U.S. Is No. 1 in Worldwide Farm Equipment Sales
In March 2015, I was covering a Ritchie Bros. auction outside of Chicago, Illinois. On occasion, the auctioneer calling the sale would mention where the buyer for a piece of equipment was located. I particularly remember that when it came to the sale of large construction equipment, he would mention it was heading overseas.
International sales of large construction or forestry equipment as well as semitrailer trucks are not unusual. I recall Rick Vacha of Ritchie Bros. saying that over 100 used semitrailer trucks were sold to one buyer in the Middle East during one of his company’s massive auctions in Miami.
I had assumed, however, that used farm machinery mostly stayed in the U.S., occasionally crossing the border into neighboring Canada or Mexico. So, I was surprised to hear the auctioneer say that several of the Case IH Quadtracs sold that day were heading overseas.
export leader in farm machinery
The fact that used machinery from the U.S. is heading overseas is a reflection of the country’s prowess in the world of farm iron. The U.S. is No. 1 in the sale of new machinery sales worldwide, shipping out just short of $10 billion in 2015, according to the Department of Commerce’s International Trade Administration. Sales of farm machinery worldwide were projected to reach $122.9 billion in 2017.
Export figures of new equipment are based on the latest assessment released by the International Trade Administration.
- Canada $2,929,500,000
- Mexico $1,209,600,000
- Australia $774,600,000
- Germany $381,900,000
- Brazil $274,300,000
- Chile $226,700,000
- SE Europe, including Romania, Hungary, Bulgaria, and Croatia $129,000,000
- Poland $73,400,000
- Ukraine $61,600,000
These figures don’t include the sales of irrigation equipment (particularly center pivot sprinklers), grain storage buildings (especially bins), and precision agriculture technology. The U.S. is the world leader in production of all that type of equipment.
Although the sales of farm machinery have been in a slump since 2014 because of lower commodity prices worldwide, items like low- and medium-horsepower tractors and sprayers have seen increases. U.S. exports to China, Russia, and the Ukraine have flourished, as well.
Of those three countries, Ukraine saw the biggest growth in new machinery purchases, as sales skyrocketed 204% the first half of 2016 with tillage and planting equipment in hot demand.
In the future, “Trends suggest that the market growth potential (for used equipment) lies mainly in developing regions such as China, India, and Brazil,” according to Catriona Rigley of Research and Markets Co. That firm predicts the global farm equipment market to grow at around 10% over the next decade to reach approximately $368 billion by 2025. The Asia-Oceania area (China, India, Indonesia, etc.) is also predicted to dominate the market for farm iron.
corn belt’s reputation for used iron
Although little information is available regarding international sales of used equipment, the U.S. enjoys a reputation of being home to high-quality large machinery. Machinery from the Corn Belt, in particular, is highly sought after when foreign buyers are looking to invest in used equipment, says Doug Mitchell of JD Equipment Inc. based in London, Ohio.
Mitchell’s uncle, Don Mitchell (the founder of JD Equipment), began exporting used equipment in the 1980s “when few people were in that business and margins were much healthier,” Mitchell points out. “My uncle could make 30% margins back then. Today, everyone seems to be in business, and the gains are tight.”
Mitchell notes that depressed commodity prices are hurting overseas sales of used iron. “The U.S. is best known for making large machinery suited for large farms growing grains,” he say. “Commodity values are just as depressed in other countries as they are here.”
Other factors affecting sales include the strong value of the U.S. dollar and added import taxes. “Increasingly, countries are adding more regulations on imports, which makes exporting challenging,” says Mitchell.
straining for iron
Still, Mitchell believes, the world is straining for modern farm machinery, and the U.S. makes the highest quality and most advanced equipment around.
He is particularly impressed with the potential for sales of used machinery into Argentina (“one of largest rice-growing countries in the world”) and the Ukraine (“a vast base of some of the richest farmland in the world”).
Similar used tractors on different continents – But similar auction prices
The international trade in farm machinery has resulted in similar models of equipment sold on different continents, as is the case with John Deere model 7700s. What happens when such tractors are sold used on auction? You may be surprised to discover, in at least one example, how close final bids on the sale of 7700s were in Europe vs. North America.
In all four cases, the 2014 model year 7700s were sold at events held by Ritchie Bros. Auctioneers, the world’s largest auctioneer of heavy equipment and trucks. The following sales took place last summer:
- Italy: 5,600 hours, single tires – $17,400
- Germany: 6,250 hours, single tires – $15,011
- Alberta: 4,705 hours, single tires, with loader – $28,692
- Missouri: 3,520 hours, single tires, with loader – $22,500
The higher bids given for the tractors in Alberta and Missouri can be accounted for in the fact that they sold with loaders.
The equalizer in all these sales could be the internet since buyers and sellers today are given easy access to past sale prices, regardless of location, believes Rick Vacha of Ritchie Bros. “The world is much smaller today, due to the internet, when it comes to trading machinery,” he says.