Implement sales may be slowing after rapid start

The bountiful wheat and fall harvests, combined with good grain prices, have been driving demands for new farm equipment from area machinery dealers, with orders stretching into next fall.

At least that was the case until last week.

The interest in purchasing equipment has seemed to slow of late, according to local dealerships, because of the continued high price of energy inputs into agriculture, and apprehension about what is being done at the national level to avert an economic crisis.

Agricultural equipment sales managers at Straub Farm Equipment and Prairieland Partners in Marion, and at Ag Power in Hillsboro, all confirmed that extraordinary grain yields have driven availability of some machinery, such as combines and wheat drills, for planting into September 2009.

But at the same time, Jason Henderson and Maria Akers, both with the 10th District?s Federal Reserve Bank of Kansas City, report that farm income expectations have been tempered by soaring energy costs despite historically high commodity prices.

They list energy costs to include fertilizer, fuel and chemicals.

They also listed increased bank-loan demand and farmers paying up-front for 2009 crop inputs as factors in the agricultural economy.

On Thursday, Gerald Funk at Ag Power reported demand ?pretty good? up until the first of the week, when declining grain prices and national economic news seemed to put a drag on orders.

Funk said orders for new tractors of certain models into the 200-plus horsepower range have been so brisk that possible deliveries of them have been pushed into the first half of next year.

Funk said deliveries for some other equipment may take even longer until manufacturers can catch up with the demand for ?tillage equipment a year out, and combines into next fall.?

Uncertainty and anxiety are growing on the farm, he said.

?The inputs stay high priced while the grain prices go down,? Funk said. ?It?s a real mixed up turmoil. The only guy you have a hard time feeling sorry for is the one who still has last year?s corn in the bin. He should have sold.?

Even though farmers have enjoyed good times this year, the uncertainty is growing, Funk said. Added to this are other factors that local farmers can?t control, such as the bounty of the next crop or the possibility of drought or other weather factors.

Funk said farmers also have learned that decisions made locally can be negated by world markets and world grain production thousands of miles away.

The farm equipment dealer can also lose this way, Funk said, because farmers who ordered new machinery might not be doing well when it finally arrives, leaving businesses with unneeded expensive inventory setting on the lot.

?I remember how everything was in the 1980s when everything went the other way,? Funk said.

Marlin Bartel at Straub said of equipment orders: ?Yes, it?s been excellent. It?s been a good harvest with good income, and enough equipment has been hard to get.

?What we?ve been able to get, we?ve been able to sell.?

Bartel said there has been a backlog for the larger equipment used by commercial farmers, although some models of tractors ?are still pretty accessible.?

When it?s the season to use a particular piece of machinery, Bartel said the demand is so high that the supply runs out. For instance, currently combines are hard to find, and it?s ?nearly impossible to get wheat drills.?

Bartel had more of a wait-and-see attitude to how farm business may be shaped by the events of the past week. He said the drop in business may simply indicate that farmers are currently too busy with the fall harvest to go machinery shopping.

Straub also does a brisk business in smaller, 40- to 70-horsepower tractors typically used for suburban and smaller acreages?and that hasn?t changed, he said.

Bartel said he isn?t very concerned about whether uncertain economic conditions could leave dealers holding unwanted inventory because ?we don?t have open-ended deals?but I know that is a concern nationally.?

Chad Gormley at Prairieland Partners said both John Deere sales and the farm economy have been in a ?boom period? for most of this year, ?but everybody?s slowed some on the optimism.

?There?s no idea how things in general and the markets might change,? he added.

Even though Prairieland orders at this point are booked ?way into the future? with more coming in, he feels the orders have slowed over the past 30 days as grain prices have declined.

Gormley said orders for commercial farm tractors are booked for delivery into June and July. Delivery for tillage equipment is even further out, he said, and combines aren?t available until September 2009.

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