Farm Credit Canada’s (FCC) latest report shows optimism in the future of agriculture. The demand for new farm equipment in 2016 started off slow but promising income projections suggest the market will turn the corner and slowly improve over the next two years.
The agriculture economics report released Tuesday forecasts a seven per cent recovery in total equipment sales for 2017, buoyed by projections of stronger Canadian farm cash receipts in coming years.
“The reason we are projecting a turn-around in new farm equipment sales is that cash receipts for various agriculture sectors are looking stronger,” said J.P. Gervais, FCC’s chief agricultural economist.
“Nothing is written in stone, but the key indicators are looking pretty good.”
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Gervais said equipment is among the most valuable assets for many farmers and is a great indicator for the state of the farm economy.
“While producers, manufacturers and dealers must exercise caution, strong demand for agricultural commodities, low interest rates and a stable Canadian dollar are all factors that should trigger improvement in the new farm equipment market,” Gervais said.
According to FCC, total equipment sales fell by 13.8 per cent in 2015 but they were in line with the 10-year average.
“Tighter margins in recent years have led several farmers to choose leasing over buying their agricultural machinery,” Gervais said.
“We’ve also seen new groups of producers in the market buying and sharing farm equipment.”
Additionally, FCC’s report projects crop receipts to grow 5.8 per cent this year, with a further 3.8 per cent increase in 2017.
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