The slower equipment sales are a knock-on effect of corn and soy prices dropping to more than three-year lows as U.S. farm income plummets and equipment makers and dealers are forced to pivot quickly after a period of booming business.

Reuters interviewed ten equipment dealers, mostly in the U.S. Midwest, as well as farmers and analysts, who said low crop prices combined with persistently high interest rates are deterring farmers from purchasing machinery. As farmers make fewer purchases, inventories of equipment are swelling, cutting into profits for dealers and big manufacturers alike.

Manufacturers Deere and CNH Industrial struggled to keep up with the strong demand for tractors in 2022 when farm income hit a record high and pandemic assistance payments gave farmers extra money to upgrade their fleets. Now both expect slower sales to hit their bottom line this year.

Josh Gruett, dealer principal at Waupun Equipment in Waupun, Wisconsin, which sells farm, construction and other equipment, said his inventory has risen 30 per cent to 35 per cent since the end of 2023.

The excess of unsold machinery prompted Gruett to halt new orders from companies including CNH, AGCO, and Polaris in hopes of balancing supply and demand, he said.

In April, inventory levels of high-horsepower tractors (300 and above) in the U.S. surged by almost 107 per cent year-over-year, with combine inventory experiencing a 17.63 per cent increase, according to Sandhills Global, a market research firm specializing in tracking used inventory for industrial manufacturers.

Slashing prices

Chris Tanner, a fourth-generation farmer, said some dealerships in his town of Norton, Kansas, have slashed prices up to 30 per cent with an added incentive of zero percent interest to move machinery off their lots.

“They’re heavily discounting combines and tractors—but after coming through a drought and experiencing poor prices we don’t have the money to spend,” Tanner said.

The pain has also spread to those who sell spare parts.

Guy Robinson, is a parts manager at Dekalb Implement Company, which sells Deere equipment in DeKalb, Illinois

During the peak years of the pandemic, Robinson said, the combination of supply chain troubles and rising demand made getting everything from parts to equipment to farmers “a nightmare.”

And then demand began falling off in late 2022, he said.

About 30 miles south of Robinson’s dealership, Aaron Rogers, retail location manager at AHW, another Deere dealer in Somonauk, Illinois, said zero or low percentage financing is a popular way to try to bring in customers.

“If you can get a good interest rate, that’s what’s driving the market right now,” he said. Offering lower financing rates to sell inventory can result in a loss for dealers, but carrying unsold machinery can prove costlier.

Manufacturers give dealers free financing on equipment for a limited period while they sell it, but once that expires, dealers have to pay interest on their unsold inventory to manufacturers.

With fewer sales forecast, equipment dealers are feeling pressure to auction off equipment “right away” to preserve margins, said Casey Seymour, a sales consultant for dealers.

“Some of the stuff that is being put to auction is because dealers can’t afford to keep the floor plan,” Seymour said. “They can’t have millions of dollars worth of inventory sitting around at a floor plan [with a] 7.5 per cent interest rate.”

Particularly, inventory levels have been a big concern in the Midwest grain belt, said Ryan Dolezal, the manager of TractorHouse, a site for selling new and used farm equipment.

“We do not see the inventory levels issues like we do in Midwest markets,” he said of specialty crop equipment compared to row crop machinery.

Used agriculture machinery inventory, the bulk of machinery sold in the United States, is on a steady increase that is forcing dealers to auction equipment at a lower price point, said Mitch Helman, a sales manager at Sandhills Global.

“For planters there’s a 70 per cent gap between auction and retail and that’s insane. A spread this high has not been observed since May 2015,” he said, referring to a time when grain oversupply was pummeling farmer income.

Deere reports earnings on May 16. In February, the company announced plans to cut production and warned shareholders inflation would make farmers reticent to finance equipment purchases.

Texas-based farmer, Scott Born said given his tighter budget, he’s forgoing buying new or used equipment for the remainder of the year.

“We have to try to limp by without major repairs—it’s tough especially since (equipment and fertilizer) has gone so much higher in just a few years.”

—Additional reporting for Reuters by Heather Schlitz in Chicago

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Shares of the world’s largest farm equipment maker were down 2.6 per cent in premarket trading.

With farmers reassessing expenses, particularly for compact tractors, Deere said it now expects net income for fiscal 2024 of $7.50 billion to $7.75 billion. This is below its prior forecast of $7.75 billion to $8.25 billion and below analysts predictions of $7.93 billion, which already marked a decline from the prior quarter.

“That’s not particularly unusual for the first year of a market correction,” said Stephen Volkmann, senior machinery analyst at Jefferies. “The lower guidance that they put out is just a factor of that lower large agriculture outlook.”

Deere, a barometer of the global economy, said operating margins contracted due to lower sales for large agriculture equipment which the company is expecting to decline 20 per cent this year. Operating profit across its equipment divisions fell 13 per cent in aggregate.

Executives have expressed caution about margin performance amid a weakening farm economy, and said Deere intends to cut equipment production in 2024. Rival CNH Industrial has also tempered investor expectations even after posting better than expected profit for the fourth-quarter, saying softening commodity prices will lead to a downturn in farm equipment demand.

Net farm income in the U.S. is set to fall 27 per cent this year to $116 billion, from its inflation-adjusted total in 2023, according to the U.S. Department of Agriculture. U.S. grains and soybeans are at three-year lows and face stiff competition for export business from South America and the Black Sea region, translating to tighter balance sheets for growers and causing them to pull back on new equipment purchases.

Deere’s sales for production and precision agriculture equipment, it’s largest division, declined seven per cent year-over-year in the fiscal first quarter. Revenue for equipment operations fell eight per cent to $10.5 billion year over year, but topped consensus forecasts of $10.3 billion.

Net income fell to $1.75 billion, or $6.23 per share, for the first quarter, beating analysts estimates of $5.21 per share, according to LSEG data.

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The company increased its revenue outlook for industrial activities to between eight and 11 per cent this year, versus a previous forecast of between six and 10 per cent.

Farmers’ solid income cushioned profits even as commodity prices came down from their peaks a year ago. Growers were able to cash in on still-elevated wheat and soybean prices, which fueled purchases for new and used machinery, CNH CEO Scott Wine said.

CNH’s farm equipment brands include Case IH, New Holland, Steyr and Flexi-Coil.

“The high-horsepower and cash crop markets continue to be very strong,” Wine said in an interview, adding that the company is planning to accelerate production of large ag equipment to catch up on volume output that was reduced during an eight-month long United Auto Workers strike.

Like competitors Deere and Caterpillar, CNH’s profit margins were propped up by price increases across its machinery businesses to offset inflated input costs and a choppy supply chain.

Analysts believe the manufacturer’s double-digit price hikes that contributed to a 16 per cent increase in net sales on the year for its agriculture division will sustain the company’s margin growth in the coming quarters, said Eric Greaser, vice-president at Moody’s.

Industrial activity revenues increased 21 per cent in 2022.

CNH’s first-quarter adjusted earnings before interest and tax (EBIT) for industrial activities rose 29 per cent to US$555 million, just ahead of analysts’ consensus forecast in a Reuters poll. Revenue was in line with expectations at US$4.78 billion.

Company executives said they were confident the company would complete its delisting from the Milan bourse by the end of the year and keep its shares trading only in New York.

— Reporting for Reuters by Giulio Piovaccari in Milan and Bianca Flowers in Chicago.

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The bill, which requires manufacturers such as Deere and Co. to provide manuals for diagnostic software and other aids, garnered bipartisan support as farmers grew increasingly frustrated with costly repairs and inflated input prices denting their profits.

With a Case IH red tractor displayed outside the state Capitol in Denver, Governor Jared Polis, a Democrat, signed the Consumer Right to Repair Agriculture Equipment Act.

“I am proud to sign this important bipartisan legislation that saves hardworking farmers and ranchers time and money on repairs, and supports Colorado’s thriving agriculture industry,” he said in an emailed statement. “This is a common-sense bipartisan bill to help people avoid unnecessary delays from equipment repairs.”

The legislation passed on a 46-14 vote in Colorado’s Senate earlier this month.

Once the law goes into effect on Jan. 1, farm machinery manufacturers such as Deere and rival CNH Industrial, which owns the Case IH and New Holland brands, will have to provide farmers with diagnostic tools, software and documents. Independent technicians will also be able to access similar resources.

Deere has said it believes the legislation is unnecessary and will carry unintended consequences. CNH did not respond to request for comment.

Right-to-repair legislation is gaining momentum across the country as lawmakers in 16 states have introduced bills, according to a report by the Public Interest Research Group, an advocacy organization.

Colorado farmer Daniel Waldvogle, who was present for the bill’s signing, hopes that right to repair will be a key issue for the next U.S. Farm Bill under discussion in Washington.

“Creating more fair market access through right to repair is one of the items that we hope will be included,” he said.

— Reporting for Reuters by Bianca Flowers in Chicago and Kevin Mohatt in Denver.

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The Consumer Right to Repair Agriculture Equipment Act passed 46-14 in Colorado’s Senate late on Tuesday, after winning approval in the state House of Representatives in February. The bill garnered bipartisan support as farmers grew increasingly frustrated with costly repairs and inflated input prices denting their profits.

Colorado Governor Jared Polis has 10 days to sign the bill into law and he is expected to do so, according to a spokesperson.

Equipment makers have generally required customers to use their authorized dealers for repairs to machines like combines and tractors.

Colorado’s legislation would mandate farm machinery manufacturers such as Deere and rival CNH to provide farmers with diagnostic tools, software documents, and repair manuals starting Jan. 1. Similar resources must be made available to independent technicians.

MORE READING:

• No clear-cut fix in right to repair debate
• NDP proposes ‘right to repair’ bill for farm equipment, vehicles

A spokesperson for Deere and Co. responded to the passage of the bill, saying that it support farmers’ right to repair but believes the legislation is “unnecessary and will carry unintended consequences.”

Equipment makers worry the legislation may allow farmers to override certain safety systems or emissions controls, said Eric Wareham, a North American Equipment Dealers Association vice-president.

State Representative Brianna Titone, a Democrat who sponsored the legislation, predicted other states will follow suit.

“If there are no lawsuits or collapse of the industry, it demonstrates that the law is not going to cause chaos like many opponents think it will,” Titone said.

Lawmakers amended the bill to include language that farmers and repair shops will not be authorized “to make modifications” to functions related to security or emissions.

State lawmakers are pushing right-to-repair legislation even though Deere and CNH signed a memorandum of understanding with the American Farm Bureau Federation to allow farmers to fix their equipment or go to a third-party repair shop.

The agreement does not give farmers total access for repairs, said Kevin O’Reilly, director for the campaign of right to repair at the U.S. Public Interest Research Group.

— Bianca Flowers is a Reuters correspondent covering the U.S. manufacturing sector from Chicago.

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The union did not disclose how many workers at the two plants rejected the four-year deal, which included wage increases of 25-38 per cent according to CNH on Sunday. Still, union members said the proposed contract failed to provide enough of a raise to combat inflation, additional vacation days or better healthcare coverage.

The UAW represents about 1,000 workers at the plants, and union officials had warned a rejection of the latest offer was likely.

“We’re going to notify the company and see if they are willing to come back to the table,” said Yasin Mahdi, the UAW local president in Racine, Wisconsin, where the company employs about 700 people. “I hope the next time they come with a real, bona fide offer.”

CNH officials said the latest offer was its “last, best and final” and in a statement encouraged employees to “reconsider their position in another vote.” The company said it will wait for the union to take the next step.

Workers in May had rejected an offer by the maker of agriculture and construction equipment that included an 18.5 per cent wage increase over three years.

The Italian-American company brought in replacement workers to keep the factories operating once the strike began, union officials said. The plant in Racine, 100 km north of Chicago, makes tractors and combines, while the Burlington, Iowa, facility builds tractor loaders, backhoes and forklifts.

The strike has stretched well beyond the two-month average in the United States, said Robert Bruno, a labour professor at the University of Illinois Urbana-Champaign. With a tightening labour market, union workers in the industrial sector for companies such as Boeing and Deere have gone on strike in recent years.

In 2021, more than 10,000 Deere workers in three Midwest states rejected two contract offers before a deal was reached to end a five-week strike.

For CNH workers, who last struck the company in 2004, some have taken second jobs to augment strike pay they receive from the UAW. They note the company has been reporting strong profits, including US$670 million on an adjusted basis in the most recent quarter.

At an elementary school in Wisconsin where the ballots were cast, workers voiced frustration and determination.

“This is a multibillion dollar company, they can afford to give us everything we’re asking for. We’re not asking for too much,” said 61-year-old Alric Davis.

Kelly Peters, a sub-assembly worker at the Racine plant, was not ready to vote yes.

“They’re just giving increments, like dangling a bone to see if we’re going to bite. I’m not biting,” she said.

— Bianca Flowers is a Reuters correspondent covering the U.S. manufacturing sector from Chicago.

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The announcement comes as heavy machinery manufacturers, including Deere and Agco, set their sights on the electric vehicle market as the U.S. agriculture industry shifts to smart farming.

The agreement with Monarch Tractor is the first manufacturing contract Foxconn, best known for assembling Apple’s iPhone, has entered since purchasing the Ohio facility that was formerly a General Motors assembly plant last year.

Production for Monarch’s battery powered MK-V series tractor is scheduled to begin in the first quarter of 2023, said Foxconn, formally known as Hon Hai Technology Group.

Monarch, which is based in Silicon Valley, debuted its first pilot series, autonomous electric tractor to a select group of farmers last year. The company has since entered into a multi-year licensing agreement with Italian-American vehicle manufacturer CNH Industrial.

CNH Industrial has a minority stake in Monarch Tractor.

With competition brewing among farm equipment manufacturers to expand product lines in precision agriculture technology and autonomous machinery, Monarch CEO Praveen Penmetsa told Reuters that the company’s business model to target smaller farmers gives them unique opportunity to increase the marketshare while being on the same playing field with bigger manufacturers.

“Their technology is focused on the large farm operations and commodity crops. Fruits and vegetable farmers use much smaller tractors so we are focused on smaller farmers — that differentiates us a lot,” Penmetsa said.

The company did not disclose the cost of the tractor but said the autonomous software will be sold separately and that farmers will have to pay a monthly fee to access the services.

— Bianca Flowers is a U.S. manufacturing sector correspondent for Reuters.

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In a world with a dwindling number of grain producers and a growing population, Deere and its rivals are developing self-driving equipment loaded with the latest software that is harvesting a new kind of bumper crop: data. All that translates into recurring revenue, something companies such as Apple have long enjoyed and industrial manufacturers like Deere hungrily eye.

“The more technology we can develop to allow farmers to get productivity out of their land without having to spend so much money on fertilizer and inputs, the better off everybody is,” Julian Sanchez, Deere’s director of emerging technology, told Reuters.

Investments in automation for high-horsepower equipment is only at its inception for Deere and rivals Agco and CNH Industrial. The next step is to equip machines to plant seeds using satellite imagery and soil data, Sanchez said.

While Deere has not outlined what that could mean to its bottom line, last fall U.S. automaker General Motors said it was targeting up to $25 billion in software-driven services by 2030, and added its Cruise self-driving unit could achieve $50 billion in annual revenue within six years (all figures US$).

The race among farm equipment companies to automate agriculture has accelerated amid a burgeoning food crisis. And Deere’s strategy around scaling its suite of tech products is now in the spotlight, after the manufacturer’s stock plunged 14 per cent on May 20 following a quarterly revenue miss. It was the biggest drop for Deere in 14 years.

The timing comes as the war in Ukraine and widespread drought in key grain-producing countries have roiled commodity markets, causing grain and farm input prices to spike as supplies shrink. That, in turn, has U.S. farmers scrambling to boost crop yields, yet limit their fertilizer and pesticide use.

That and a shrinking farm labor workforce has opened the door for Deere and others to make their high-tech push. For farmers, the prize is higher crop yields. For Illinois-based Deere, it’s the revenue.

Autonomous machinery is where Deere is placing its bet as artificial intelligence becomes more integrated in farming. Its self-driving 8R tillage tractor will be the latest addition to the company’s algorithm-enabled offerings when the green machines go on sale in the fall.

The new tractor will be priced at $500,000. However, the autonomy feature will be sold separately. Deere executives told analysts at a conference that the company will largely maintain its “point-of-sale” model for equipment, but will integrate a software-as-a-service (SaaS) model for its autonomous solutions. That will likely include their self-driving tractor.

“While it may take us a few years to build out a base of recurring revenues, autonomous solutions, on top of our underlying machine forms, will be recurring,” said Joshua Jepsen, Deere’s deputy financial officer.

The recurring revenue model can be economically favorable to heavy machinery manufacturers “based on those data insights,” said Michael Staebe, a Bain and Co. partner focused on machinery.

In Deere’s case, using a subscription model by either selling or leasing its driverless tractor can result in higher margins.

“After expenses, every incremental dollar falls straight to the bottom line,” Edward Jones analyst Matt Arnold said. “We would expect it to be an attractive offering to farmers given the efficiency it offers them, and lucrative to Deere.”

Agronomic data helps bottom line

Farmers have long been wary about how machinery and supplier firms profit off the data gleaned from their operations, and how secure such data is. But with farmers facing economic pressures, Deere and other manufacturers said it is easier to sell farmers on making such investments.

One key reason: The ability to glean crop insights from huge amounts of agronomic data takes the guesswork out of when to plant and how many seeds to use — which saves farmers money.

“Everybody in the industry is much more data-focused than we have ever seen them,” said Michael Boehlje, a professor at Purdue University. “(Companies) can do profit projections by geographic space in fields. That takes you to a different level of thinking and analysis.”

In 2020, Deere acquired Harvest Profit, a farm profitability software company that has been integrated into the John Deere Operations Center. The platform stores and lets farmers access their machine data from the cloud.

“When I look at what precision ag has done for our operations and what we can accomplish in a day’s time compared to 10 to 20 years ago, it’s so much easier,” said Jeremy Jack, a row-crop farmer in Mississippi and chief executive of Silent Shade Planting Co.

Ron Heck’s fleet of Case IH combines and tractors are equipped with automated steering to harvest his 4,000 acres where he rotates soybeans and corn.

The fourth-generation farmer in Iowa said some of his new equipment is loaded with technology. “Unfortunately for us it costs more, but hopefully the costs will be paid back in the long run by better efficiency.”

— Reporting for Reuters by Bianca Flowers and Joseph White.

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Georgia-based Agco, whose brands include Massey Ferguson, Fendt, Challenger and Valtra, said in a statement it expects operations at some facilities to be affected for “several days and potentially longer.”

The ransomware attack comes at a time U.S. agricultural equipment makers were already facing persistent supply chain disruptions and labour strikes that left them unable to meet equipment demand from farmers.

Agco did not disclose the names of the facilities or if any data was stolen, but said it was still probing the extent of the attack that occurred on Thursday and working to repair its systems.

Tim Brannon, president and owner of B+G Equipment in Tennessee, told Reuters he has not been able to access Agco’s website for ordering and looking up parts since Thursday morning.

“We just have to trust that it will be over as soon as possible because we are coming into our busiest time of the year and it will be very damaging to our business and customers,” Brannon said.

Agco, which competes with larger rival Deere and Co., sells tractors and combines and manufactures and assembles products in 42 locations worldwide with 1,810 dealerships in North America.

Dealers are now struggling to keep up with orders that were already backlogged.

The company told dealers that it was “prioritizing” the most business-critical systems in an email read to Reuters by a dealer who declined to be identified.

“I’ve got about nine orders that I need to place right now,” the dealer said.

He said Agco told him “digital systems” had been impacted worldwide.

Agco did not respond to requests for additional comment.

Ransomware attacks have targeted food and fuel companies in the U.S. in recent years, including the Colonial Pipeline oil network and meat processing company JBS. Last autumn, at least three grain handlers in the Midwest were hit with ransomware attacks.

— Reporting for Reuters by Nathan Gomes in Bangalore and Bianca Flowers and P.J. Huffstutter in Chicago.

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Now, facing a global shortage of commercial fertilizers made worse by Russia’s invasion of Ukraine, more U.S. growers are knocking on his door. Sandquist says they’re clamouring to get their hands on something Old MacDonald would swear by: old-fashioned animal manure.

“I wish we had more to sell,” said Sandquist, founder of Natural Fertilizer Services Inc., a nutrient management firm based in Iowa. “But there’s not enough to meet the demand.”

Some livestock and dairy farmers, including those who previously paid to have their animals’ waste removed, have found a fertile side business selling it to grain growers. Equipment firms that make honeywagons are also benefiting.

Not only are more U.S. farmers hunting manure supplies for this spring planting season, some cattle feeders that sell waste are sold out through the end of the year, according to industry consultant Allen Kampschnieder.

“Manure is absolutely a hot commodity,” said Kampschnieder, who works for Nebraska-based Nutrient Advisors. “We’ve got waiting lists.”

Sky-high prices for industrial fertilizer are projected to reduce American farmers’ corn and wheat plantings this spring, according to U.S. government data. That further threatens global food supplies as domestic wheat inventories are the lowest in 14 years, and the Russia-Ukraine war is disrupting grain shipments from those key suppliers.

While manure can replace some of the nutrient shortfall, it’s no panacea, agriculture specialists say. There’s not enough supply to swap out all the commercial fertilizer used in the U.S. Transporting it is expensive. And prices for animal waste, too, are rising on strong demand.

It’s also highly regulated by state and federal authorities, in part due to concerns about impacts on water systems.

Manure can cause serious problems if it contaminates nearby streams, lakes and groundwater, said Chris Jones, a research engineer and water quality expert at the University of Iowa.

Livestock farmers say it’s a heavy lift to meet all the government rules and track how manure is applied.

Race for waste

Regardless of the drawbacks, demand is booming.

In Wisconsin, three dairy farmers told Reuters they turned down requests to buy their manure sent via text and Twitter messages.

North Carolina-based Phinite, which makes manure-drying systems, says it’s fielding solicitations from growers as far away as Minnesota, Illinois, Iowa and Indiana.

Smithfield Foods, the world’s largest pork producer, has noticed the shift at the U.S. hog farms that supply its slaughterhouses.

“We’re definitely seeing farmers move toward manure with the increase in fertilizer prices,” said Jim Monroe, a spokesperson for the company, which is owned by Hong Kong-listed WH Group.

Industrial fertilizers such as nitrogen require a lot of energy to produce. Prices started to surge last year amid rising demand and lower supply as record natural gas and coal prices triggered output cuts by fertilizer manufacturers. Extreme weather and COVID-19 outbreaks also roiled global supply chains.

War in Ukraine has made the situation worse by reducing fertilizer exports from Russia and its ally Belarus due to Western sanctions and shipping snags. That threatens to shrink harvests around the world at a time of record food inflation. Combined, Russia and Belarus accounted for more than 40 per cent of global exports of potash last year, one of three critical nutrients used to boost crop yields, according to Dutch lender Rabobank.

As of March, commercial fertilizer prices reached a record high, with nitrogen fertilizer jumping four-fold since 2020 and phosphate and potash up three-fold, said London-based consultancy CRU Group.

One person left bereft is Dale Cramer, who grows corn, soybeans and wheat on about 6,000 acres at Cambridge, Nebraska. Searching for alternatives, he has sniffed around feedlots for manure since last August with no luck.

“A lot of people have put their names in for the same thing,” Cramer said.

Honeywagon scramble

With demand for manure surging, prices have followed, delivering an unexpected windfall to livestock producers and cattle feedlots.

Prices for good-quality solid manure in Nebraska alone have reached $11 to $14 per ton, up from a typical price of $5 to $8 per ton, consultant Kampschnieder said (all figures US$). A dry winter helped drive up prices by leaving manure with less water in it, making it more concentrated, and thus more valuable, he said.

Iowa farmer Pat Reisinger is relieved he has dung from the pigs and dairy cows he raises to fertilize the corn, soybeans and hay he grows to feed those animals. He sold a little manure to one neighbor and is getting phone calls from others in need.

“If I sold any more, I’d have to turn around and buy commercial fertilizer, which makes no sense,” Reisinger said.

The boom has also has lifted machinery companies that make spreading equipment for solid manure as well as so-called honeywagons: wheeled tanks hitched to trucks and tractors for transporting and applying liquefied waste.

In Ontario, Husky Farm Equipment is sold out of honeywagons. The company built its first contraption back in 1960 as a way to make collecting and spreading manure more efficient, according to company president Walter Grose. Today Grose sells directly to farmers and machinery dealerships, and he can’t keep up.

“We have people looking for equipment right away and we’re sold out for six months,” said Grose who sells honeywagons in several sizes. Bigger tanks come with a $70,000 average price tag.

CNH, the American-Italian farm and construction equipment giant, said it has seen strong demand for its New Holland brand box spreaders — essentially, a steel box that attaches to a tractor to haul and spread solid manure.

Kansas equipment dealership KanEquip Inc. is sold out of New Holland spreaders, even though prices have jumped 10 per cent from the normal list price of $30,000, said regional manager Bryndon Meinhardt. He said the dealership has ordered 10 more to meet demand.

No poop for you

Even in states where large livestock herds generate massive quantities of manure, there’s not enough to replace commercial fertilizer completely. Iowa, the top U.S. producer of pork and corn, already applies all of its manure on land covering about 25 per cent of its corn acres each year, said Dan Andersen, an associate professor at Iowa State University who specializes in manure management.

On average, Iowa uses about 14 billion gallons of manure annually, said Andersen, known as @DrManure on Twitter. He expects Iowa growers may suck out an extra billion gallons this year from storage in tanks on farms to substitute pricey commercial fertilizer.

Part of the current supply problem is rooted in the evolution of the U.S. farm economy. As America’s livestock sector has consolidated, there are geographical hubs where animals are raised for eggs, milk or meat, and where the most manure is produced. As a result, some places have too little, while others have too much and have wrestled with ways to dispose of it.

Last October, Pennsylvania dairyman Brett Reinford thought he might be tight on manure storage space over the winter. So he made an offer to local farmers: You come and haul it away, you can have it for free. He got no takers.

Fast forward six months and Reinford is now sitting on liquid gold. “We’re keeping it all and I wish we had more,” he said.

Manure could become even more precious later this year, as U.S. livestock herds and poultry flocks shrink.

The number of hogs in the United States has dropped to its lowest level in about five years, as producers grapple with swine diseases and rising costs for feed and other inputs. Bird flu, meanwhile, has wiped out more than 22 million chickens and turkeys on commercial U.S. farms since February.

But even hard-hit poultry farmers could have something to use: Their dead birds can be composted and applied as fertilizer, according to the Iowa Department of Agriculture and Land Stewardship.

— Reporting for Reuters by P.J. Huffstutter and Tom Polansek in Chicago and Bianca Flowers in Chicago and New York. Additional reporting by Leah Douglas in Washington, D.C.

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