The great ethanol binge in the U.S. has spurred a buying frenzy for farm equipment as the books closed on 2007.
According to a report by Farm Industry News, after a slow start in 2007, equipment sales climbed with commodity prices, especially for corn, the main ingredient for ethanol fuel. The U.S. Department of Agriculture predicted net farm income would hit a record $87.5 billion in 2007, up 48.3 percent from 2006.
Most of the farm equipment dealers surveyed by another publication, Farm Equipment magazine, expect 2008 new equipment unit sales to be as good as or better than in 2007, overall projecting a 2.6 percent increase in sales. Unit sales of used equipment are expected to increase 2.5 percent.
This is all thanks to increased prices farmers are earning for their crops.
``When the price of their product is up, growers pay down debt and buy equipment,'' according to Farm Equipment. Consequently, states heavily invested in grain farming are more optimistic about the new year, with dealers in those states forecasting a 25-percent jump in unit sales.
The Association of Equipment Manufacturers (AEM) said that in a survey of its members, unit sales of four-wheel-drive tractors and planters are expected to rise the most, about 6.5 percent in 2008, followed by increased sales of field cultivators, self-propelled combines and two-wheel-drive tractors of 100 horsepower or more.
According to AEM data, four-wheel-drive tractor unit sales skyrocketed 88 percent in November, compared with the year-ago period, while sales of 100-plus horsepower two-wheel-drive tractor sales shot up 53.8 percent and self-propelled combines jumped 44.1 percent. For the first 11 months of 2007, four-wheel-drive tractor sales climbed 21.6 percent, compared with the year-ago period. Sales of 100-plus horsepower two-wheel-drives increased 22.8 percent and combines jumped 15.6 percent.
In the AEM survey, 70 percent of the respondents said they expect new equipment prices to increase modestly this year while half predict a modest jump in used equipment prices.
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Farm equipment sales by the numbers
4-wheel-drive tractor sales - up 88% in Nov. 2007 vs. Nov. 2006; up 21.6% Jan.-Nov. 2007 vs. same 2006 period
100-plus horsepower two-wheel-drive tractor sales - up 53.8% in Nov. 2007 vs. Nov. 2006; up 22.8% Jan.-Nov. 2007 vs. same 2006 period
Self-propelled combine sales - up 44.1% in Nov. 2007 vs. Nov. 2006; up 15.6% Jan.-Nov. 2007 vs. same 2006 period
Source: Association of Equipment Manufacturers