Harvesting a successful crop begins long before seeding a crop farmer’s soil. Investing in agricultural equipment is a real possibility for farmers looking to set up their growing season well following strong crop yields in 2020.
As weather permitted crops like cotton and corn to grow well and then be harvested in the Crossroads, relatively competitive prices allowed farmers to cash in on equipment for the next crop cycle so much so that demand is outpacing the supply of various tools to assist farmers.
Agricultural equipment includes big-ticket items like combines, tractors and augers or smaller ones like mechanical parts, electronic equipment or replaceable parts like tires. At Hlavinka Farm Equipment‘s Victoria location, 7105 U.S. Highway 59N, salesman Seth Potts said some items are available for purchase today, and others might not be available until the end of the year.
“For some, it was the best year they had had in a while,” Potts said. “I’ve never seen it like this where it’s been so far away to get anything in.”
Like many industries since the onset of the pandemic, supplying customers’ demands continues to be a challenge.
Plants that supply the items Potts sells have backorders for various smaller and big-ticket items. Much of that is because of high demand for steel, similar to other materials the Advocate previously reported, and because other buyers outside the U.S. beat many domestic vendors to purchase supplies, Potts said.
Production for agricultural equipment for the 2021 model year, for example a brand new 2021 combine, lasts about from October 2020 through October 2021, Potts said.
In most years, vendors or customers can still purchase a new piece of equipment for the previous model year at the time the next model year is coming onto the market. As of mid-February, Potts said he can’t buy 2021 combines, row crop tractors and articulating tractors.
Hlavinka’s experience has been in line with the industry across the continent.
In the U.S., farm tractor sales were up 18% from 2019 to 2020, said Alastair Hayfield, senior research director at market research firm Interact Analysis, citing data from the Association of Equipment Manufacturers. Despite this, Interact Analysis and Hayfield also forecast the agricultural equipment sector in North America to stay relatively steady throughout the next eight years and grow by about 2% in 2021.
Similarly, Potts estimated gross revenue increased about 20% from 2019 and that tractor sales of 250 horsepower or more tripled, approximately.
Hlavinka also repairs equipment, which Potts said can be more profitable than equipment sales despite making up only about 20% of gross revenue.
“As long as guys are running (crops), guys are going to break stuff,” Potts said. “It doesn’t matter if it’s the new equipment or the 20-year-old equipment.”