John Deere is increasingly seeing 2026 not as another difficult year for agricultural equipment, but as a potential turning point.

The company’s latest results, released on August 20, point to an agricultural machinery market that remains uneven but may be moving toward the end of its current downturn.

Deere reported third-quarter net income of $1.379 billion, up from $1.289 billion a year earlier, while worldwide net sales and revenues rose 5% to $12.608 billion.

More significant for the machinery industry, however, is what Deere expects next.

The company now forecasts fiscal 2026 net income of between $4.75 billion and $5.00 billion, while CEO John C.

May said Deere continues to believe that 2026 will mark the bottom of the current agricultural equipment cycle.

That does not mean farm machinery demand is suddenly returning to boom conditions.

It suggests something more important: the industry may be approaching the point where deferred equipment purchases, improving inventories and investment in newer technology begin to support the next replacement cycle.

Deere Sees Evidence of a Cycle Turning

Agricultural equipment is highly cyclical. Farmers tend to increase machinery investment when commodity prices, farm income and financing conditions are favourable, but postpone purchases when margins tighten.

That creates a lag between a downturn in farm economics and the eventual impact on equipment manufacturers.

Deere says three developments are particularly encouraging: early order programme trends, improving used-equipment inventories and increased customer adoption of advanced technologies.

The used-equipment market is particularly important.

When farmers delay buying new tractors and combines, older machines remain in service for longer.

Eventually, however, the replacement decision becomes difficult to postpone, particularly for large commercial operations where equipment downtime can have significant financial consequences.

This dynamic means the bottom of a machinery cycle does not necessarily produce an immediate surge in sales.

It can instead mark the point where purchasing decisions stop deteriorating and begin building toward the next cycle.

The Recovery Will Not Be Uniform

Deere’s outlook should not be interpreted as evidence that every agricultural market is recovering at the same speed.

May specifically pointed to relatively stable U.S. market conditions alongside softer conditions in Brazil and Europe.

That distinction matters because the global farm machinery market is not a single market.

A large grain producer in the United States has very different machinery economics from a Brazilian soybean farmer, a European mixed farm or a commercial operation in Africa.

Commodity prices, interest rates, farm sizes, currency movements, government policies and access to finance can all change the timing of machinery purchases.

This makes the idea of a “bottom” more useful as an industry-cycle indicator than as a universal forecast of immediate sales growth.

Technology Could Change the Next Replacement Cycle

There is another important difference between the next machinery cycle and previous ones: farmers are increasingly being asked to justify equipment purchases not simply through horsepower or capacity, but through productivity.

Precision agriculture, automation, connectivity and machine data are becoming part of the investment equation.

That creates an interesting dynamic for manufacturers such as Deere.

A farmer replacing an old tractor may not simply be buying a newer version of the same machine. The purchase can provide access to guidance systems, data connectivity, automation and other technologies designed to improve how the entire farming operation is managed.

For manufacturers, that makes the technology installed on a machine increasingly important to the value proposition.

What Does the Turning Point Mean for Africa?

This is where Deere’s outlook becomes particularly interesting for African agriculture.

A global machinery recovery does not automatically translate into a rapid increase in equipment purchases across African markets.

In many parts of the continent, the bigger constraint is not necessarily the absence of machinery demand. It is the ability of farmers and agricultural businesses to finance machinery.

In an interview with Agrimachinery Africa, Kip Eideberg, Senior Vice President of Government and Industry Relations at the Association of Equipment Manufacturers, highlighted the issue directly:

“For African farmers the high upfront cost of equipment and limited access to affordable credit remain major barriers to modernization.”

That means Africa could enter the next global machinery cycle from a very different position.

While mature markets may be focused on replacing relatively recent equipment and upgrading to more advanced technology, many African agricultural economies still have significant unmet demand for basic mechanization.

The opportunity is therefore potentially larger than simply selling the newest tractors.

Africa’s Machinery Opportunity Is About Access

For African farmers, the critical question may be whether the next global machinery cycle produces equipment that is financially accessible, not merely technologically advanced.

That could increase the importance of smaller tractors, used equipment, machinery leasing, contract farming services and dealer-supported financing.

It also creates opportunities for manufacturers that can adapt products and financing models to local operating conditions.

A sophisticated 300-horsepower tractor may be highly productive on a large commercial farm, but it is not necessarily the machine that unlocks mechanization for a smaller agricultural enterprise.

The same principle applies to precision technology. Digital agriculture can create measurable efficiency gains, but farmers first need an economically viable pathway to acquire the equipment and technology.

A Cycle Bottom Is Not the Same as a Boom

Deere’s announcement therefore deserves attention beyond its quarterly financial performance.

The company is effectively signalling that the agricultural equipment industry may be moving from correction toward stabilization.

If 2026 does prove to be the bottom, the next phase could be driven by replacement demand that has accumulated during the downturn, improving used-equipment conditions and growing demand for machines equipped with productivity-enhancing technology.

But several risks remain. Deere itself points to factors including farm income, commodity prices, interest rates, trade policy, tariffs, currency movements and customer demand as variables that could alter the outlook.

For Africa, the story is even more nuanced.

The continent does not need to wait for a global machinery boom to demonstrate its mechanization potential.

Its challenge is creating the financial and commercial systems that allow farmers to participate when machinery becomes available.

If Deere is right that 2026 represents the bottom of the current cycle, the next question for Africa will not simply be whether the global farm machinery market recovers.

It will be whether African farmers can access enough capital, machinery and support to participate in the recovery.

That could determine whether the next global equipment cycle becomes merely a recovery for manufacturers—or a genuine opportunity to accelerate agricultural mechanization across Africa.

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Ask anyone who sells agricultural machinery in Africa what’s holding the market back, and you’ll rarely hear “farmers don’t want tractors.”

You’ll hear about deposits farmers can’t raise, loan terms that don’t match a harvest cycle, and lenders who won’t finance equipment they aren’t confident they could repossess if a loan goes bad.

That gap between real demand and a financial system that can’t safely meet it is, according to the Association of Equipment Manufacturers (AEM), the single biggest obstacle to mechanizing agriculture across the continent.

It’s also a solvable one, says Kip Senior Vice President of Government and Industry Relations at AEM.

Speaking after the release of AEM’s 2026 report on the economic impact of the U.S. equipment manufacturing industry, Eideberg laid out a case that should matter to every policymaker, financier, and equipment dealer operating in African markets: the technology to lift agricultural productivity already exists and is scaling.

What’s missing in many emerging markets is the financial infrastructure to get it into farmers’ hands.

What a $415 Billion Industry Can Teach Africa

AEM’s newly released report, produced with S&P Global Market Intelligence, puts hard numbers behind the U.S. equipment manufacturing industry’s footprint: 2.2 million jobs across all 50 states, $902 billion in total output, and $415 billion contributed annually to U.S. GDP.

Agriculture equipment alone accounts for 35% of that industry, generating an estimated $237 billion in total sales activity once direct, indirect, and induced effects are combined.

Behind those numbers sits a lesson Eideberg believes is transferable to any market trying to build a modern equipment sector, including Africa’s. Success, he says, depends on much more than manufacturers alone.

The U.S. industry thrives because it is supported by a broad network of suppliers, dealers, financiers, technology providers, training institutions, and skilled workers, all operating within a stable and predictable business environment, Eideberg explains, and AEM’s research shows that this surrounding ecosystem generates as much economic activity as the manufacturers themselves.

That framing matters because it reorients the conversation. Discussions about mechanizing African agriculture often start and end with equipment — which tractors, which brands, which local assembly plants.

But according to Eideberg, the equipment itself is the smallest part of the story; indirect and induced impacts, the suppliers, the dealer networks, the technicians, the financing arms, account for a substantial share of the U.S. industry’s overall economic contribution, and that supporting ecosystem is exactly what tends to be thinnest in emerging markets.

Manufacturers, Eideberg notes, are more likely to invest where there is regulatory certainty, access to financing, strong infrastructure, legal transparency, and open, competitive markets. He’s equally direct about what he believes doesn’t work.

Long-term competitiveness, he argues, is built through partnership between government and the private sector rather than through market-distorting policies such as forced localization, tariff and non-tariff trade barriers, or weak intellectual property protections.

For African governments weighing whether to mandate local assembly requirements or protect domestic manufacturers behind tariff walls as a shortcut to industrial development, it’s a pointed caution from an organization that represents the manufacturers those policies are meant to attract.

The Missing Middle: Suppliers, Dealers, and Financiers

Ask what actually determines whether a piece of equipment reaches a farmer’s field, and Eideberg points past the factory gate entirely.

Suppliers provide the components and materials, dealers connect customers with equipment and after-sales service, technicians keep machinery running, and financial institutions help customers access the capital required to purchase it in the first place, he says.

Strip out any one link in that chain and the equipment doesn’t move, no matter how strong demand is.

Financing is where Eideberg’s argument sharpens into something close to a diagnosis of Africa’s specific problem. Mining, agricultural, and construction equipment are high-value capital assets, he points out, and that is precisely what makes financing so critical.

In many developing markets, he says, demand exists, but purchases are constrained by limited access to credit, high financing costs, and legal uncertainty surrounding collateral and asset recovery.

“

For African farmers, the high upfront cost of equipment and limited access to affordable credit remain major barriers to modernization.

Kip Eideberg
Senior Vice President of Government and Industry Relations, AEM

That last phrase, legal uncertainty surrounding collateral and asset recovery, is worth sitting with. It’s not simply that African farmers and contractors are poor or that interest rates are high, though both are often true.

It’s that lenders in many African jurisdictions cannot be confident that if a borrower defaults, they can actually recover the tractor, excavator, or harvester that secured the loan. Repossession processes can be slow, contested, or effectively unenforceable.

Faced with that uncertainty, banks and equipment-finance companies respond the way lenders everywhere respond to unpriceable risk: they lend less, they lend at higher cost, or they don’t lend at all.

The result is a market where the demand side and the supply side of the equipment trade are both healthy — farmers want machinery, manufacturers and dealers want to sell it — but the financial plumbing connecting them is broken.

It’s a distinctly different problem from the one usually assumed, and it points to a distinctly different set of solutions.

Why AEM Is Backing the MAC Protocol

Asked what policy would do the most to change that picture, Eideberg doesn’t hesitate: ratification of the MAC Protocol, formally the Mining, Agriculture and Construction Equipment Protocol, an international commercial treaty designed specifically to de-risk equipment financing.

The Protocol, he explains, establishes a clear and transparent legal framework that protects creditors when financing agricultural, construction, and mining equipment.

By providing defined remedies in the event of default, including repossession, sale, leasing, and export of equipment, it reduces lending risk and increases confidence among financial institutions, Eideberg says, adding that those protections are underpinned by an international electronic registry that records security interests in equipment, giving lenders a transparent, searchable record of who has a claim on a given machine, the kind of legal clarity that’s often simply absent in domestic frameworks.

The mechanism by which this is supposed to help ordinary farmers is straightforward, even if it operates a step removed from the field.

When a lender knows it has an enforceable, internationally recognized right to repossess and resell equipment in the event of default, it can afford to offer better terms.

For many African farmers and businesses, Eideberg says, the high upfront cost of equipment and limited access to affordable credit remain major barriers to modernization, and by reducing financing risk, the MAC Protocol can encourage lenders to offer longer loan terms, lower financing costs, and more flexible leasing arrangements.

Notably, Eideberg frames adoption of the Protocol as close to a free policy win for African governments.

There is no cost for African governments to ratify the MAC Protocol, he stresses, and doing so would boost agricultural productivity across the continent while helping to combat food insecurity and the environmental degradation caused by unsustainable agricultural practices.

For treasuries and ministries of agriculture weighing competing priorities and limited budgets, a treaty ratification that costs nothing but could unlock private lending is a rare combination.

The knock-on effects Eideberg describes extend beyond individual farm loans.

Beyond improving equipment access, he says, adoption of the MAC Protocol can support the growth of domestic manufacturing and machinery-support industries: as demand for equipment increases, countries can attract investment in local assembly operations, component manufacturing, maintenance services, dealer networks, and skilled workforce development.

In other words, fixing the financing bottleneck doesn’t just move more tractors, it’s a precondition for the dealer networks, technician training programs, and local supply chains that AEM’s own U.S. data shows generate the bulk of an equipment industry’s economic value.

What Modern Equipment Actually Does for a Farmer

It’s worth being concrete about what’s being financed, because the case for the MAC Protocol is really a case for getting a specific set of technologies into more hands.

Eideberg describes a suite of tools that go well beyond horsepower.

Modern equipment technologies, he says, put data in the hands of farmers to better utilize the land already under cultivation; from preparation and planning to seeding and harvest, that data allows farmers to read soil moisture, texture, and temperature so they can make informed decisions on how and when to apply necessary inputs.

Auto-guidance systems, he notes, reduce overlap, avoid soil compaction, and prevent skipped field passes, while variable-rate technologies use sensors on equipment and attachments to map a farmer’s field so operators can visualize and optimize where certain areas need more, or less, seed, water, and fertilizer.

The pitch here is productivity gains without a corresponding expansion of farmland, a critical distinction in a continent where much of the highest-quality agricultural land is already under cultivation, and where expanding into new land carries real environmental cost.

At its core, Eideberg says, modern equipment can drastically improve agricultural land already under cultivation without relying solely on generational knowledge passed down from one farmer to the next about how to optimize each piece of land.

Importantly, he’s careful to note that this isn’t an all-or-nothing proposition requiring African farmers to leap straight to fully autonomous, sensor-laden machinery.

These technologies can scale up or down depending on the sophistication of the application and equipment, he says, and retrofits, interoperable technologies, and scalable equipment options can allow farmers to adopt solutions that fit their operation, crop, geography, and capital constraints.

A smallholder in Kenya’s Rift Valley and a large-scale commercial farm in South Africa‘s Free State don’t need the same equipment package; the technology stack, in Eideberg’s telling, is designed to meet farmers where their capital and operations actually are.

A Growth Market, If the Financing Follows

Eideberg is unambiguous that AEM sees Africa as a genuine long-term opportunity rather than a charity case.

The continent, he says, represents a significant long-term growth opportunity for equipment manufacturing due to its growing population, expanding infrastructure needs, and demand for improved productivity across the mining, construction, and agriculture sectors.

He believes many African markets already have strong underlying demand for modern equipment, with investment constrained primarily by financing challenges and legal uncertainty, the same diagnosis, restated as an opportunity rather than a problem.

As that demand is unlocked, Eideberg expects the ecosystem to mature in a fairly predictable sequence, with opportunities emerging for greater local assembly, regional supply chains, dealer development, service networks, and workforce training programs.

He also points to a role for deeper partnership between multinational manufacturers and local firms to build distribution, maintenance, and technical support capacity, the kind of on-the-ground presence that turns a one-off equipment sale into a durable, serviceable asset for a farmer or contractor.

Zooming out, Eideberg situates the African opportunity within a broader global pattern. Emerging markets everywhere face significant pressures, he says: population growth, climate change, environmental degradation, and disruptions in global supply chains are all increasing the need to grow more food with fewer inputs.

Precision agriculture, in his telling, is not a luxury add-on for wealthy farmers but a response to that pressure, a way to scale production safely and efficiently by making better use of the land already under cultivation.

He points to AEM’s own Benefits of Precision Ag study as evidence that higher productivity does not have to come at the expense of local environments, since technologies that optimize seed, water, fertilizer, and fuel use can raise output while cutting waste.

The Bottom Line for Africa’s Agricultural Machinery Market

Strip away the policy language, and Eideberg’s argument reduces to something fairly simple: the equipment exists, the demand exists, and the productivity case is proven in mature markets, but none of it reaches African farmers without a financial system willing and able to lend against it.

That’s not a manufacturing problem or a demand problem.

It’s a legal and financial infrastructure problem, and one that AEM argues has an unusually cheap fix in the form of a treaty that costs governments nothing to ratify.

For dealers, financiers, and manufacturers watching Africa’s agricultural machinery market, the message is that the next major unlock for the sector may not come from a new product launch or a new assembly plant, but from a signature on an international registry.

Whether African governments move to ratify the MAC Protocol, and how quickly lenders respond if they do, will be one of the more consequential storylines to watch across the continent’s equipment markets in the years ahead.

This interview was conducted with Kip Eideberg, Senior Vice President of Government and Industry Relations at the Association of Equipment Manufacturers (AEM), following the release of AEM’s 2026 report on the economic impact of the U.S. equipment manufacturing industry, produced in partnership with S&P Global Market Intelligence.

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• South Africa’s Next Farm Machinery Cycle Will Be Driven by Intensification, Not More Land

South Africa’s next agricultural machinery cycle may be shaped less by the expansion of farmland and more by the need to produce more from the land already under cultivation, according to the latest BFAP Baseline 2026 outlook.

That shift could favour machinery and technologies that improve productivity per hectare, from high-capacity tractors and combines to precision planting, automated irrigation and connected farm equipment.

BFAP does not forecast South African machinery sales. But its outlook for the agricultural sector points to a market where productivity is becoming increasingly important as farmers face constraints on land, water, labour and operating costs.

The underlying change is already visible.South Africa has about 15.8 million hectares planted to field crops, limiting the scope for agricultural growth to come simply from putting substantially more land into production.

At the same time, productivity has been rising. Maize yields have increased by an average 3.5% a year over the past decade, compared with 2.6% over the preceding five decades.

Machinery investment has been part of that productivity story. BFAP says machinery investment doubled between 2019 and 2023, while larger machinery units have helped farmers capture scale efficiencies within increasingly narrow planting and harvesting windows.

The result is an agricultural economy that is gradually asking more of every hectare — and, by extension, more of every machine working on it.

South Africa’s current three-year average maize yield stands at 6.28 tonnes per hectare, 36% above its level a decade ago.

BFAP also estimates that maize yield per millimetre of rainfall has increased by 312% since 1983.

Those numbers matter for machinery manufacturers because they show where the market is heading.

The opportunity is no longer simply to sell a farmer a machine capable of covering more hectares. Increasingly, the machine needs to help the farmer get more output, greater precision and better resource efficiency from each hectare already being farmed.

That changes the equipment equation.

A high-capacity combine can shorten the harvesting window. A precision planter can improve seed placement.

Guidance and automated steering can reduce overlap. Variable-rate technology can target inputs more precisely. Telematics can help farmers monitor machine utilisation and operating costs.The common denominator is productivity.

Horticulture could accelerate the shift

The case for intensification becomes even clearer in horticulture, where the economics of producing more from existing land are particularly strong.

BFAP expects horticultural planted area to remain relatively constrained after years of expansion, with future growth increasingly dependent on higher yields, improved cultivars, better production practices and technologies such as precision irrigation.

Citrus illustrates the point.

BFAP projects citrus planted area to grow by only about 0.5% annually, while gross production value is expected to increase by roughly 5% a year.

That gap between acreage growth and value growth is significant.

It suggests that a larger share of agricultural value will have to come from improving the productivity and profitability of existing orchards rather than continually expanding the planted area.

For equipment suppliers, that points towards a different type of opportunity.

The next investment may not always be a larger tractor. It could be a precision irrigation system, an orchard sprayer, harvesting equipment, automated handling technology or a digital system that allows growers to monitor crops and respond to problems earlier.

In other words, the value of machinery increasingly follows the value of the crop it helps protect or produce.

Water could become just as important as land

The same logic applies to water.

BFAP identifies water availability as a fundamental constraint on South African agriculture, while climate change is expected to increase pressure through higher temperatures and changing rainfall patterns.

Agriculture accounts for roughly 60% of national water consumption, making irrigation efficiency an increasingly important economic issue for farmers.

The machinery opportunity therefore extends beyond pumps and irrigation equipment.

It includes soil-moisture monitoring, automated irrigation, weather-linked systems, fertigation, remote controls and digital platforms that help farmers determine when and where water is needed.

The objective is not simply to move more water.

It is to produce more with every unit of water available.

That is increasingly the same productivity equation driving machinery investment across the farm.

Bigger machines will still have a role

The shift towards intensification should not be interpreted as a move away from large machinery.

BFAP’s analysis suggests that larger machinery has helped South African farmers capture scale efficiencies as operating windows become tighter.

That remains particularly important for grain producers.

When weather leaves only a limited number of suitable days for planting or harvesting, field capacity has a direct economic value. A machine that can cover more hectares in the available window can reduce delays and protect yield.

But horsepower alone is unlikely to define the next equipment cycle.

The more valuable proposition may be capacity combined with intelligence.

A high-horsepower tractor equipped with automated steering, telematics and precision implements can deliver capabilities that a similarly powered conventional machine cannot.

That also creates an opportunity for manufacturers to compete through technology rather than simply machine size.

Replacement demand could become more sophisticated

A land-constrained agricultural sector also changes the replacement market.

If farmers are not significantly increasing their cultivated area, manufacturers cannot rely entirely on additional hectares to generate equipment demand.

Replacement and upgrading become more important.

But the next replacement does not have to be a like-for-like purchase.

A farmer replacing an older tractor can move into a connected, precision-ready machine. An existing planter can be upgraded with more accurate application technology. Irrigation can be automated. A fleet can be connected through telematics.

That creates a market for productivity upgrades as well as new machines.

It also increases the importance of dealers and after-sales support. As equipment becomes more connected and software-dependent, diagnostics, training, technical support and parts availability become part of the value proposition.

The machinery market is moving beyond the field

The implications of intensification also extend into South Africa’s export-oriented horticulture sector.

BFAP expects exports to remain an important source of agricultural value, with citrus, table grapes and berries among the key products.

But producing more fruit is only part of the challenge.

Export crops have to be harvested, sorted, graded, packed, cooled and transported within tight quality windows.

BFAP highlights logistics, infrastructure, energy and market-access pressures as risks to horticultural profitability.

That broadens the equipment opportunity into the post-harvest chain.

Sorting and grading systems, pack-house automation, material-handling equipment, refrigeration, cold-chain systems and traceability technologies all become part of the productivity equation.

The machinery market is therefore becoming less about a tractor working alone in a field and more about a connected equipment ecosystem extending from production to export.

What this means for machinery manufacturers

BFAP does not provide a direct forecast for South African tractor or farm machinery sales.

But the direction of the agricultural economy provides several signals.

Farmers are likely to place greater value on equipment that can:

• increase field capacity during narrow operating windows;
• improve productivity per hectare;
• reduce water and input waste;
• improve labour productivity;
• provide real-time operating data;
• support climate-risk management; and
• protect crop quality beyond the field.

That favours precision-ready equipment, automation, telematics, efficient irrigation and specialised horticultural machinery alongside conventional tractors and implements.

It also suggests that the replacement market could become increasingly technology-led.

Productivity becomes the market

The central machinery story in the BFAP Baseline 2026 is therefore not simply how many tractors South Africa will need.

It is what farmers will expect those machines to deliver.

With limited scope for major increases in cultivated land, rising production costs and growing pressure on water resources, the economics increasingly favour equipment that can help farmers extract more value from every hectare, every machine hour and every unit of water.

South Africa does not necessarily need dramatically more farmland to increase agricultural output and value.

It needs to make the farmland it already has more productive, more efficient and more resilient.

For machinery manufacturers and dealers, that could make intensification — rather than land expansion — one of the defining forces shaping South Africa’s next agricultural equipment cycle.

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The global farm machinery market is entering a sharply divided phase.

In mature agricultural markets, farmers are delaying machinery purchases as weak farm profitability puts pressure on cash flow.

High-horsepower equipment, particularly machinery used by large row-crop operations, is bearing the brunt of the downturn.

But in Africa, the picture is markedly different.

While North America and Europe are experiencing a machinery downcycle, demand across African markets remains strong, particularly for tractors below 100 horsepower.

According to CNH, the African agricultural machinery industry is now more than 30% larger than it was three years ago, with East Africa and the Maghreb emerging as particularly promising growth regions.

The divergence suggests that the next phase of global agricultural machinery growth may not come primarily from traditional replacement markets. Increasingly, it could come from regions where mechanization is still expanding.

The global downturn may be a postponement, not a collapse

The latest equipment-market assessment from the Association of Equipment Manufacturers (AEM) points to significant pressure in the U.S. agricultural machinery market.

American row-crop farmers have experienced six consecutive years of financial losses, while fuel, fertilizer and other input costs have remained volatile. These conditions have made farmers increasingly cautious about committing capital to new machinery.

AEM says farmers still need new equipment, but many are extending replacement cycles and deferring purchases in order to preserve cash flow. Agricultural equipment shipments have continued to decline since their 2022 peak. And high-horsepower equipment has suffered the most.

AEM’s current data suggests that retail sales of high-horsepower equipment could finish 2026 between 18% and 25% below 2025 levels.

But CNH sees an important distinction between declining sales and declining underlying demand.

Valerio Domenici, Marketing and Business Manager for Africa and the Middle East at CNH Industrial, told Agrimachinery Africa that the company believes the current weakness is primarily a postponement of purchases rather than a fundamental collapse in demand.

“We strongly believe it is merely postponement of purchasing. The demand remains strong but we are simply in another downcycle moment of such demand.”

That distinction could prove important for manufacturers.

If farmers are postponing purchases rather than abandoning machinery investment altogether, the industry could eventually see a release of pent-up replacement demand when farm profitability improves.

High-horsepower machinery is under pressure in mature markets

The weakness is not confined to the United States.CNH says it is seeing similar pressure on high-horsepower equipment in other major markets, although the problem is concentrated primarily in North America and Europe.

“Yes, like every manufacturer,” Domenici said when asked whether CNH was experiencing similar pressure, adding that the weakness is mainly concentrated in North America and Europe.

AEM’s assessment supports that picture.

The average U.S. farm equipment fleet remains relatively young, making it easier for farmers to postpone replacement purchases while they deal with financial pressures. AEM therefore expects near-term demand to remain relatively flat.

The result is a market where the need for machinery remains, but the timing of purchases has shifted.

Financing cannot overcome weak farm economics

The machinery downturn also illustrates the limits of financing as a tool for stimulating equipment demand.

AEM reports that financed sales of both new and used agricultural equipment have continued to decline despite some reduction in interest rates over the past year.

The underlying problem is farmer profitability.

If farmers are not generating sufficient returns from their operations, cheaper financing alone may not convince them to commit to a major equipment purchase.

That helps explain why the current downturn could persist even as monetary conditions become somewhat more favorable.

Equipment inventories are beginning to normalize

There are nevertheless signs that the machinery distribution channel is becoming healthier.

AEM says manufacturers and dealers have adjusted to softer market conditions, with inventory turnover improving toward historical norms.

High-horsepower equipment currently represents approximately five months of inventory compared with a historical norm of four months, while low-horsepower equipment is approaching its normal six-month level.

The development does not mean demand has recovered.

Instead, it suggests manufacturers and dealers are becoming better aligned with the level of demand actually present in the market.

That reduces pressure on dealers, helps preserve asset values and limits carrying costs.

Africa is moving in the opposite direction

The contrast with Africa is striking.While high-horsepower equipment demand is under pressure in North America and Europe, CNH says African agricultural machinery demand remains very strong.

And the growth is being driven primarily by smaller tractors.

“Africa remain very strong,” Domenici said. “Mostly in the segment below 100hp.”

According to his assessment, the African agricultural machinery industry is now more than 30% larger than it was three years ago.

That represents a fundamentally different market dynamic from the mature agricultural economies currently experiencing a replacement-cycle downturn.

Africa’s machinery market is not primarily being driven by farmers replacing relatively young fleets. Instead, the industry is continuing to expand as mechanization reaches more agricultural operations.

The African tractor market is overwhelmingly concentrated around 50–80 hp

The difference becomes even clearer when looking at tractor horsepower.

While large farms in North America and Europe have traditionally supported substantial demand for high-horsepower tractors, African demand is concentrated much lower on the horsepower scale.

“Mainly small HP,” Domenici said. “Almost the entire industry is buying equipment between 50hp and 80 hp.”

There is a structural reason for this.

African agriculture remains highly fragmented in many markets, limiting the practical need for very large tractors.

“Africa struggles to increase the HP on tractor demand, and this is mostly due to fragmentation of land,” Domenici explained.

This creates an important distinction between the two markets.

In mature agricultural economies, the immediate question is often whether farmers will replace large machines already in their fleets.

In Africa, the question is more frequently about expanding access to mechanization with machinery that fits the size and economics of individual farms.

That makes the 50–80 hp tractor segment particularly important for manufacturers and distributors targeting the continent.

Africa’s growth is not simply a spillover from the Western downturn

One tempting interpretation of the current global market would be that weaker demand in North America and Europe could create opportunities for African buyers through cheaper or more readily available machinery.

CNH does not see a direct connection.

Asked whether the Western machinery slowdown could create opportunities for African buyers through greater availability of used machinery, more competitive pricing or financing, Domenici rejected the idea.

“I don’t see any relation between the economics and machinery currently running in the Western Countries and any opportunities for African buyers,” he said.

“Type of machines and its financing are totally different.”

That is an important qualification.

Africa’s machinery opportunity should therefore not be viewed simply as a consequence of weakness in mature markets.

The underlying drivers are different.

Africa’s machinery opportunity is structural

The African market has its own reasons for growing.

Mechanization remains a major agricultural development opportunity across the continent, while farmers, contractors and governments continue to seek ways of increasing productivity and reducing dependence on manual labor and animal traction.

The equipment requirements are also different.

Rather than simply replicating the machinery mix found in North America or Europe, African markets are developing around equipment suited to smaller and fragmented farms.

That helps explain why 50–80 hp tractors remain such an important part of the market.

It also means manufacturers that can provide appropriately sized, affordable and supportable machinery could be better positioned to capture Africa’s growth than companies simply attempting to export the largest machines used in mature agricultural markets.

East Africa and the Maghreb emerge as growth hotspots

Looking ahead, CNH sees particularly strong potential in two parts of the continent.

“East Africa and Maghreb seem to be the next big thing,” Domenici said, adding that growth is expected to continue at double-digit rates.

The assessment puts East Africa firmly on the radar of global agricultural machinery manufacturers.

Countries across the region are investing in agricultural productivity and mechanization, while demand for tractors and related equipment is being supported by commercial farming, smallholder mechanization initiatives and agricultural value-chain development.

The Maghreb presents a different but equally important opportunity, with established commercial agriculture and continuing demand for modern agricultural equipment.

For machinery manufacturers, the two regions could therefore become increasingly important as mature markets struggle through their current downcycle.

The replacement cycle could eventually turn

The global agricultural machinery market may therefore be approaching an important inflection point.

AEM’s data indicates that machinery sales have fallen significantly in some mature markets, particularly among high-horsepower equipment.

But CNH’s assessment suggests that the underlying demand has not disappeared.It has been deferred.

That means the current market weakness could ultimately create a large pool of postponed replacement purchases.

Once farm profitability improves sufficiently, farmers that have extended machinery replacement cycles may return to the market.

AEM is already seeing evidence that the industry may be moving from rapid contraction toward stabilization. The timing of the next recovery remains uncertain, however.

Two machinery markets, two different stories

The global agricultural machinery market can therefore no longer be viewed as a single story.

In North America and Europe, high-horsepower machinery is facing a significant downcycle as farmers protect cash flow and postpone replacement purchases.

In Africa, machinery demand is continuing to expand, with the strongest demand concentrated in smaller tractors.

CNH’s assessment that the African machinery industry is more than 30% larger than three years ago—and that East Africa and the Maghreb could maintain double-digit growth—provides a striking contrast to the weakness currently affecting mature markets.

The implication for equipment manufacturers is clear.

The next global machinery recovery will not necessarily be driven by the same markets or equipment categories that powered the previous cycle.

For mature agricultural economies, the next opportunity may come when deferred replacement demand is finally released.

For Africa, the opportunity is more fundamental: bringing more farmers into mechanized agriculture in the first place.

That could make Africa one of the most important growth stories in the global agricultural machinery industry over the next several years.

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The North American agricultural machinery market is still under pressure, but the latest sales data suggests something more nuanced than a simple collapse in equipment demand.

U.S. agricultural tractor sales fell 10.9% in July 2026 from a year earlier, while combine sales declined 5.3%, according to the Association of Equipment Manufacturers (AEM).

In Canada, tractor sales fell 7.8% and combine sales dropped 10.8% over the same period.

The July figures extend a difficult year for equipment manufacturers and dealers.

But beneath the headline declines is a more important signal: farmers appear to be becoming increasingly selective about where they commit capital.

That distinction matters for machinery manufacturers, dealers and exporters—and increasingly for Africa, where the machinery market is driven by a very different stage of agricultural mechanisation.

July confirms that the North American equipment cycle is still weak

The July results did not come out of nowhere.

AEM reported a 21.6% year-on-year decline in U.S. tractor sales in May, accompanied by a 56.1% fall in combine sales.

In June, the tractor decline moderated to 18.4%, while combine sales unexpectedly moved into positive territory, increasing 3.9% year over year.

July therefore brought another decline, but the pace of contraction in tractors was less severe than in May and June.

The progression is revealing:

The pattern does not describe a market moving in a straight line downward. Instead, it points to a market in which purchasing decisions are being delayed, reconsidered and made selectively.

That is consistent with AEM’s latest assessment. Curt Blades, AEM senior vice president, said the July data reflected “continued softness” as farmers and equipment manufacturers navigate persistent economic uncertainty.

He also stressed the importance of clear and consistent policy direction for farmers making investment decisions.

In other words, the issue is not necessarily that farmers no longer need machinery. It is that the timing and economics of purchasing new machinery have become more difficult to justify.

Canada provides an even clearer picture

The Canadian data supplied by AEM adds an important layer to the North American story because it breaks tractor sales down by horsepower.

In July, Canadian sales of 2WD tractors below 40 hp fell 8.6%, while the 40–100 hp segment dropped 12.6%.

But sales of tractors above 100 hp increased 4.9%.

That is a striking divergence.

Year to date, the same pattern is even clearer. Canadian sales of tractors below 40 hp were down 13.3%, while 40–100 hp tractors declined 4.8%. By contrast, 100+ hp tractors were 6.2% higher than during the comparable period of 2025.

The wider Canadian market looked like this:

The 100+ hp result deserves particular attention.

It would be wrong to conclude from the data alone that farmers are deliberately abandoning smaller tractors in favour of high-horsepower machines. AEM does not make that claim in the report.

However, the divergence is consistent with a market in which productivity-focused investments may be holding up better than discretionary or lower-utilisation equipment purchases.

For a large commercial farming operation, a high-horsepower tractor can represent field capacity, timeliness and the ability to cover more hectares during critical planting or harvesting windows.

When margins are under pressure, those productivity benefits can become more—not less—important.

That is an inference from the sales pattern rather than an explanation supplied by AEM, but it is precisely the kind of distinction worth watching.

The combine market is also sending a mixed signal

Combines tell a similar story of volatility.

Canadian combine sales fell 10.8% in July, but the year-to-date decline was only 1.9%.

The U.S. market has been equally uneven. After the extraordinary 56.1% decline in May, U.S. combine sales recovered into positive territory in June before falling 5.3% in July.

That volatility matters because combine purchases are often highly seasonal and influenced by harvest timing, fleet replacement requirements and individual farm investment cycles.

AEM itself cautions that its Canadian monthly data should be interpreted carefully because of the seasonal nature of the equipment industry.

The association describes the figures as preliminary retail sales derived from manufacturer reporting, with data subject to revision.

The right conclusion, therefore, is not that farmers have suddenly stopped buying combines.

It is that the market has become less predictable.

What is driving the caution?

AEM’s July statement points directly to persistent economic uncertainty.

That matters because machinery is one of the largest capital commitments on a farm. A producer can postpone the replacement of a tractor for another season if the existing machine remains operational. The same logic can apply to combines and other expensive equipment.

AEM’s monthly data throughout 2026 has repeatedly reflected softness in the agricultural equipment market. In April, for example, both U.S. and Canadian tractor sales were down 11.3% year over year, with AEM citing lingering challenges and uncertainty in the agricultural economy.

The result is a market where replacement cycles can stretch.

This is important for manufacturers. A farmer who delays a purchase has not necessarily disappeared from the market. That potential customer may simply move the transaction from 2026 to 2027—or opt for a different machine, a used unit or a repair of existing equipment.

For dealers, that makes inventory management particularly important.

For manufacturers, it raises a different question: which products will farmers continue to prioritise when budgets tighten?

The real signal: farmers are becoming selective

The Canadian horsepower data may provide one of the clearest answers.

Total tractor sales were down 7.8% in July, but 100+ hp tractors increased 4.9%. Four-wheel-drive tractor sales, meanwhile, fell 25%.

This does not mean that high-horsepower machinery is immune to the downturn. Nor does it establish why individual farmers made those purchasing decisions.

But it does show that the headline tractor number conceals substantial differences inside the market.

That is increasingly important for machinery companies.

A manufacturer with a broad portfolio spanning compact tractors, utility tractors, high-horsepower row-crop machines, combines and precision agriculture technologies could experience very different levels of demand across its product lines.

The same applies to dealers.

A weak overall market does not necessarily mean every category is equally weak.

Why this matters for Africa

This is where the North American numbers become particularly relevant to African agricultural machinery markets.

Africa is not at the same stage of mechanisation as the United States or Canada.

In mature North American markets, equipment purchases are largely connected to replacement, fleet optimisation, productivity upgrades and technology adoption.

Across much of Africa, the bigger opportunity remains mechanisation expansion: getting tractors, planters, harvesters, irrigation equipment and other machinery into farming systems that remain under-mechanised.

That difference means a 10.9% decline in U.S. tractor sales should not automatically be interpreted as a negative forecast for Africa.

African machinery demand is driven by a different combination of factors, including farm size, access to finance, government mechanisation programmes, contractor markets, food-production investment, import policies and the availability of affordable machinery.

In fact, a prolonged slowdown in mature equipment markets could eventually create opportunities for emerging markets.

Could a weaker North American market push manufacturers toward emerging markets?

This is one of the questions Agrimachinery Africa will be watching.

When mature markets become harder to grow, manufacturers naturally have greater incentives to pursue markets where mechanisation penetration remains low and long-term equipment demand has room to expand.

That does not mean Africa will immediately absorb machinery displaced from North America. Agricultural machinery is highly specialised, and equipment specifications, financing structures, dealer networks and operating conditions differ substantially between markets.

But manufacturers with globally competitive products may increasingly look at Africa as part of their growth strategy.

That could benefit African buyers in several ways.

Greater competition could encourage manufacturers to expand dealer networks. It could increase financing partnerships. It could bring more tractor models into African markets. It could also intensify competition between established Western brands and increasingly aggressive manufacturers from China and India.

For African distributors, meanwhile, a changing global equipment cycle could create opportunities to source machinery more competitively.

The bigger question is what happens next

July’s data should therefore be viewed less as a standalone sales report and more as another signal in a broader equipment cycle.

The immediate indicators to watch are straightforward.

First, U.S. tractor sales. If the year-on-year decline continues to narrow through the second half of 2026, the market may be moving toward stabilisation. If declines widen again, manufacturers and dealers could face a longer replacement-cycle slowdown.

Second, Canadian high-horsepower demand. The 100+ hp segment is one of the most interesting parts of the July report. Whether its 6.2% year-to-date growth can be sustained will provide an important indication of where commercial farm investment remains strongest.

Third, combines. The sharp month-to-month swings in U.S. combine sales demonstrate why several months of data are needed before drawing firm conclusions.

Fourth, manufacturer strategy. A prolonged slowdown in North America could make international markets increasingly important to manufacturers seeking growth.

And that last point matters greatly for Africa.

Africa may be watching the downturn differently

The North American agricultural machinery market is showing clear signs of softness, but the deeper story is not simply about fewer tractors leaving dealer lots.

It is about how farmers allocate capital when uncertainty rises.

The Canadian numbers are particularly instructive. Total tractor sales are down, yet the 100+ hp segment is growing.

Combine sales are down sharply in July but only marginally year to date. The U.S. tractor market is contracting, but the pace of decline has moderated from May to July.

This is a market becoming more selective rather than one moving uniformly in one direction.

For manufacturers, that means product mix, productivity and customer economics will matter increasingly.

For dealers, it means understanding which segments remain resilient.

And for Africa, it creates a potentially important strategic window.

The continent’s machinery market is still characterised by enormous unmet mechanisation demand. If manufacturers begin looking more aggressively beyond mature markets for growth, African distributors and farmers could find themselves with a wider choice of equipment, brands and business models.

The July AEM data does not prove that this shift is already happening.

But it provides another reason to watch it closely.

The North American machinery market may be cooling. Africa’s mechanisation opportunity, however, remains much larger than the sales numbers from mature markets might suggest.

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