[Author: Tom Junge, 05.17 | Keywords: Iowa Field Notes, Whole Goods]
The results are in! First, letís take a moment to celebrate the good news ñ new equipment sales were up 2.8% and used equipment sales were up 22.8% for the first quarter of 2017 compared to the first quarter of 2016, according to the 2017 State of the Ag Industry (IA-NE) survey results. Total dealership sales were also up 7.5%.
Most firms in Iowa and Nebraska might question these results though, because for the first time since the survey was conducted there was a large disparity among multi-store and single store performances. For example, only 29% of the firms that reported showed positive results for new equipment sales; while 41.9% reported positive results for used equipment sales. However, due to the number of locations these firms represented, total sales of new and used equipment showed an increase. Based on the number of store locations, new equipment sales were up at 52.9% of the locations and 65.5% for used equipment sales.
Since the Association first started conducting this survey, data submitted by members was weighted based on the number of store locations the reporting dealer operated. This method provided the most accurate number when looking at percentage changes in total dollar sales for the two states. In the past, weighting by number of stores has had very little impact on the final results.
So believe it or not, whole good sales are up. While one can over analyze why the results are what they are, let’s just accept that the results were positive. Hopefully the next survey will reinforce this positive step forward.
Parts & Service Sales
Once again, the bright spots are in parts and service sales. Both showed modest gains.
Used equipment inventory continues to fall with double digit declines. New equipment inventory declines were less modest.
Used Equipment Auction Values
Another sign of a positive change is that nearly 2/3 of the dealers feel auction prices for ag equipment have hit a low.
For more specific numbers regarding the state of the ag industry, remember to participate in the next survey this July.
Word on the Street – Guarded Optimism
Last August, farmer and dealer attitudes seemed to be at an all-time low when corn prices fell below $3/bushel and cattle prices fell as well. Summer and fall farm show attendance was down and the farmers who did attend seemed to “just walk the show.” Then harvest came and record yields boosted attitudes. As one farmer said, “Big yields bailed us out from low commodity prices.”
This improved attitude carried into both of the Association’s winter farm shows – the Nebraska and Iowa Power Farming Shows. Farmer attitudes were much better than anyone expected and exhibitors experienced good results.
The latest Industry Conditions Summary conducted by the Association of Equipment Manufacturers showed a positive reading for the first time since the beginning of 2014. They, too, are waiting for the next quarterly report to see if this momentum can continue.
Dealers are reporting equipment sales with $50,000 (as trade difference or the price of the item) being the upper limit of what farmers are willing to spend right now. While ticket sales are lower, it is better than no sales at all.
A few dealers stated, “If the ag economy doesn’t get any worse than this, we can live with it.” Many also indicated that they are still able to show a profit.
There is currently a guarded optimism among dealers. Cattle prices have moved up from their lows. Another growing season is upon us and all of the acres will be planted with some type of crop.
Just like last year, dealers will wait out the summer to see what direction the ag economy will take. A short harvest somewhere will increase grain prices, while another bumper crop in the U.S. will deflate grain prices even more. Only time will tell, but it seems like dealers may have experienced the “low” of the ag economy.
About the Author
Tom has traveled across Iowa calling on members for more than 24 years. When he’s not on the road, Tom stays busy managing both the Iowa and Nebraska Power Farming Shows. In his free time, Tom enjoys watching college and NFL football, fruit gardening and taking trips with his wife and children.