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Tractor sales will continue to be weak in 2010, manufacturers' association projects

AgFax.Com - Your Online Ag News Source

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From a press release

MILWAUKEE, Wisc., January 21, 2010 -- Agricultural machinery manufacturers anticipate overall continued weakness in U.S. and Canadian tractor sales in 2010, according to the Association of Equipment Manufacturers' (AEM) annual "outlook" survey.

For all sizes of two-wheel tractors, however, declines are expected to be less steep than 2009 losses. Double-digit decreases are expected for four-wheel-drive tractors, following relatively flat business in 2009. Combine sales are predicted to drop by double digits for 2010 after 2009 sales growth. Sales of tractors and combines are then predicted to start rebounding through 2011 and 2012.

For other types of farm-related equipment in the survey, overall 2010 demand for most products in the U.S. and Canada is expected to improve after 2009 business declines. All categories are predicted to be in the plus column for 2011 and 2012.

AEM is the North American-based international trade group for the off-road equipment manufacturing industry. It annually polls its agricultural machinery manufacturers on sales predictions for a variety of farm-related equipment. Each forecast in the AEM survey is the average of responses from companies in each product line, predicting industry wide expectations rather than individual company performance, and unit sales rather than company profitability. The full survey results are online at www.aem.org in the Industry Trends section.

"The recession reached the agricultural sector in 2009, and the drop in equipment sales in most categories is attributed to a combination of the fall in commodity prices, significant drops in net farm income, the tightening of credit throughout the ag equipment distribution channel, and the overall reduction in economic confidence," commented AEM Vice President of Agricultural Services Charlie O'Brien.

"The recession is expected to continue to drive negative growth rates in many equipment categories in 2010. However, it is important to keep in mind that the larger equipment has been coming off of some very good production years, specifically the 100 HP tractors, which were at a 25-year-high watermark in 2008," O'Brien continued.

"Other influencing factors fueling market uncertainty include legislative issues such as cap and trade, the ongoing debate on increasing food production while reducing agriculture's contribution of approximately 30 percent of the world's greenhouse gases, Country Of Origin Labeling, and emission standards that will raise the cost of powered equipment," O'Brien stated.