The global farm machinery industry has suffered a significant downturn, with orders plummeting by 28% in 2024 compared to the previous year, according to a report by Tobias Ehrhard, CEO of the Machinery and Equipment Manufacturers Association of Germany (VDMA).
Ehrhard’s report paints a bleak picture, highlighting that farmers and contractors worldwide spent approximately €11.1 billion on machines, equipment, and software—far below previous expectations. While some in the Irish sector had hoped for a smaller decline of 15-20%, the reality suggests a steeper drop, potentially isolated to Ireland or reflecting misplaced optimism.
Declining Confidence in Machinery Investment
The downturn follows a period of sustained growth, with declining farmer confidence cited as a key factor. Many are opting to pause investments or avoid taking on additional debt.
One exception to the trend is specialist dairy equipment, where sales remained stable throughout the year due to strong milk prices. However, despite increased income, dairy farmers did not extend their spending to tractors and harvesters, which experienced steep declines. This raises concerns for manufacturers who had hoped that strong commodity prices would drive a market rebound.
Covid-Induced Demand Spike Leads to Excess Inventory
Ehrhard noted that the economic slump in 2024 was remarkably consistent across global markets. However, he dismissed weak commodity prices or harvest volumes as primary causes. Instead, he suggested that post-pandemic demand surged beyond sustainable levels, leading dealers to over-order stock to mitigate supply chain disruptions. Now, excess inventory must be cleared before normal trading resumes.
Cautious Outlook for 2025
VDMA forecasts a subdued 2025 for the agricultural machinery sector, though recent surveys indicate a slow improvement in industry sentiment. The recovery is unfolding unevenly, with the U.S. market still grappling with high inventory levels, while Europe is making faster progress in reducing dealer stock.
Meanwhile, South America is expected to see strong harvests and improved agricultural machinery sales. However, the report underscores that even favorable commodity prices do not necessarily translate into increased machinery investments.
Technology as a Lifeline?
Despite economic fluctuations, VDMA remains confident in technology as a driver of sustainable productivity in agriculture. Ehrhard emphasized that modern machinery, precision software, and digital solutions are essential for efficiency.
However, while industry leaders champion digitalization, many farmers remain resistant to an overreliance on technology, preferring hands-on field management over desk-bound farming. The hope that IT-driven solutions will single-handedly revive the machinery industry may ultimately prove unrealistic.