The agricultural machinery industry is bracing for a significant downturn, with major manufacturers like John Deere, Agco, and CNH Industrial reporting notable declines in demand. This trend has raised concerns about the future of farming operations and the broader agricultural economy, as these companies play a pivotal role in supplying the equipment necessary for modern agriculture.
John Deere, one of the most recognized names in agricultural machinery, is projecting a 20 to 25% drop in annual revenue. The company’s half-year results, which cover the period from October to April, show a 9% decrease compared to the same timeframe in 2023. In this period, John Deere generated sales of $27.4 billion (approximately €25.1 billion), with its agricultural machinery and precision agriculture divisions contributing $11.4 billion (€10.5 billion) to that total. Notably, this division is lagging 12% behind last year’s figures, reflecting a broader trend of reduced demand for new agricultural equipment.
John Deere operates on a non-standard fiscal year that ends on October 31, making its financial reporting schedule unique compared to its competitors. While the company has already released its half-year results, Agco and CNH Industrial are also grappling with similar challenges. CNH Industrial reported a revenue decline of 13% in the first half of 2024, bringing in $10.3 billion (€9.4 billion). Its agricultural division, which is the largest segment of the company, saw a particularly steep drop, with revenues down 17% from the previous year, totaling $7.29 billion (€6.67 billion). The construction and earth-moving machinery segment also faced a 14% decline, further compounding the company’s revenue challenges.
Agco, known for brands like Fendt, Massey Ferguson, and Valtra, is not immune to this downturn either. The company reported a 13.7% decrease in sales during the first half of 2024, with total revenues of $6.2 billion (€5.7 billion). Agco has highlighted that demand for new tractors in its three largest markets has fallen by an average of 8%, indicating a significant shift in purchasing patterns among farmers.
The implications of these declines are multifaceted. For farmers, reduced demand for agricultural machinery could signal a tightening of budgets and a shift in investment strategies. As manufacturers anticipate fewer machines being sold in the coming months, farmers may be more inclined to maintain existing equipment rather than invest in new purchases. This could lead to longer-term impacts on productivity and efficiency in agricultural operations, as aging machinery may not perform at optimal levels.
Moreover, the expected revenue declines across these major manufacturers could have ripple effects throughout the agricultural supply chain. Companies that rely on the sale of parts, service, and support for agricultural machinery may also see a decline in business, potentially leading to job losses and reduced economic activity in regions where farming is a primary economic driver.
As the agricultural machinery market continues to adjust to these changing dynamics, manufacturers are likely to explore new strategies to stabilize their revenues. This may include diversifying product offerings, investing in technology to enhance equipment efficiency, or targeting emerging markets where demand may still be robust. The landscape of agricultural machinery is shifting, and how these companies respond will be critical in navigating the challenges ahead.