The Economics of the Modern Agricultural Equipment Industry

Like every sector of the American economy, the agricultural industry has experienced a transformation during the past few decades of rapid technological progress. However, U.S. agriculture has been somewhat slower to recognize and celebrate the many achievements it’s made. Now, the global leadership role of the American agri-business sector on any number of agricultural policy issues is undeniable. This perspective seems obvious when presented with the impressive data on the current state of the industry.

Fotosearch_k10204009Over the last 100 years, American agricultural production has grown over 500%. At the same time, the industry now employs less than 2% of the global workforce. In the last 50 years, an individual U.S. farmer went from being capable of feeding 25.8 people to 144. Of course, these incredible advancements were only possible thanks to the coinciding revolution in agricultural technology and equipment. For example, within just 80 years, a farmer went from harvesting 100 bushels of corn over the 9 hours of a work day to harvesting the same amount in fewer than 7 minutes. Such a gigantic leap in productivity was thanks to the transition from harvesting by hand to harvesting using combines.

The pace of the revolution in farming equipment has only accelerated in recent years. The industry weathered the recession better than most, with domestic output bouncing back from a decline of 8% in 2009 to the value of equipment shipments increasing by more than 31% last year. By comparison, the U.S. economy grew only 17% over the same period.

The agricultural equipment manufacturing portion of the national economy has become a behemoth all its own. The $51 billion industry was ranked 30th by revenue of all 280 manufacturing industries by the U.S. Bureau of Economic Analysis. It employed 377,000 people in jobs with average compensation at over $67,000, a full 15% larger than the American economy average of $58,700. It’s therefore more than appropriate for the industry to be proud of such wild success. Its continued prosperity is good news for the entire country. We at Stern Companies are happy to boast that we serve the agricultural equipment industry with our technical expertise and two decades of experience.

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