Farm Machinery Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,000 farm machinery manufacturers in the US sell agricultural and farm machinery and equipment through dealers and distributors. Product categories include harvesting machinery (combines, balers); commercial turf/grounds care equipment (mowers); planting, seeding, and fertilizing machinery (sprayers, soil prep machinery); related attachments; and parts.

Highly Seasonal Sales

Because farm machinery sales are tied to the agricultural calendar, sales are highly seasonal.

Sales Channel Dependent On Credit

Floor plan financing is a critical element for farm machinery sales.

Industry size & Structure

The average farm machinery manufacturer operates out of a single location, employs 61-62 workers, and generates $37 million annually.

    • The farm machinery manufacturing industry consists of over 1,000 companies that employ about 61,900 workers and generate $37 billion annually.
    • The industry is highly concentrated; the top 20 companies account for 71% of total industry revenue.
    • Large US-based companies include John Deere, AGCO, and Alamo Group. Most large companies have global operations with significant sales from foreign countries.
                            Industry Forecast
                            Farm Machinery Manufacturers Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            May 23, 2024 - Producer Prices Ease on Surplus
                            • Producer prices for farm machinery manufacturers rose 1.8% in March compared to a year ago after rising 8.6% in the previous annual comparison, according to the latest US Bureau of Labor Statistics data. Price increases have moderated following a steep runup that began in 2021 and peaked last October. A surplus of unsold tractors and combines is sapping manufacturers’ pricing power. Employment by makers of farm machinery shrank 1.9% in March year over year, while average wages at agricultural, construction, and mining machinery manufacturers rose 8.1% over the same period to $30.12 per hour – just 10 cents short of their all-time high in November – according to the BLS.
                            • Farm equipment is piling up on dealers lots as boom times fade for machinery manufacturers, Reuters reported in May. Declining farm income, stubbornly high interest rates, and low corn and soybean prices have led to a surplus of tractors and combines. As a result, farm equipment dealers are discounting machines, suspending new orders, and auctioning off equipment at reduced prices, according to Reuters. The current oversupply of farm machinery is quite a change from 2022, when industry giants Deere and CNH struggled to meet surging demand amid record-high farm income and pandemic assistance payments that gave farmers extra money to upgrade their fleets. The inventory glut has prompted some dealers to halt new orders from companies, including CNH, AGCO, and Polaris, to try to balance supply and demand. Moreover, used agriculture machinery inventory, the bulk of machinery sold in the US, is steadily increasing, dampening demand for new machinery.
                            • Net farm income – a broad measure of farm profitability – is projected to decline this year compared to 2023, according to the latest USDA Farm Sector Income Forecast. In inflation-adjusted 2024 dollars, net farm income is forecast to fall by $43.1 billion (27.1%) from 2023 to 2024, and net cash farm income is forecast to decrease by $42.2 billion (25.8%) compared with the previous year, If realized, both measures in 2024 would fall below their 2003-2022 averages (in inflation-adjusted dollars). Overall, farm cash receipts are forecast to decrease by $21.2 billion (4.2%) from 2023 to $485.5 billion in 2024 in nominal dollars. Direct government farm payments are forecast at $10.2 billion in 2024, a $1.9 billion drop from 2023. Total production expenses are forecast to increase by $16.7 billion from 2023 to $455.1 billion in 2024.
                            • Only 25% of US farms currently use connected equipment or devices to access data, putting them at a big disadvantage in today’s increasingly connected agricultural sector, according to a recent white paper by the Association of Equipment Manufacturers (AEM). “Without ubiquitous connectivity, the agriculture industry cannot fully embrace the new tools and technologies that will enable it to meet the productivity and sustainability demands of the future,” AEM writes. Underscoring the importance of connectivity, farm machinery giant Deere is investing billions of dollars in building out computer-assisted services for farmers and recently signed a deal with SpaceX’s Starlink business to connect tractors, seed planters, crop sprayers, and other equipment in areas that lack adequate internet service, The Wall Street Journal reports. The lack of Wi-Fi service is even greater outside the US, with over 70% of the acres farmed in Brazil lacking adequate connectivity, per WSJ.
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