Sitting under a tent at an annual agricultural equipment sales event, Shawn Berry noted that orders for the machinery he sells have dramatically slowed down this year — so much so that the Ohio-based company he represents could end up to 30% short in sales compared to last year in some states, South Dakota and Minnesota included.
Berry is not alone. Many of the exhibitors at Dakotafest saw one effect of this belt-tightening year in the Corn Belt: Farmers aren’t buying or trading in the pricey equipment because of lower commodity prices and a 95% reduction in a federal tax break that has traditionally benefited the sector. “If they can’t buy more equipment, we are going to have to start laying off people,” said Berry, who represents Unverferth Manufacturing, that makes and markets, among other things, tillage, hay and grain handling equipment.
The U.S. appears headed for record-breaking corn and soybean harvests this year, but the abundant yields are driving prices lower, significantly affecting farmers’ profitability since the crop will end up costing more to produce than they can immediately sell it for. Even before planting season began, the U.S. Department of Agriculture in February predicted this year’s farm income would sink to levels not seen in four years because of falling commodity prices. Upgrades happen for numerous reasons — increase or decrease in acreage, new tools to get the job done faster and better — and can be dependent on the amount of cash a farmer has on hand, according to Dale Moore, director of public policy at the American Farm Bureau Federation.
Machinery costs vary widely. A tractor capable of serving a farm that is several hundred acres can run between $40,000 and $200,000, while a combine for grain harvesting can cost $400,000. John Horter trades in his high-horsepower tractors and combines every two or three years for his his corn, soybean and cattle farm in Andover, S.D. He says that helps him keep up with new farming technology and have a higher resale value — just like with a car.