Although the Canadian market for combines appears to be healthy, new data suggests there may be a shift on the horizon.
According to a recent news release from Alberta Agriculture and Irrigation, higher combine prices do not yet appear to have affected their sales in Canada. Increased market demand has driven higher sales each year since 2020. However, it noted, recent data suggests that combine sales, while strong on a year-to-date basis, tell a different story when measured year-over-year.
Good crop prices and record-high farm income may have previously buffered the effect of growing combine prices on buyer behaviour, the province said. That gravy train has since hit the brakes.
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“Surprisingly, recent data from the Association of Equipment Manufacturers show combine sales in Canada up 5.7 per cent year-to-date in July, while U.S. sales are down nearly 18 per cent year-to-date,” read the release.
“Sales in Canada for the month of July 2024, however, are nearly 28 per cent lower compared to July 2023. This may indicate tougher market conditions ahead.”
The release also noted the technology-rich nature of newer combines, which may be playing into consumer demand.
“The level of technology has increased dramatically and newer machines are equipped with GPS, computer sensors and a range of automatic features,” it noted.
Inflation, unsurprisingly, is also playing a major role. Although the price of a combine has increased in real terms, general inflation has also “contributed substantially” to increasing sticker prices, said the department.
The release also referenced the effect of the exchange rate between Canada and the U.S. As of Aug. 29, the Canadian dollar is worth 74 cents of a U.S. dollar, according to Google Finance.
“Many combines sold in Canada are manufactured in the U.S., and so the exchange rate has an effect on prices as well,” the release noted. “Combine prices seem to be more suppressed when the Canadian dollar is strong vis-a-vis the U.S. dollar, such as the period from 2010 to 2012, than when the Canadian dollar is weak.”
