By Ed White
REGINA, Saskatchewan (Reuters) – All around a recent farm show in Canada, equipment salespeople struggled to swing deals with farmers worried about tariffs.
With some combines costing more than $800,000, a surprise price hike from a tariff would be a hit most farm budgets cannot easily take.
Canada was spared the Trump administration’s broad global tariffs on April 2 but faces tariffs on steel and aluminum exports to the U.S. as well as on autos not compliant with the United States-Mexico-Canada Agreement on trade.
As of Friday, Canadian farmers said they were unclear whether agricultural equipment is subject to the duties or to Canada’s retaliatory tariffs. Sorting out the details could take weeks.
Meanwhile, farmers’ appetite for new combines, tractors and other farm equipment has slumped, and manufacturers are pulling back.
In March, Case IH, an agricultural equipment manufacturer based in Racine, Wisconsin, and owned by global giant CNH Industrial, notified hundreds of workers in North Dakota and Minnesota of layoffs. The company did not immediately respond to a request for comment.
The uncertainty is scaring off farmers from buying equipment imported from the U.S., farmers and salespeople said in interviews.
In Saskatchewan, the Canadian province where much of the country’s spring wheat, canola and durum is grown for export, farmers will be very cautious about capital spending, said Bill Prybylski, president of the Agricultural Producers Association of Saskatchewan, with tens of thousands of members, as he gestured his thumb towards a giant green John Deere combine at the March farm show.
Elsewhere inside the show’s teeming halls, farmers kicked the tires and tracks of combine harvesters, seeders, sprayers and rockpickers they would love to buy, but few did.
Manufacturers, too, were grappling with fears of getting caught on the wrong side of a tariff.
“We have a lot of balls in the air right now and we don’t really know where they’re going to land,” said Derek Molnar, marketing director for rockpicker manufacturer Degelman Industries, in front of a display of his company’s bright yellow farm implements.
With machinery purchases often negotiated months up to a year or more before delivery, the risk that major tariffs could be plunked on a product when it arrives is too costly.
“We personally backed off” on buying new farm machinery, said Gunter Jochum, a Manitoba farmer. “We decided to hang on to our combines longer.”
Jochum, like most farmers, buys machinery from around the world: Claas combines made in Germany and the U.S.; American-made AGCO tractors and Case sprayer; a Canadian Bourgault seeder.
Due to “ongoing economic uncertainty and looming trade wars, equipment manufacturers on both sides of the border are recalibrating production downward,” said Kip Eideberg, a senior vice president at the Association of Equipment Manufacturers, which represents heavyweights like John Deere and Case IH.
Some 30% of U.S. agricultural equipment is exported, with Canada the biggest foreign market, Eideberg said.
“Tariffs will disrupt our North American supply chains, increase the cost for equipment manufacturers, and threaten tens of thousands of family-sustaining jobs.”
Jamie Pegg, general manager of Frontier, Saskatchewan machinery manufacturer Honey Bee, said the company would have to scale back production to avoid an inventory buildup if tariffs, or tariff fears, affected sales.
“Inventory is something that kills you,” he said.
For Canadian machinery dealers, uncertainty is “creating a terrible environment for business,” said Nancy Malone, vice president for Canada of the North American Dealers Association, whose members buy machinery, fertilizers and other big-ticket items to sell to local farmers.
Malone said she is lobbying the Canadian government to stave off any retaliatory tariffs from Canada on U.S. farm equipment.
Meanwhile, Malone said, paralysis would reign.
“We wait,” she said.
(Reporting by Ed White; Additional reporting by Tim Aeppel; Editing by Richard Chang)
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