Agricultural Equipment Sales Slow Down Due to Crop Price Decline and High Interest Rates

The slowdown in agricultural equipment sales is due to falling crop prices and high interest rates, causing farmers to postpone purchases. This excess inventory is resulting in dealers discounting machines, suspending new orders, and auctioning off equipment at reduced prices. Manufacturers such as Deere and CNH Industrial experienced strong demand in 2022 due to record-high farm income and pandemic assistance payments, but now expect slower sales to negatively impact their profitability this year. Farmers are hesitant to make purchases due to poor crop prices and tight budgets caused by inflation. The pain is spreading to suppliers of spare parts, with some dealerships offering discounts and zero-interest financing to move unsold machinery off their lots. Dealers are feeling pressure to auction equipment quickly to preserve margins, as inventory levels are a significant concern in the Midwest grain belt. Used agricultural machinery inventory is increasing, forcing dealers to auction equipment at lower price points. Texas-based farmer Scott Born is postponing equipment purchases due to tighter budgets caused by high costs for equipment and fertilizer. Deere is set to report earnings on May 16, warning shareholders that inflation will deter farmers from financing equipment purchases.