Revving up: Machinery sales seeing uptick in Grand Forks area

Farm machinery sales for several dealerships across the U.S. are up from last year, and at least one Grand Forks dealership said it may be doing better than other parts of North Dakota and the country.

But farmers still are cautious as they wait to see this year's harvest or until they absolutely need to replace their machinery, experts say.

Sales for farm equipment in the area appear to be picking up, said John Oncken, co-owner and vice president of Grand Forks John Deere dealer True North Equipment.

"This region typically goes in first in terms of the down trend and then it comes out first," he said. "Sales have spiked in this region, and we're not seeing that in other areas to the extent that we would."

Sales have declined in recent years due to depressed crop prices, and a widespread drought in North Dakota stifled production in some areas, leaving farmers with tighter budgets.

But the Grand Forks area avoided dry conditions for most of the growing season, and the region's record of taking advantage of technology tends to help sales, Oncken said.

"We have always been predominantly a hotbed for technology, even before technology was called technology," he said. "I think we have a pretty robust group of producers who are trying to effectively manage their succession plans."

Increased sales

Dealers nationwide also are doing better than last year as a whole.

Across the entire company, John Deere had $6.83 billion in net sales for the third quarter ending in July, almost $1 billion more than last year's third quarter, according to its SEC report post at the end of August. Net sales for for the nine-month period ending in July also was up more than $1 billion.

Locally, True North has "solid numbers" for new machinery and is selling more used machinery than in recent years, said Dan Gorder, co-owner and president of the dealership.

"It's quite refreshing to get both those categories," he said.

CNH Industrial, whose machinery lines include Case IH and New Holland Agriculture, showed in its August report an uptick in net sales for the three-month period ending in June-roughly $6.7 billion compared with $6.5 billion for that period last year. Agco Corp. of Duluth, Ga., had $2.2 billion in net sales for its second quarter, an 8.5 percent increase from last year at this time, according to a late July news release.

West Fargo-based Titan Machinery fell behind last year's sales numbers, posting $167.9 million in the second quarter, according to its late August report. That was down $5.4 million from 2016. Overall revenues were down from last year.

Operating costs didn't decrease as much as anticipated, but the company appeared profitable. That was likely because of higher expenses on the international level and "lower restructuring savings in our agriculture and construction operations resulting from our decision to commit more resources to customer support," Titan Chairman and CEO David Meyer said in a statement.

The agriculture and construction equipment company announced earlier this year it would close 15 branches, including ones in Thief River Falls and Mayville, N.D., as part of a restructuring move amid low commodity prices. It also reduced its inventory by half over the last three years in an effort to reduce debt.

The buying crowd for Main Resource Auctions and Land Sales of Grand Forks has stayed steady, auctioneer Dennis Biliske wrote in an email. He hasn’t noticing a change in how much equipment is bought, but the buying attitude is better and sale prices are stronger than in previous years, he said.

“We had a nice little climb in wheat prices this summer that made people smile for a while,” he wrote. “Even though it’s been dry and getting dryer, the crop went in nicely, spraying went well and with the exception of some isolated storms, the region has had respectable weather, which makes it easier for farmers to get their work done, start to finish. A happy farmer is a better buyer.”

Back to normal

Comparing sales numbers to a few years ago can be misleading since the ag industry is "coming off a historic cliff," Oncken said. Ag commodity prices spiked in 2012 and 2013-some crops hit record highs or close to it.

Wheat went from $9.12 per bushel in July 2012 before crashing to $3.34 in September 2014. Corn peaked at $8.39 per bushel in July 2012 before falling to $2.80 in September 2014. Though prices have recovered slightly, they still are low-wheat sold for $4.46 as of mid-Friday while corn was at $3.53, according to the Chicago Board of Trade.

Machinery sales also climbed in the early 2010s, but the industry had never seen such a rapid fall as crop prices plummeted in 2014, Gorder said. The numbers have leveled off in the last couple of years, he added.

The two declined to give sales numbers for the Grand Forks area but said the increases are "big numbers," Oncken said. He described the uptick as returning back to normal.

"We're well on our way of getting out of that trough," Gorder said of the Grand Forks area. "We are well on to the road to recovery, which is outpacing other some other areas in the country."

Farmers have been cautious in spending money amid low commodity prices, said Andrew Swenson, a farm and family resource management specialist for North Dakota State University. Costs may have gone down, but farmers are uncertain about the future of ag prices.

It may be too early to tell if more farmers are going to come in for loans on equipment than last year, said Jim Dusek, community bank president with Wells Fargo's Grafton, N.D., branch. Producers are waiting to see what this year's crop brings them in revenue, he added.

"They would have to really need it, and they would be tough negotiators," Swenson said. "Yeah, they'll buy things, but they have to need it. It's not a want."