The North American agricultural industry consists of production agriculture and hobby farmers, according to DLL’s head of global program management, food and agriculture, Ken Whitelaw.
In terms of the production agriculture segment, Whitelaw anticipates continuing challenges ahead, with 2025 mirroring the somewhat challenging year that has been 2024. Though, he emphasizes that
longer-term fundamentals remain strong.
“The increasing demand for food, along with anticipated efficiency gains, will likely keep the industry resilient through economic cycles,” Whitelaw says.
The U.S. Department of Agriculture’s Net Farm Income forecast for 2024 indicates a material decline. A year-over-year decline of $10.2 billion is expected in net farm income, and a $16.3 billion decline is expected of net cash farm income, this year. “However, when viewed over a longer historical timeline, this reduction appears more moderate,” Whitelaw says.
He points to the Association of Equipment Manufacturers’ September 2024 report, which shows an 8.1% decline in sales of 100+ HP two-wheel tractors, as an impact area of the this decline — it has directly affected equipment sales. “This has impacted dealers, many of whom are dealing with excess equipment inventory and aging wholesale finance balances,” Whitelaw says. “As supply chain issues have been resolved and equipment availability has improved, market dynamics have softened, leading to aggressive dealer pricing and competitive retail finance promotions.”
For those who play in the agriculture market, Whitelaw says the Net Farm Income — which depends on commodity prices, crop production, governmental support and costs associated with inputs, land rental and equipment — is an imperative resource. “Farmers, as long-term market participants, typically have strategies in place to weather these economic cycles,” Whitelaw says. “Despite the current headwinds, including the reduction in equipment sales and lower farm incomes, the value of agricultural land remains high, offering farmers a vital buffer in the form of equity.” •
