Dealers hopeful despite weak farm market

The farm tire market has been bleak for the past few years, and although tire dealers are hopeful, this year may bring more of the same.

"We saw similar results in 2017 to previous years," said Eric MacPherson, CEO of Gothenburg, Neb.-based Dawson Tire & Wheel.

"Farmers (are) hesitant to spend money, and only doing so when absolutely necessary."

Mark Carpenter, owner of Lake Odessa, Mich.-based Jerry's Tire., blamed the decline of crop and milk prices in 2017 as a reason why most farmers are not looking to 2018 with positive thoughts on change.

"We are being told by several ag equipment dealers that sales are already lower to start this year, and expectations are for a very flat or a down year in sales if these crop prices and milk (prices) continue to stay low," Mr. Carpenter said.

Yet, farmers still have to farm the land, and their tires will continue to wear out. Technology shifts and the way farmers are working may be the keys to future farming success.

"2018 is projected to be marginally better with net farm income due to the reduction in input costs to the farmer," Mr. MacPherson said.

"The more significant trend in my mind is farm consolidation and changes to farming practices," he said. "These have had more impact on tire usage than the economy, as the farmer is using different equipment, traveling over the field less times and using wider equipment."

Other ag dealers are hoping that although sales have been down, 2018 will see a bit of a brighter path.

"We saw (sales) go down a little bit. Probably with the commodity prices going down, that trend can only go on so long," said Steve Howard, owner of Upper Sandusky, Ohio-based Wilson Tire Co.

"We're hoping 2018 will be better. The guys can only put off buying so long before they have to start updating and replacing."

The commodity price factor

Commodity prices still are significantly affecting tire sales.

"Commodity prices are directly correlative to net farm income, which is the 'driver' of whether the farmer makes money," Mr. MacPherson said.

Mr. Howard shared a similar sentiment.

"It changes the cash flow for the farmers, no doubt about that," he said.

"If they are unable to buy new equipment, maybe they need to update, buy new tires for their old equipment."

Unfortunately, with crop prices remaining low, it looks as if farmers may not be looking to invest significantly in their equipment.

"With crop prices low we saw very little end-of-year buying, and most calls we get, the farmers are replacing only what is needed," Mr. Carpenter said.

"There is little hope of increases in commodity prices in 2018, as supply continues to outweigh demand globally."

OE market vs. replacement

With commodity prices driving the farm market, it is factoring in both original equipment and replacement sales. Both markets have seen their share of struggles over the past few years, but 2018 may bring a shift.

"OEMs project a stronger increase in 2018, as some OE customers are projecting 10- to 15-percent increases due to the age of farm equipment and need to replace it after four-five years of 'getting by,' " Mr. MacPherson said.

"In our area, OE dealers that we deal with, it sounds like everybody was down as far as sales goes," Mr. Howard said.

Mr. MacPherson noted that replacement and service business are steady. His company is projecting marginal increases for 2018.

In other areas of the country, tire dealers hope farmers will focus on improving the equipment they already have.

"That's what we're hoping will increase this upcoming year," Mr. Howard said.

"If guys are unable to update their equipment, they need to update the tires on their old equipment."

However, some farmers are turning to older technologies if they cannot keep up with current technology.

"Most farmers who have traded their equipment on a regular basis have moved back considerably, (with trade-in) values lower, tax incentives and overall cost," Mr. Carpenter said.

"We have a large family farm that is going back to older tractors and refurbishing them because of all the problems they incurred with new engines/electronics from their new tractors."

He noted that more progressive farmers are not looking backward, but instead finding ways to improve efficiencies in their business.

"In our business, the Titan/ Goodyear LSW (low sidewall) technology has been one of our biggest areas of growth in 2017, and some production of theses tires are already sold out for the first half of 2018," Mr. Carpenter said.

The LSW tires/wheels offer improved traction, reduced compaction and reduced road lope, according to Titan Tire Corp.

"For the large farms with high-horsepower (mechanical front-wheel-drive) planting tractors with four tires on them with the new LSW tires and wheels, there are testimonials of upwards of 6-percent better production, and many innovative farmers are looking at this," Mr. Carpenter added.

Although the market has seen its rough days, dealers are hoping that 2018 will be the year things change for the better.

"We're always hoping for the best," Mr. Howard said.

"That's the way it's always been. Hopefully things will come around, for everyone."