Commodity Prices Are Down and Farm Expenses Are Up

A recent USDA report detailing that commodity prices were down and farm expenses were up came as no surprise to farmers across the country. Crop producers have been caught in a squeeze for the past couple of years as input prices have failed to drop as fast as commodity prices did. (You can read about it here and here…that second one also includes a very sobering graph.)

The fallout has certainly hit the farm equipment industry hard. Most manufacturers and dealers say sales of new machinery are down 25% or so. That’s no surprise, as many farmers bought new equipment when cash was flowing in, and can run it comfortably to weather the down cycle.

We’ve all seen lean times in the notoriously cyclical agricultural market, and we’ve seen that the people who weather the storm best are those who make every asset count. When it comes to machinery, proper maintenance is the golden rule.

For farmers who have some cash under the mattress, or are enjoying today’s high livestock prices, this is a great time to buy new or used equipment. This may also be a great time to scale up by buying some of the massive inventory of large trade-ins that haven’t been absorbed by larger farmers.

Tires can play important roles in enhancing productivity, too.

If you’re planning on hanging on to machinery you already own, it’s likely you’ll need to replace tires sometime. When you do, it pays to really think hard about the tires you choose—or even to think about investing in new tires sooner than you’d expected to, just to boost the performance of your equipment.

For instance, just switching from bias to radial tires can have huge impacts on costs and performance, including:

• Increasing fuel efficiency as much as 16%
• Improving tractor productivity by 13%
• Boosting drawbar pull by reducing wheel slippage up to 26%
• Increased tread life

Every one of those improvements goes straight to the bottom line. Then there are other benefits that are a little more subtle, but just as important. For example:

• Increased flexion (IF) tires can allow you to carry up to 20% more load on the same inflation pressure as comparably sized conventional radials, or to reduce inflation pressure by 20% under the same load. Very high flexion (VF) tires change those numbers to 40%. (Full disclosure: we have one of the world’s largest selections of IF and VF farm tires.)

• Flotation tires and choosing the most appropriate tread design for your soils and crops can help extend the season, allowing you to accomplish fieldwork or harvest in conditions that could keep neighbors out of their fields

• By operating at reduced inflation pressure and spreading load across larger footprints, flotation and IF/VF tires can minimize soil compaction. That can improve yield potential for years to come. (For more on soil compaction, download our free white paper.)

Of course, saving money is important, too. Buying tires out of season, purchasing from dealers with lots of inventory and negotiating on price can all help.