US Agricultural Export Market Report from TractorExport CEO Steve Massey

At TractorExport, we are pleased to report that our African sales and operations have increased dramatically over the past two years. This is part of the continuation of an upward trend in the agricultural industry overall and especially in US agricultural export sector growth.

Due to the boon in the US agricultural sector market, US agricultural equipment purchases have also escalated. The USDA forecast projects US farm net income for 2012 will ultimately be 47% above the 2002-2011 average of 83.8 billion.
US Agricultural Equipment Exports

This industry boon has had a positively dramatic effect on US agricultural equipment sales. The Association of Equipment Manufacturers (AEM) reports that tractor and combine sales continue their upward trend. Reported February year to year increases are:
Row Crop Tractor sales: up 27.2%
• Four Wheel Drive Tractor sales: up 37.9%
• Midrange Tractor sales: up 5.8%
• Compact Tractor sales: up 17.2%
AEM also indicated combine sales from January on a year to year basis have increased 16.9 percent.

Significance of the Data
Used agricultural equipment inventory is up. John Deere agricultural equipment dealers are receiving high incentives from the manufacturer to move new equipment. New equipment means more trade ins. More trade-ins mean a higher level of used inventory at the dealer lots. All of these factors translate into a higher level of export sales because the US domestic market cannot absorb the increased level of used John Deere combines and used John Deere tractors.

Consequently, exports of US made agricultural equipment increased by 16 percent in 2012 compared to the previous year for a total of $12.8 billion according to a US commerce report cited by AEM.
Top Agricultural Export Destinations
The top three agricultural equipment export destinations are listed as:
• Canada: 4 billion
• Australia: 1.1 billion
• Mexico: 959 million

It is worth noting that Africa had the highest overall growth segment increase according to AEM. US exports to Africa increased 33 percent compared to the previous year’s sales of 442 million.
Exports of US agricultural equipment to South America gained 19 percent to 1.5 billion. Central American exports gained 15% to 1.2 million.

The Bigger Picture
The US export growth rate of agricultural equipment worldwide in 2011 was 23 percent. In 2010 the worldwide growth rate was 12 percent. Worldwide exports declined in 2009 by 23 percent.
In a related industry summary AEM Senior Vice President Charlie O’Brien was quoted as saying: “while global pressures have affected export sales of US agricultural machinery, we are optimistic that worldwide sales will remain positive. Commodity prices overall have been solid, and there is continued demand for the latest equipment to improve productivity.”

Impact on TractorExport Clients
What this analysis means for African and South American farmers is that the supply of quality used John Deere agricultural equipment and used Case agricultural equipment will continue. Fueled by increased profits and incentives from manufacturers to buy the newest gear, US farmers will keep trading in their low hour used combines and tractors as part of the purchase of the latest models. This means that the supply of low hour tractors and combines will remain robust. For TractorExport’s customers, it means that we will be able to source high quality equipment at very competitive prices through the remainder of 2013.

The top 10 export destinations for American-made agricultural machinery in 2012 by dollar volume:
(1) Canada – $4 billion, up 18%;
(2) Australia – $1.1 billion, up 5%;
(3) Mexico – $959 million, up 19%;
(4) Brazil – $729 million, up 41%;
(5) Germany – $497 million, up 9%;
(6) China – $468 million, up 42%;
(7) Ukraine – $382 million, up 30%;
(8) France – $370 million, up 18%;
(9) Russia – $334 million, up 42%;
(10) South Africa – $315 million, up 47%.

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