“The financial year 2021 showed: We are on the right track. With strategic and proactive crisis management we protected our employees from infection in the best possible way, supplied our customers reliably and continuously, and presciently managed challenges such as the disruption of global supply chains in the pandemic. The positive underlying business performance provides both planning security and a sound financial foundation for our transformation into a provider of sustainable solutions. Our customers are demanding such solutions – and we are ensuring that the shift to new types of climate-friendly system solutions can be realized.”

emphasized Andreas Schell, CEO of Rolls-Royce Power Systems.

Significant economic recovery

Power Systems has ended the 2021 financial year with an underlying operating profit of £242 million (€282 million) (2020: £188 million, €212 million). The underlying revenue increased by 3%

to £2,749 billion (€3,199 billion) (2020: £2,735 billion, € 3,077 billion). In the currency used for reporting (British Pound Sterling), revenue appears almost unchanged due to currency rate effects. The underlying operating margin increased to 8.8% (2020: 6.5%). With this, the Rolls-Royce division significantly increased its profit in the second year of the pandemic despite challenging conditions. Order intake of £ 3.3 billion increased by 24% compared to the previous year. The order backlog reached a record £2.8 billion (€3.4 billion) at the end of the year.

“Current factory utilization is proof of returning confidence and intend to invest across all segments”,

said Andreas Schell.

Sustainable solutions operationalized

Power Systems has reorganized the company into four business units with the introduction of a matrix structure in April 2021. In addition to the existing business in “Mobile Power Solutions” and “Stationary Power Solutions“, there is a new business unit for the Chinese growth market: “Power Solutions for Greater China”. The new unit “Sustainable Power Solutions” focuses exclusively on developing sustainable and climate-friendly systemic solutions across all application areas.

In 2021, as part of Rolls-Royce’s Net Zero strategy, Power Systems published its detailed roadmap to carbon neutrality “Net Zero at Power Systems“: from 2030 on, newly supplied products will reduce the product portfolio’s greenhouse gas emissions by 35% compared to 2019.

Hydrogen solutions as an essential component of the energy turnaround

In Berlin and Friedrichshafen, Power Systems is vigorously developing solutions based on hydrogen, the fuel of the future.

“We see ourselves not only as a manufacturer of products that run on hydrogen, but consider the entire hydrogen ecosystem in our development, in line with the concept of integrated end-to-end solutions,”

explained Andreas Schell.

The mtu fuel cell element for climate-neutral energy supply had its world premiere at the UN Climate Conference COP 26 in Glasgow at the end of 2021. A fuel cell demonstrator is in an ongoing operation in Friedrichshafen. From 2025, the company plans to have series-manufactured fuel cell systems in the megawatt range.

Power Systems is providing the first hydrogen-powered mtu energy supply system as part of a lighthouse project for the reconstruction of a terminal in the port of Duisburg, Europe’s largest inland port. Three mtu fuel cell systems and two hydrogen-fueled mtu thermal power stations will supply the new container terminals with CO2-free energy from 2023.

“In Duisburg, our products and solutions are essential components in a climate-neutral solution that paves the way to a carbon-free future,”

said Andreas Schell.

Investments and partnerships to further expand the sustainable offer

The British technology group, Rolls-Royce, supports this strategy and is prioritizing investment in more sustainable solutions and is allocating €400 million to support the growth of the “Sustainable Power Solutions” business unit of Power Systems. This investment will expand the development capacities for new technologies and solutions, as well as support further partnerships and potential acquisitions.

“This illustrates the confidence Rolls-Royce Group has in our capacity to realize significant value from our transformation towards climate-friendly technologies. This confirms our course,”

underlined CEO Andreas Schell.

Power Systems has made investments of around € 120 million in its 20 most important projects in 2021. This includes a new test stand for the company’s engines in China enhancing further its local presence. Several partnerships illustrate the multifaceted transformation into a solution provider: Together with investment company SDCL, Rolls-Royce will offer all-in-one energy solutions to customers who neither own nor operate the plants themselves.

In September 2021, Rolls-Royce Power Systems and yacht manufacturer Ferretti announced their deepened partnership for the development of sustainable solutions for modern yachts. NautiQ, a new bridge-to-propeller marine automation system, was unveiled as a result of the acquisition of the former Servowatch company.

“In the future, Power Systems will be increasingly partnering and developing system solutions together with our customers and in ecosystems that go far beyond what we offer today,”

said CEO Andreas Schell.

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U.S. total farm tractor sales gained 0.3 percent for the month of December compared to 2020, while U.S. self-propelled combine sales for the month saw a gain of 25.3 percent. Those gains contributed to a total gain for the year of 10.3 percent for tractors, and 24.7 percent for combine harvesters. For the year, the only segment in either the U.S. or Canada that gained less than ten percent was sub-40hp tractors in the U.S., growing 8.9 percent. The overall growth leader for tractors in the U.S. was 100+hp 2WD tractors, growing 24.1 percent, followed by articulated 4WD tractors, up 18.3 percent. A total of 317,897 tractors and 6,272 combine harvesters found new homes in the U.S. in 2021.

In Canada, sales of tractors for the month of December grew 10.5 percent, while combines fell 17.6 percent year-over-year. However, total sales for 2021 were up 19.4 percent for tractors, and up 23.1 percent for combines. The slowest-selling segment in Canada, the 40-100hp 2WD range of tractors, grew an impressive 14.4 percent for the year, while the leading segment, 100+hp 2WD units grew 33.6 percent, followed closely by articulated 4WD units up 32.7 percent. A total of 33,463 tractors and 1,786 combine harvesters were sold in Canada in 2021.

“Seeing gains in the double digits across North America year-over-year for both tractors and combines is great for equipment manufacturers. Sales gains over an already-successful 2020 came despite the supply chain issues and workforce challenges that made 2021 a challenging year for manufacturers. Our industry is working hard to navigate these supply chain challenges to deliver equipment and parts to farmers as they approach the 2022 growing season,”

said Curt Blades, senior vice president, industry sectors & product leadership at the Association of Equipment Manufacturers.

The full reports can be found in the Market Data section of the AEM website under Ag Tractor and Combine Reports.

Source: AEM

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U.S. total farm tractor sales climbed a healthy 8.7 percent in November compared to 2020, while U.S. self-propelled combine sales saw a gain of 37.8 percent, the fourth month in a row of growth near or above 20 percent for harvesters. All segments except articulated 4WD units grew in the month, led by the 100+hp segment, up 30.9 percent. Articulated 4WD units fell 23 percent on the month but remain more than 17 percent positive year-to-date. Year-to-date farm tractor sales are up 11.3 percent and combine growth climbed to 25 percent.

For Canada, November was a mixed bag, with tractors climbing 1.3 percent in aggregate, while harvesters fell 56.8 percent, bringing combined tractor and combine sales down 0.7 percent, or 18 total units. Segment-by-segment, sales in Canada were like the U.S., with articulated 4WD sales falling 52.8 percent, while 100+hp 2WD units led gains at 20.2 percent. The only segment difference was sub-40hp units which fell 2.5 percent in Canada while growing 6.8 percent in the U.S. Still, both tractors and combines remain above 20 percent growth year-to-date in Canada, with tractors up 20.5 percent, and combines up 28.1 percent.

“Both tractors and combines continue to see year-to-date growth in the double-digits demonstrating that farmer demand and optimism remains strong. While supply chain issues are still causing some bumps, our members continue to do all they can to deliver the parts and products to the market,”

said Curt Blades, senior vice president, industry sectors & product leadership at the Association of Equipment Manufacturers.

The full reports can be found in the Market Data section of the AEM website under Ag Tractor and Combine Reports.

Source: AEM

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Third-quarter sales in the Agricultural Products segment were $4,660,000 compared to $3,671,000 during the same period of fiscal 2020, an increase of $989,000, or 26.9%.  Year-to-date Agricultural Product sales were $12,017,000 compared to $9,695,000 during the same period in fiscal 2020, an increase of $2,322,000, or 24%. The company attributes the large increase in revenue to a strengthening agricultural economy that is producing five to ten-year highs in commodity and livestock prices along with government assistance programs that provided farmers with much-needed government assistance during the COVID-19 pandemic.

The company saw a 71% increase in grinder mixer sales year on year, a 60% increase in beet equipment, and is showing a 13% increase in manure spreader sales year on year. Art’s Way is seeing continued demand in the fourth quarter with the current ag backlog up 269% from a year ago. Supplier delays have improved but are not gone completely. Further price increases before the company’s early order program will be necessary to maintain strong margins on products.

Consolidated net income was $56,000 for the three-month period ended Aug. 31, 2021, compared to a net loss of $(424,000) for the same period in fiscal 2020. Consolidated net loss for the nine months ended Aug. 31, 2021 was $(195,000) compared to $(1,663,000) for the same period in fiscal 2020. Art’s Way has now reported two straight quarters with net income. The overall health of the agricultural economy has stabilized its primary business segment while operational improvements have increased productivity in this time of high demand.

President and CEO of Art’s-Way, David King reports,

“I am very pleased with our third-quarter performance as the company continues to see positive results from our operational improvements. Our team continues to show impressive execution despite the challenges of supply chain disruptions, shortages of skilled labor, and inflationary pressures. To address these ongoing issues our team is working closely with suppliers to ensure delivery of critical parts, deploying industrial robots to alleviate labor shortages, and implementing new pricing to offset escalating costs.  Favorable market conditions increased sales, and a strong backlog supports our positive outlook for the fourth quarter of 2021 and the first half of 2022.”

Source: Art’s Way

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U.S. total farm tractor sales climbed 2.5 percent in September compared to 2020, while U.S. self-propelled combine sales jumped 34.6 percent, the third month in a row of growth near or above 20 percent for harvesters. The sub-40hp stayed moderately positive, growing 0.4 percent, while the mid-size 41-100 hp segment was up 2.4 percent. Heavy-duty units saw another big month, with 100+hp units up 23 percent, however, the articulated 4WD segment slowed just 1.3 percent. Year-to-date farm tractor sales remain up 12.2 percent and combine growth moved up to 17.3 percent.

For Canada, September monthly tractor and combine sales were mostly positive as well, with both ag tractors and combines finishing the month in the black. The sub-40hp segment was up 13.5 percent while the biggest growth sector combined harvesters, up 23.5 percent to 142 units sold. Total farm tractor sales were up 7.2 percent despite a 24.3 percent miss on articulated 4WD units.

“The continued growth in ag tractor and combine sales is is good news for the ag equipment industry. Year-to-date, every segment is up double-digits over last year, which was already a high-growth year. We look forward to these trends continuing through the rest of the year, and into the next,”

said Curt Blades, senior vice president of agriculture services at the Association of Equipment Manufacturers.

The full reports can be found in the Market Data section of the AEM website under Ag Tractor and Combine Reports.

Source: AEM

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In response to the economic turmoil from COVID-19, Congress passed six economic relief and stimulus bills in 2020 to provide financial assistance to farm businesses and farm households. USDA and other government agencies worked to implement authorized programs in 2020 and 2021.

Farm Sector Income During the Pandemic

The USDA Economic Research Service (ERS) releases farm income and financial forecasts three times per year. How the coronavirus (COVID-19) pandemic affected the 2020-21 farm financial indicators is reflected in the current farm income estimates and forecasts, released on September 2, 2021.

During the pandemic, the farm income outlook evolved because of changing conditions, including changes in commodity prices, production, and government support. For example, projections for the value of agricultural sector production, a key component of farm income, shifted throughout 2020 and 2021.

In early February 2020, just prior to the outbreak of the pandemic in the U.S., the combined value of production for eight major crops—barley, corn, upland cotton, oats, rice, sorghum, soybeans, and wheat—for the crop year 2020/21 was forecast at $108.8 billion based on price and production quantity projections from USDA Agricultural Projections to 2029. Starting in May 2020, the World Agricultural Supply and Demand Estimates (WASDE) report had price and production projections for the crop year 2020/21 and with the June 2020 WASDE report, the combined value of production forecast was revised down 5 percent, to $103.7 billion.

Three months later, in September 2020, the forecast was revised up, to $110 billion, 1 percent above the pre-pandemic February 2020 forecast. With the May 2021 WASDE report, the 2020/21 crop year price and production projections became estimates, and the value of production was estimated at $128.0 billion, 18 percent above the February 2020 forecast. Most of the upward revisions in September 2020 and May 2021 were because of higher commodity prices rather than changes in production quantities. Any further revisions to the WASDE data for 2020/21 after May 2021 are likely to be small.

The 2020 forecast for the combined value of production of six major animal/animal products (beef, pork, broilers, turkeys, eggs, and milk) fluctuated throughout the 2020 calendar year but remained lower than the pre-pandemic forecast. The pre-pandemic January 2020 forecast of the combined value of production for beef, pork, broilers, turkeys, eggs, and milk was $144.1 billion. In June 2020, that forecast was revised to $17.9 billion (12 percent). The September 2020 forecast was slightly higher than the June forecast at $127.5 billion. By May 2021, the value of production was estimated at $131.3 billion, 9 percent below the pre-pandemic January 2020 forecast.

For the farm income forecasts, ERS creates calendar-year forecasts of cash receipts and value of production based on the WASDE and other data.

Federal Financial Assistance to the Agriculture Sector

In response to the economic turmoil from COVID-19, Congress passed 6 economic relief and stimulus bills in 2020. Using the authority from one of the bills, the USDA created the Coronavirus Food Assistance Program (CFAP), which was specifically targeted to farm operations. Other Federal departments and agencies created more general programs for which some farm operations were eligible, such as the Paycheck Protection Program (PPP), or expanded eligibility to the agriculture sector (such as expanded eligibility for the Economic Injury Disaster Loan Program (EIDL)).

Coronavirus Food Assistance Programs

USDA developed and implemented two rounds of funding for the Coronavirus Food Assistance Program. We refer to the original round as CFAP 1 and the second round as CFAP 2. Both rounds combined provided $23.5 billion ($10.5 billion from CFAP 1 and $13.0 billion from CFAP 2) in direct payments to farmers and ranchers in 2020. CFAP provided direct payments to producers who faced market disruptions, increased production costs, and reduced farm-level prices.

Payments reported on farmers.gov at the end of 2020 from both rounds of CFAP totaled $11.5 billion for producers of animal and animal products and $12.0 billion for crop producers.

The USDA website provides additional details about CFAP programs, including current levels of payments under CFAP1 and CFAP2 by commodity and State.

USDA Pandemic Assistance to Producers

On March 24, 2021, USDA announced a new initiative, USDA Pandemic Assistance to Producers, to provide financial assistance to producers who felt the impact of COVID-19 market disruptions. USDA is dedicating at least $6 billion to this initiative that aims to reach a broader set of producers than in previous COVID-19 relief programs. USDA has made additional payments to producers under existing CFAP programs and also rolled out new programs under the initiative. More information about USDA Pandemic Assistance to the sector, including direct payments to producers, may be found on the farmers.gov website.

While much of the assistance is to be paid directly to farmers, the initiative includes some provisions for funding research, training, and outreach. And some payments are not targeted for farm operations. In the ERS farm income statistics, only direct, financial assistance to agricultural producers is included as income.

Paycheck Protection Program

The Paycheck Protection Program (PPP) is a program implemented by the Small Business Administration (SBA) and intended to help small businesses—including farm operations—keep employees on the payroll and/or bring back furloughed or laid-off workers. To be eligible, a business needed to either have positive employee payroll costs or positive income, and the loan would be forgiven if used to meet the program criteria.

Under this criteria, 2019 ARMS data indicated that 72 percent of all family farm operations would have been eligible to receive a PPP loan. Using publicly available data from the SBA, we found that in 2020 the agriculture sector received $6.0 in PPP forgivable loans. The crop sector received $3.9 billion (65 percent of the total) and the livestock sector received $2.1 billion (35 percent of the total). In 2021, farms received $8.7 billion in forgivable PPP loans based on SBA data through June 30, 2021.

COVID-19 Related Assistance for Family Farm Households

Farm households may be affected by the pandemic through loss of wages and benefits from off-farm jobs or off-farm businesses that supplement income from farming. Family farm households could receive Federal COVID-19 related financial assistance from two main sources: Economic Impact Payments and Federal Pandemic Unemployment Compensation.

Economic Impact Payments

Economic Impact Payments (EIP) were meant to provide households with an immediate injection of cash to spur demand and mitigate the economic downturn. The full EIP amount in 2020 was $1,200 for individuals or $2,400 for couples filing jointly, and households with dependents received an additional $500 per dependent.

ERS estimated the amount of these payments using 2019 ARMS data. These estimates indicate that the median married farm household would have received an EIP equivalent to 30 percent of one month’s income, while the median unmarried farm household would have received payments equivalent to 24 percent of one month’s income. These estimates will be revised when the 2020 ARMS data are released in December 2021.

Federal Pandemic Unemployment Compensation

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided $600 per week in Federal Pandemic Unemployment Compensation (FPUC) to those who were unemployed from March 29 to July 25 in 2020 due to the pandemic. These FPUC benefits were in addition to existing State unemployment benefits and were available to anyone who qualified for at least $1 of unemployment benefits.

According to 2019 ARMS data, 71 percent of farm households had one or more household members who earned off-farm salaries or wages. Among those farm households reporting off-farm income, 89 percent of their total household income was attributed to off-farm sources. Excluding residence farms (small farms whose principal operators report being retired from farming or having a primary occupation other than farming), 57 percent had off-farm income that contributed 45 percent of their total income.

Farm Household Income and the Pandemic

The latest ERS farm household income estimates for 2020 and forecasts for 2021 were released on September 2, 2021, and reflect the observed and expected continued effects of the pandemic. Please visit the Farm Household Well-being topic page to learn more.

For households that operate a farm, total household income is a combination of income earned from the farm and off-farm income. Off-farm income sources vary by household. In 2019, the majority (61 percent) came from wages and salaries of operators and other household members, and the remainder came from:

• transfer income (19 percent),
• non-farm business income (11 percent),
• interest and dividend income (4 percent), and
• other sources of income (6 percent).

Of these, the loss of wages and salaries earned off the farm is most likely to result in a decline in household income because of COVID-19.

On December 1, 2021, ERS will release estimates of 2020 farm household income based on data from the 2020 ARMS. Summaries and analyses of farm household income based on the 2019 Agricultural Resource Management Survey (ARMS) do not cover the pandemic but can provide insights into the potential impact of COVID-19 on farm households, including decreased employment rates in 2020.

Source: USDA

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U.S. total farm tractor sales fell 0.8% in July compared to 2020, while U.S. self-propelled combine sales jumped 19.2% to 657 units sold. The sub-40hp reduced its decline, down only 4.4%, while the mid-size 41-100 hp segment was nearly flat, down 0.4% or only 26 units.

All other segments were positive, with the articulated 4WD segment leading the way for the third straight month by climbing a healthy 79.4% to 287 units sold. The 100+hp 2WD segment also grew 37.8%. Year-to-date farm tractor sales remain up 13.7% and combine up 12.6%.

For Canada, July monthly tractor and combine sales were positive across all segments, including in the sub-40hp segment up 0.2% or 3 units, with the biggest growth in four-wheel-drive units nearly doubling, up 93.8% to 62 units sold, while total farm tractor sales were up 14.8% and self-propelled combines up 59.8%.

“The story of these row-crop and articulated four-wheel-drive sales is a reflection of farmer optimism throughout North America. We’re glad to see the smaller units start to return to pace, but these big units selling are often six-figure investments for farmers, and farmers don’t make these sorts of investments without serious consideration of future market conditions,”

said Curt Blades, Senior Vice President of Ag Services at the Association of Equipment Manufacturers.

Source: AEM

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“We’re operating in a very interesting market right now,”

says Curt Blades, Senior VP of Ag Services for the Association of Equipment Manufacturers (AEM).

So far, in the first quarter of 2021, total farm tractor unit sales are up more than 50 percent in the U.S., and nearly 60 percent in Canada, according to the AEM Ag Tractor Combine Report released monthly.

“For the last twelve months, we’ve seen a dramatic rise in under-40-horsepower, or small tractor sales in North America, both U.S. and Canada. This is due largely to a lot of the industries that have done very well during the pandemic, like luxury items or things that have to do with the home,”

says Blades.

Small tractors fall into that category as well.

Blades says the small tractors that have been spiking are largely going to the suburbs with larger lots to help homeowners haul rocks and dirt, work around trees, and overall improve the property. However, starting later in 2020, larger row-crop and articulated 4WD tractors have also enjoyed increasing sales success.

One reason has been the gradual increase, over the past five years, of the average age of the ag fleet in both the U.S. and Canada. However, with commodity prices increasing, and trade difficulties starting to ease, not only is the replacement market doing well, but farmers are upgrading their operations with newer technology.

“We’re seeing an increase in commodity prices. We’re seeing some of the uncertainty of trade wane. As a result, people are willing to invest a little more in their farming operations and we’re seeing that reflected in capital equipment,”

says Blades.

There has been some difference in the past 12 months between sales in the U.S. and Canada, however, Blades says it’s typical for one market to “lead” the other.

“In this current recovery, we’ve seen the U.S. has been leading Canada. But both markets are particularly strong right now on both sides of the border,”

he says.

Blades does advise that equipment inventories having been reduced significantly through these sales trends. However, he says dealers are being proactive, especially when it comes to keeping parts for their service centers in stock, but farmers looking to buy new machines may have to order several months ahead of expected delivery.

“I think you’re seeing a lot of optimism out there. And that optimism is leading to a lot of new equipment purchases, but also farmers thinking about what their businesses are going to look like into the future. It is an interesting time that we’re operating in. Tractor sales are strong, commodity sales are particularly good, and optimism is at an all-time high in the farming community,”

says Blades.

Source: AEM

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