Ag equipment market doing well in good year for farmers. The strong farm prices and good crops the past season have made for a busy winter for farm equipment dealers and delays in delivery of some new tractors and combines.
The strong farm prices and good crops the past season have made for a busy winter for farm equipment dealers and delays in delivery of some new tractors and combines.
But it’s all a good problem to have, as the agricultural economy rumbles on in one of its most prosperous times.
The end of 2010 was hectic, as farmers flush with big new crops and higher-than-normal prices were eager to lower their tax profile with judicious spending on equipment and other needed inputs. Since then the action has slowed, but it’s still “good and steady,” said Charlie Murphy, salesman at Forks Equipment, the John Deere dealership in Grand Forks, N.D.
Anyone ordering a new combine or big four-wheel drive tractor now will have to wait until late summer or so to get delivery, he said.
Other dealerships see similar conditions.
“Up to this point, we have not had too many issues,” said Kevin Nelson, sales manager at Uglem-Ness, Inc., a Case-IH dealer in Northwood, N.D., of the fabled long waits for buyers to take delivery of new combines and tractors. “We could see (backlogs) more this year than last.”
If someone walked in today to buy a new CaseIH combine, it could be delivered “the first part of July,” Nelson said. Before harvest, that is.
“So we’re still OK.”
Butler Machinery is a relative newcomer in the big farm equipment business. The yellow tracked Caterpillar Challenger tractors came on the market about two decades ago, and the German-made Lexion combines appeared not much more than a decade ago.
“We are getting low on big tractors, but our row-crop tractors and combines are good,” said Jeremiah Kronebusch, salesman at the Butler dealership in Grand Forks. “It’s been very active.”
In fact, it looks like this will be a better year than the record of 2009, he said, which followed the record spike in grain prices.
Good Crop Prices
The average price of spring wheat at area grain elevators Thursday was $10.05 a bushel, according to Agweek magazine’s daily survey, the second-highest nominal price ever and one making some farmers figure on upping their wheat acres this spring.
Thursday’s local cash prices are up 18 percent since Jan. 5, and up 53 percent since Oct. 20 when they averaged $6.55, normally considered a very good price.
Three years ago, almost to the day, spring wheat prices hit $20 a bushel as some elevators in North Dakota, beginning a brief spurt that is the only rival to current price levels.
This year, the high prices are across the board as all crops have gained in value.
Corn price bids Thursday at area elevators averaged $6.21, about twice a typical price. Soybeans were at $13.33 at elevators Thursday, also about twice more normal levels.
Sugar beet farmers in the Red River Valley had their most successful year ever, judging it by the price they are projected to receive and the average yield. Their projected average gross per acre of $1,500 is 35 percent to 50 percent higher than what typically has been considered a very good return.
Sunflower and edible bean prices for this coming season can be contracted at about $30 per hundredweight, well above normal.
Farming Costs Up, Too
The cost of farming keeps pace, though, Murphy said, with fuel, fertilizer and land all going up in price, too.
The size of farm equipment as well as the implements keeps growing, it seems, with massive 60-foot cultivators that fold up five ways to become road-safe. There are 48-row planters that span 120 feet in one pass.
New combines come with price tags from $400,000 to $550,000.
A spanking new 9870 combine, the largest Deere harvester, is a list price of a staggering $400,000. But one it can earn, according to some customers, who claim that — with the best, $100,000 corn header added on across the front to gobble up 12 rows at a time — it can reap 4,000 bushels of corn an hour, or 20 to 30 acres, depending on the yield. In dollar terms, at current prices, that would represent $24,000 worth of crop harvested per hour.
The big move into corn the past four years in North Dakota was given a big boost again this past fall when yields ballooned and harvest went smoother than ever with little extra cost in drying or combining through snowdrifts, as was seen in previous, late years.
“We are selling more corn heads and sugar beet planters are selling better,” Murphy said.
One reason for some slower deliveries of equipment is new, stricter federal EPA emission standards, called “Tier 4,” for off-road diesel engines bigger than 174 hp that went into effect Jan. 1.
It means added stuff on new tractors as manufacturers scrambled to find technologies to meet the standards.
For some, it will mean adding a second, smaller tank of fuel as part of a system to burn off more carbon particles from the exhaust systems.
For others, such as John Deere, it will mean an added filter — “the size of a 55-gallon drum,” said Murphy — on the side of the engine. It’s more cost, more hassle, something to watch out for in the field, he said.
Nelson agreed it’s another hoop to drive through.
“Right now, the four-wheel drive (tractors) are going to be tight, with the Tier 4 emission standards, they have to change their line at the Fargo (Case-IH) plant, so we won’t see some new ones until fall,” Nelson said.
“We’re doing pretty good on combines,” Nelson said. “We’re told they are going to increase production at the (Case-IH) combine plant in Grand Island, Neb., to meet retail demand.”
But Murphy said that in a contrary way, the new Tier 4 regs also have loosened up supplies of new tractors and combines in the now-global market that local equipment dealers live in. That’s because Canada and European nations aren’t sure yet about the new technology, Murphy said. “So they cancelled some orders. That freed up some equipment for us.”
The Internet now makes sales possible around the world, too.
“We sell a lot of our older equipment to Mexico and they sell it all over South America,” Murphy said. “We just sold an old grain drill in Northwood to a farmer in South Africa this week.”
It’s about 20 years old and not really up speed in this era of much bigger and faster air seeders, and the South African farmer nearly died, he told Murphy, getting it pulled out of the snow. But the farmer, who plants 10,000 acres, says it’s just what he needs for his land, despite having to pay as much or more in shipping costs as for the drill itself.
Forks Equipment, part of the five-store chain of Grafton (N.D.) Equipment, has been able to do some jockeying around the country with other dealers, said Sales Manager Jeff Syverson. Because harvest in corn and soybean country in the Midwest comes later than the spring wheat harvest in North Dakota, swaps with dealers there allowed for some combines to be available here earlier, in a shift of Deere allotments, he said.
There hasn’t been a real pinch of inventory, Syverson said, because it’s too important to be able to service every thing sold. “We don’t want to get out in front of the service people,” he said of expanding sales more than the dealership can handle.
Just getting all the new and used equipment ready for delivery by the time it’s needed will be a tight race this year, Murphy said.
The big rush for new equipment in recent months means a very good supply of used stuff traded in.
Forks Equipment uses a big lot at the former Hansen Ford dealership on Gateway Drive to park a bunch of year-old combines traded in by some big-hitting farmers who drive new machines every year.
The depreciation and lack of sales tax attract more conservative buyers for slightly used harvesters, which still cost upward of $300,000, Murphy said, laughing a little in disbelief.
Kronebusch said that Wednesday and Thursday, at the annual International Crops Expo at the Alerus Center in Grand Forks, Butler plans to show off its new giant combine.
“It’s the only ‘Class 10’ combine in the industry,” Kronebusch said.
The Lexicon 700 has a list price of $560,000, is powered by a 576 hp engine and has a hopper, or tank as they are called now, that can hold nearly 400 bushels of grain, half a semi-load.
He figures to sell some, Kronebusch said.