Farm equipment sales look positive in Canada
Local farmers more optimistic than U.S. growers
Winnipeg Free Press
Sat Apr 16 2005
By Martin Cash
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FARM equipment manufacturers in Canada are more optimistic than their American counterparts about the coming year, according to a survey released recently by a U.S.-based industry association.
Members of the Milwaukee-based Association of Equipment Manufacturers (AEM) believe sales will be up for most types of farm equipment in 2005 in Canada although large tractors and combines might show slight declines in the U.S., the survey found.
However, Canadian equipment manufacturers and dealers have already seen enough this year to be optimistic about the season after dealers negotiated most of their tractor sales in the fall and early winter for delivery at this time of year.
"Sales were stronger (than the previous year) and there is a more positive attitude in this part of the country," said Kelly Mathison, a partner in Countryside Equipment in Brandon and Yellowhead Equipment in Neepawa, both John Deere dealerships.
Mathison, who is also a director of the Calgary-based Canada West Equipment Dealers Association, said there has been an increase in larger tractors and large equipment sales.
"Farmers are eternal optimists," he said. "Last year was a great crop, but there was an early frost. Many are thinking they came so close last year that this could be the year."
He said that drought and BSE problems have also forced smaller farmers to sell their land creating larger farms which gives some an incentive to purchase new equipment.
While manufacturers believe sales will increase in the majority of machine categories, U.S. companies are expecting an 8.8 per cent decline in four-wheel drive tractor sales and a 4.8 per cent decline in the largest category of two-wheel drive tractors, the AEM survey showed.
But expectations in Canada suggest a more modest 5.2 per cent decline in four-wheel drive tractors and increases in all sizes of two-wheel drives, including a 1.2 per cent increase in the largest horse-powered models.
"The Canadian outlook is more optimistic than the American," AEM senior vice-president John Smylie said in a telephone interview during a break in the action at the annual AEM board meeting in Washington this week. "Looking to 2005, the grain growers are expecting a good year and the hay and forrage people are looking for a re-opening of the U.S. border for Canadian cattle and beef."
Craig Engel, president of Winnipeg-based Buhler Industries Inc., said the company is happy with the order book for its entire range of products, including large four-wheel drive tractors, two-wheel drive models and a range of augers, front-end loaders, blades and other agricultural equipment.
"Sales last year surprised everyone by being as strong as they were," Engel said. "Our second-quarter results are due next week and we don't think there will be any surprises from our previous forecasts."
The company's first-quarter results included an eight-per-cent increase in gross revenue, although profits were off by 21 per cent. Company officials attributed much of the profit slippage to the doubling in the price of steel, a significant component of virtually everything Buhler makes. Engel said the company is projecting to increase sales throughout the course of the year and will attempt to maintain its profits at last year's levels.
AEM's survey suggested the largest growth in Canada will come from balers and self-propelled sprayers with sales increases forecast in the range of five to eight per cent. Survey results showed potential sales declines this year in Canada for windrowers/swathers, field cultivators, chisel plows and air seeders/drills.
Although the AEM does not necessarily analyse the data it collects, Smylie said recent meetings with senior U.S. agriculture officials in the Bush administration indicated there does not seem to be any scientific or health reason to keep the border closed to Canadian beef and cattle which may give some reason for Canadian farmers to be a little more optimistic about the border opening soon.
He said although there is some talk of changing the generous farm subsidies in the U.S. they would more likely affect sugar and cotton producers rather than soy, corn and wheat growers, the kind of producers that Canadian equipment manufacturers are most likely to sell to.
Smylie said the equipment manufacturers tend to be conservative and are reluctant to be too optimistic.
"We think this year could be better than what is being forecast although we do continue to be bearish on commodity prices," Smylie said. "The outlook is fairly positive."