StoneX’s Ben Clevy says agricultural machinery demand is weak because farmers are squeezing capex, while seed, fertilizer, and crop-protection spending stay relatively sticky. Supply-chain and geopolitical shocks have raised risk, but he says OEM output has not yet been materially hit; the bigger near-term issue is delayed equipment replacement, not immediate production loss.
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This interview focuses on how rising farm input costs and geopolitics are affecting agricultural machinery OEMs and downstream food production. Host Johanna Bota speaks with Ben Clevy, senior research analyst at Benchmark, about the supply side and demand side of the machinery market. Clevy’s core point is that agricultural machinery is one of the most elastic farmer spending categories. Farmers still have to buy seed, crop protection, and much of their fertilizer, but they can delay replacing tractors and other equipment, or trade down into used machines. …
Tactically, the setup still favors weak near-term machinery orders and continued pressure on ag OEMs as farmers defer new purchases. Used equipment and aftermarket solutions are the immediate substitutes, while supply-chain shocks remain a risk rather than a confirmed hit.
Over the next few months, the likely path is continued softness in ag machinery demand unless farm incomes improve or input costs ease. A durable turn would need better crop economics or evidence that support payments are flowing into capex instead of just keeping farmers current on bills.
Structurally, this points to a farm-equipment cycle that is highly sensitive to input inflation and farmer profitability, not just replacement age. The longer-run regime risk is that persistent cost pressure, combined with weather and geopolitical shocks, raises food-security vulnerability even if output holds up in the near term.
Agricultural machinery is one of the most elastic categories of farmer spending.
He contrasts machinery with seed and crop protection, saying farmers can delay or trade down on equipment much more easily.
Higher diesel and fertilizer costs are worsening already-weak farm profitability.
He says these costs are making a bad income statement worse and forcing farmers to keep spending on inputs instead of equipment.
Large agricultural machinery demand is expected to fall 15-20% this year.
He explicitly gives a demand forecast for major OEMs such as Deere and CNH.
What are you seeing in terms of how rising input costs and supply chain pressures are translating into production decisions for major OEMs?
Ben explains that rising input costs (energy, steel) and trade disruptions from the US attacks on Iran have not materially impacted machinery output yet. OEMs are watching the risk closely, but there hasn't been a direct effect on supply levels so far.
How much have geopolitical tensions and energy shocks disrupted access to semiconductors and other key components for farm machinery?
Ben says semiconductor challenges in machinery predate the war and have been ongoing for years due to the high number of chips embedded in tractors. Other parts availability has also been affected by geopolitical tensions and energy shocks, but the impact hasn't been dramatic like during the post-pandemic supply chain crisis.
When farmers start tightening budgets, how does machinery spending compare to things like seed, fertilizer or crop protection?
Ben explains that machinery is one of the most elastic spending categories for farmers. Seed, herbicides, pesticides, and fertilizers have inelastic demand — farmers must buy them. But farmers can easily delay a machinery purchase by a year or trade down to used equipment, making machinery spending much more responsive to economic conditions.
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