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Farm equipment in 2020 – the asterisk year

Progressive Dairy Editor Lynn Jaynes Published on 02 November 2020

Well might 2020 be called the asterisk year. From now on, any five-year average or historical data could well put an asterisk beside 2020 to explain the anomaly of a pandemic. What did it affect? Well, what didn’t it affect? It’ll be the year that screwed the curve.

The 2017 USDA Ag Census showed that since 2002, net cash farm income had more than doubled, growing 117%; however, the number of farms with net gains decreased 10.3% during that time. The September 2020 USDA farm income forecast predicted an increase of 22.7% over 2019 (21.7% if inflation-adjusted). Net cash farm income in 2020 is forecast to increase 4.5% (or 3.6% inflation-adjusted). A little surprising, wouldn’t you say, when just a few months ago we saw milk dumping, potato giveaways and cheese piling up in storehouses because schools weren’t open?

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And, yes, farm commodity prices have been stronger in the last few months, even amidst the supply chain problems that created milk dumping and potato giveaways. But, surely one of the asterisks for 2020 will involve the percentage of farm income that came from government programs, compounded by pandemic programs for financial assistance (to the tune of 36%).

Machinery costs

But, let’s narrow this down a bit and look at what tracked machinery costs alone have shown. The USDA Farm Production Expenditures 2019 Summary (released July 2020), listed tractors and self-propelled farm machinery costs from 2018 to 2019 staying relatively flat at 4.9% of total farm expenditures (and staying at the same level as 2015 expenditures). Other farm machinery also stayed flat for 2018-2019, at 1.5% and 1.4%, respectively, showing an overall drop since 2015 costs across all farm sizes. While not explaining the entire picture, surely that helped net cash farm income.

Farming has changed

Equipment sales reflect more than economics. They also show a change in farming practices. The USDA 2017 ag census saw a definite shift away from conventional tillage and toward reduced tillage and no-till practices. No-till acres in 2017 increased 8.3% over the 2012 ag census. Broken down by farm size, larger farms (over 2,000 acres in no-till) saw the biggest jump, with an increase of 17.9%. The number of acres from those farms also rose 22.5%.

Brand loyalty

What else is shifting in the farm equipment world: brand loyalty. In June, Farm Equipment reported results from their farm equipment brand loyalty study. They first launched the study in 2010, followed by studies in 2014 and 2017, finding a steadily increasing brand loyalty among farmers (63%, 69% and 75%, respectively). Then came 2020 (the asterisk year), where numbers fell backward 10 years to 63%, a drop of 12%.

So, what’s the cause? The report says it’s not entirely clear but could be anything from a few years of low commodity prices, lower farm incomes and rising debt, or maybe the new equipment has too many bells and whistles and producers can’t justify enough gain to cover new technology costs. Some new equipment even seems to be the result of what engineers call “feature creep.”

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Feature creep is the tendency for things to become incrementally more complex until they no longer perform their original functions very well. Have you seen the inside of a newer tractor cab lately? Anyone else out there having trouble figuring out what every knob, lever, screen, button and feature is for? Show of hands – have you ever sat stupidly staring around you, like, “Yeah, I think I recognize the cupholder.” Many farmers are having trouble compiling and making useful the data they already have.

Another cause lingering on the periphery of depressed equipment sales is the issue of fixing new equipment (or in the inability to fix new equipment). Regardless, farmers are claiming less brand loyalty.

The question is: Do we “throw out” the data from this year on this issue (or any other) because it’s an unusual year? Who’s to say? I look forward to reading the 2020 asterisk notes (in my rearview mirror, of course).  end mark

PHOTO: This New Holland tractor with John Deere Turbotill shows the change in brand loyalties and the rise in brand switch among tillage implements. Photo by Will Jaynes.

Lynn Jaynes
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