A decline in farm incomes, high interest rates and an uncertain economy have compelled farmers to reassess large expenses on agricultural machinery and forced dealers to limit inventory restocking.

U.S. farm income is expected to fall for a second consecutive year in 2024, as farmers grapple with corn and soybean prices hovering near four-year lows.

“Amid significant market challenges this year, we proactively adjusted our business operations to better align with the current environment,” CEO John May said.

For 2025, Deere expects net sales to fall about 10 per cent to 15 per cent across all its machinery segments.

A slump in equipment volumes has also forced smaller rivals CNH Industrial and AGCO to trim their profit expectations for the rest of 2024.

The world’s largest farm-equipment maker expects profit for fiscal year 2025 in the range of $5 billion to $5.5 billion (C$7 billion to $7.7 billion) , compared with analysts’ average estimate of $5.93 billion (C$8.26 billion), according to data compiled by LSEG.

Concerns around supply chains and a surge in demand led dealers to significantly increase their inventories last year, boosting sales for Deere.

However, amid the recent demand slowdown, skeptical dealers have slowed inventory restocking.

“As expected, farmers are pulling back on equipment purchases, given the growing P&L pressure, and that is reflected in Deere’s results and guidance for 2025,” said Chad Dillard, senior analyst at Bernstein.

“It is encouraging Deere is managing channel inventories and defending price.”

The company reported a profit of $4.55 per share (C$6.34) for the fourth quarter ended Oct. 27, above Wall Street expectations of $3.87 ($5.39), aided by lower production expenses and cost controls, sending its shares up 1.8 per cent before the bell.

Net sales from equipment operations fell nearly 33 per cent to $9.28 billion (C$12.93 billion), missing analysts’ estimate of $9.34 billion (C$13.01 billion).

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