High prices for eggs and other food commodities not only have generated headlines of late, but also some extra cash in farmers' wallets. That is good news for the agriculture tire market.
"2022 farm income was pretty good, so farmers have cash. So they'll be increasing farm acreage, probably, so that will mean more usage of farm equipment and more usage of farm tires," Paul Hawkins, senior vice president, aftermarket at Titan Tire Corp., said.
The U.S. Department of Agriculture predicted that net farm income, a broad measure of profits, would increase 13.8% in 2022, compared with 2021, which saw a surge of 49.3% over 2020.
"I believe we will see strong demand for farm tires in 2023. Though prices for inputs, especially fertilizers, rose dramatically, high commodity prices have helped offset the costs," said Blaine Cox, national product manager — agriculture, golf and turf for Yokohama Off-Highway Tires America Inc. (YOHTA).
"Canadian farmers had some decent rain in 2022, which was an improvement from 2021. Back down here in the states, milk producers in particular enjoyed strong demand and good prices, which helped make up for the high cost of feed.
"As a manufacturer of tires for tractors, combines, implements, sprayers, skid steers, loaders and manure equipment — all of which are used on dairy farms and other operations that integrate livestock and crops — we are always happy to see livestock producers making money," Cox said.
"The timing is good for farmers in the sense that crop prices are high, and farmers are making some money, but with aging equipment and more cash in hand, it's time to spend," said Tony Orlando, who recently expanded his title to president of Bridgestone integrated agriculture tire business — Americas, Europe, Middle East, India and Africa, for Bridgestone Americas Inc.
Farmers who wanted to buy new equipment often were deterred by low OEM inventory.
If farmers can't get new equipment, they prolong the life of equipment they have, resulting in strong demand in the aftermarket channel, the tire makers said.
"I think farmers want to buy a lot of new equipment," Hawkins said, adding, "There's a lot of demand out there. Supply chain issues hampered filling that demand."
Cox noted that tractor sales were flat in 2022, compared with 2021, though combine sales increased dramatically.
"All in all, our OE tire sales were stable. Replacement tires have been in high demand as farmers kept their machinery going and spruced up used equipment they purchased. Farmers and machinery dealers recognize that tires can provide a cost-effective and immediate boost to equipment performance," he added.
The tire makers have a positive outlook for this year.
"Crop prices are good, farm income for 2023 is going to be pretty solid. People are going to have money to spend. … Farmers are going to plant a fair amount of acreage, so I think equipment will be in demand," Hawkins said.
"Some of the supply chain issues are still out there. I'm not sure what kind of supply will be available for OE, and I think that will be a benefit for the aftermarket. We foresee a pretty good year for the aftermarket," he said.
"Farmers are definitely spending," Orlando said, adding, "Certainly, there's a bit of headwinds regarding OEs having sufficient labor or components for their production; there are some challenges there. Farmers are facing higher input costs and escalating financing costs, but I think they are doing what they can to get new equipment in the field."
Cox noted that this year Congress will be deliberating on the five-year renewal of the so-called Farm Bill, which "always creates a little uncertainty about farmer spending."
"But I believe farmers will continue investing in their operations and seeking out tires that will help them stay productive and profitable," he said.