Expect strong demand for farm equipment in 2023, FCC says
Farmers Forum staff
ONTARIO — Strong demand for increasingly expensive farm equipment will persist into 2023 despite higher interest rates, a weakening Canadian dollar and continuing low equipment inventory levels, according to a Farm Credit Canada market outlook.
“This equipment demand is supported by strong farm cash receipts, while inventory is hampered by the supply chain disruptions we saw over the past two years,” FCC chief economist J.P. Gervais said.
Despite rising sticker prices, FCC predicts Canadian farmers will make more large equipment purchases in 2023. The agency projects an 8.7 % rise in 100-plus horsepower tractor sales, a 13.9 % increase in 4WD tractor sales, a 19.3 % increase in combine sales and a 32.2 % increase in Canadian agricultural implement manufacturing output. Smaller tractors sales will nudge up only 0.4 %.
Alongside that demand are low equipment supplies. At the beginning of December, tractor inventory levels in Canada were down 42 % and combines were down 47 % from the five-year average.
Don’t expect farm equipment production to catch up and ease the price increases soon. Retail inventories are expected to remain below pre-pandemic levels through 2024, according to Gervais.
A weak Canadian dollar will also make new equipment more expensive because most tractors and combines are manufactured south of the border, and he predicts the loonie will continue to lose ground through 2023. Supply-chain inflation during the last half of 2022 will also continue to work its way into prices in 2023.