By MICHELE F. MIHALJEVICH
Indiana Correspondent

MILWAUKEE, Wis. — Farm equipment sales were up in 2010, as farmers found themselves with more money to spend and new technology to spend it on, industry officials said.
According to the Assoc. of Equipment Manufacturers (AEM), which tracks two- and four-wheel-drive tractors and self-propelled combines, sales of farm tractors through November 2010 were up 5.1 percent over the same period in 2009. Sales of self-propelled combines through November 2010 were up 7.4 percent over the same period in 2009.
“Sales numbers have come back well, they’re close to 2008 numbers,” said Charlie O’Brien, vice president of agricultural services with AEM. “Tractors with less than 40 horsepower have been on a slide for several years but are up this year.
“They’re used mainly by weekend farmers who have a small acreage. They’re more like the consumer sector – they’ve tightened using discretionary dollars to purchase things. But with these numbers up, it seems like they’re kind of being optimistic about the economy.”
Sales of two-wheel-drive tractors with less than 40 hp increased 4.5 percent through November 2010 over the same period in 2009, according to AEM.
An increase in farm income has helped the overall optimism in the agricultural industry, O’Brien said, adding he expects that optimism to continue at least through the next six months or so.
“Last year (2009), there was a dip in several categories of equipment sales,” he explained. “Buyers of equipment saw gloom and doom in the newspaper and started to believe it regardless of what’s happening to you.
“On the plus side, they’re producing food, and that’s the one thing people need around the world. There will always be a need for food, and we’re seeing an increased demand for food.”
U.S. net farm income is forecast to be $81.6 billion in 2010, up 31 percent from 2009, according to the latest report from the USDA’s Economic Research Service. Net cash income is expected to be $92.5 billion, up nearly 34 percent from 2009.
Equipment sales in 2010 and 2011 will also probably be affected by the change in emission standards for diesel engines in off-road equipment, O’Brien noted. In 1996, the U.S. Environmental Protection Agency established a tiered system to lower particulate matter and nitrogen oxides from diesel engines.
Beginning Jan. 1, standards under Tier 4 I, or interim, took effect, requiring engines with 175-750 horsepower to produce 50-96 percent lower levels of these materials than produced in the existing generation of engines, according to the Diesel Technology Forum. The same standards will apply to 75-174 horsepower engines beginning in 2012.
Tier 4 final standards, which require even further reductions, will take effect in 2014 for 175-750 horsepower engines, and in 2015 for 75-174 horsepower engines, the Diesel Technology Forum stated. Tier 4 requirements apply only to new equipment and not retroactively to older machines or equipment.
“It’s going to be a really good observation to study the buyers of equipment,” O’Brien said. “An increase in fuel efficiency is a result everybody looks for. They want to be as efficient as possible with input costs.
“Farmers will do their research before they buy. This will be the latest cutting-edge equipment, but do they want that cutting edge? That depends on a person’s personality. A certain number of people will make sure the new engines are everything they say they are first.”
Case IH is benefiting two ways from the transition to Tier 4 technology, according to Duane Nelson, the company’s director of global communications.
“A percentage of the customer base will be interested in early adoption of new technology,” he explained. “Others will wait, thinking ‘Let them be the first.’ That’s true of anything, and is true in agriculture.

“There has been a significant increase (in demand) for Tier 3 technology. They’re thinking they’ll get in on buying a new model with technology they know and like so much. That did drive sales in the third and fourth quarters.”
The company also has the strongest order book in the company’s history for Tier 4 technology, Nelson noted.

Case IH announced in early December it had shipped the world’s first tractor that met Tier 4 interim requirements. The engine in its Magnum Series tractor uses selective catalytic reduction (SCR) to reduce emissions while boosting power, the company stated.

Unlike previous technologies, which made modifications at the point of combustion, SCR technology treats the exhaust outside of the cylinder, leading to an increase in production, better fuel economy and better power, Nelson noted.

Maintenance of the new engines will be less, he said, adding the company has doubled some maintenance intervals. For example, the hour life is doubled on such things as oil changes and filters.

John Deere officials opted to use exhaust gas recirculation (EGR) technology in its Tier 4-compliant engines. The technology recirculates a portion of the exhaust gases back into the combustion chamber, which has the effect of lowering the combustion temperature and reduces formation of nitrogen oxides, according to the Diesel Technology Forum.

Customers of Stevens Implement Co., a John Deere dealer in Petersburg, Ill., started placing orders last year for the new equipment, with delivery this year, said Drew Stevens, the company’s vice president. “The new ones are going over really well,” he said. “We’re optimistic about 2011. Our customers have a positive attitude about their ability to market their crops at good prices. 2010 was a good year and things look good going into 2011. What’s good for the farmer is good for us.”

EGR technology uses a single fuel and is based on the same engines as before, meaning customers can count on documented performance and simplicity, Stevens noted.