MILWAUKEE, Wis. — Exports of U.S. agricultural equipment dropped 29.2 percent last year from 2013, for a total $8.51 billion shipped to global markets, primarily owing to lower grain prices from last year’s record crop, according to the Assoc. of Equipment Manufacturers (AEM).
"While a decline of nearly one-third is steep, the drop in U.S. ag equipment exports was not completely unexpected," an official AEM statement of Feb. 25 report read. "In 2014, a record harvest led to lower commodity prices and falling farm incomes, leading to a deterioration in farm economics worldwide. Lower crop prices caused an uneven market in Europe, while in Asia, the declines mostly focused on China."
In South America, the Brazilian market, which remains highly subsidized, experienced not only lower commodity prices, but also a delay in the government’s financing program.
"Overall, conditions for the U.S. remained more positive as it was supported by smaller equipment sales and an improved livestock/dairy sector," AEM analysis stated.
According to the report, all world regions recorded double-digit declines, except Central America. Leading the way were Asia, Europe and Canada, citing U.S. Department of Commerce data it uses in global markets reports for members. The report stated year-end 2014 U.S. ag equipment exports by major world regions, compared to year-end 2013, were as follows:
•Canada dropped 38.4 percent, for a total $2.64 billion
•Europe declined 30.8 percent, for a total $1.95 billion
•Central America decreased 7.1 percent, for a total $1.09 billion
•South America dropped 18.9 percent, for a total $1 billion
•Asia fell 34.9 percent, for a total $754.9 million
•Australia/Oceania fell 19.7 percent for a total $732.1 million
•Africa decreased 21.2 percent, for a total $348.7 million
In addition, the AEM stated the top 10 countries buying the most U.S.-made agricultural machinery during 2014 (by dollar volume) were:
•Canada – $2.64 billion, down 38.4 percent
•Mexico – $920.3 million, down 6.9 percent
•Australia – $640.1 million, down 22.1 percent
•Brazil – $407.2 million, down 21.2 percent
•China – $319.4 million, down 34.9 percent
•Germany – $292.8 million, down 37.7 percent
•South Africa – $241.1 million, down 20.6 percent
•France – $203.6 million, down 40.8 percent
•Russia – $198.1 million, down 34.7 percent
•United Kingdom – $174.4 million, down 16.3 percent
Ken Golden, director of global public relations for John Deere & Co. in Moline, Ill., said while the AEM report and Deere’s fiscal reporting don’t cover the exact same timeframe, "our results in 2014 were in line with the findings of the AEM report." (AEM appears to report on a calendar basis, while Deere’s fiscal year ends in October).
"After three record years of net income from 2011 to 2013, Deere experienced lower sales and net income in 2014," he said. "As we had forecast, this downturn has continued into 2015. In February, Deere reported results for our first quarter and provided our forecast for fiscal 2015.
"At that time, we said Deere’s worldwide sales of agriculture and turf equipment are forecast to decrease by about 23 percent for fiscal year 2015. Lower sales of farm equipment – both in 2014 and into 2015 – are the result of lower commodity prices and falling farm incomes. This has led to lower demand for agricultural machinery, especially for larger models."
At the annual meeting on Feb. 25, Deere Chair and CEO Sam Allen told stockholders the company could be facing the largest single-year sales decline in its history, with income at barely half of its 2013 peak.
"The reductions are due to sharply lower demand for agricultural equipment, especially for larger, more profitable models," Allen said. "Sales of this class of machinery are expected to be down by about 50 percent this year versus 2013 – more than in any downturn since the 1980s."
While the amounts fluctuate, Golden said the company’s export sales of U.S.-made equipment is about 15 percent of total equipment sales, with net sales of equipment operations in 2014 at about $34.9 billion. He said Deere has facilities around the world, serving customers in more than 130 countries.
Currently, he reported the company’s Harvester Works in Moline exports 1 in 4 combines; Davenport Works in Iowa exports 1 in 2 graders and 1 in 4 loaders; and Waterloo Works in Iowa exports 1 in 3 tractors.
He added the company is projecting the declines of 2014 to continue in 2015. On Jan. 23, the company announced indefinite layoffs of about 500 employees at its Deere’s Seeding and Cylinder facility in Moline; 565 at its three John Deere plants in Waterloo; and about 300 employees at the Des Moines Works plant in Ankeny, Iowa, where the company initially laid off more than 100 workers last August.
