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Canadian farmers afraid to buy due to tariff worries

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US farm machine makers face headwinds in both countries

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Widespread confusion over full extent of tariffs

By Ed White

REGINA, Saskatchewan, April 5 (Reuters) - All around a

recent farm show in Canada, equipment salespeople struggled to

swing deals with farmers worried about tariffs.

With some combines costing more than $800,000, a surprise

price hike from a tariff would be a hit most farm budgets cannot

easily take.

Canada was spared the Trump administration's broad global

tariffs on April 2 but faces tariffs on steel and aluminum

exports to the U.S. as well as on autos not compliant with the

United States-Mexico-Canada Agreement on trade.

As of Friday, Canadian farmers said they were unclear

whether agricultural equipment is subject to the duties or to

Canada's retaliatory tariffs. Sorting out the details could take

weeks.

Meanwhile, farmers' appetite for new combines, tractors and

other farm equipment has slumped, and manufacturers are pulling

back.

In March, Case IH, an agricultural equipment manufacturer

based in Racine, Wisconsin, and owned by global giant CNH

Industrial ( CNH ), notified hundreds of workers in North Dakota

and Minnesota of layoffs. The company did not immediately

respond to a request for comment.

The uncertainty is scaring off farmers from buying equipment

imported from the U.S., farmers and salespeople said in

interviews.

In Saskatchewan, the Canadian province where much of the

country's spring wheat, canola and durum is grown for export,

farmers will be very cautious about capital spending, said Bill

Prybylski, president of the Agricultural Producers Association

of Saskatchewan, with tens of thousands of members, as he

gestured his thumb towards a giant green John Deere combine at

the March farm show.

Elsewhere inside the show's teeming halls, farmers kicked

the tires and tracks of combine harvesters, seeders, sprayers

and rockpickers they would love to buy, but few did.

Manufacturers, too, were grappling with fears of getting

caught on the wrong side of a tariff.

"We have a lot of balls in the air right now and we don't

really know where they're going to land," said Derek Molnar,

marketing director for rockpicker manufacturer Degelman

Industries, in front of a display of his company's bright yellow

farm implements.

With machinery purchases often negotiated months up to a

year or more before delivery, the risk that major tariffs could

be plunked on a product when it arrives is too costly.

"We personally backed off" on buying new farm machinery,

said Gunter Jochum, a Manitoba farmer. "We decided to hang on to

our combines longer."

Jochum, like most farmers, buys machinery from around the

world: Claas combines made in Germany and the U.S.;

American-made AGCO ( AGCO ) tractors and Case sprayer; a Canadian

Bourgault seeder.

Due to "ongoing economic uncertainty and looming trade wars,

equipment manufacturers on both sides of the border are

recalibrating production downward," said Kip Eideberg, a senior

vice president at the Association of Equipment Manufacturers,

which represents heavyweights like John Deere and Case IH

.

Some 30% of U.S. agricultural equipment is exported, with

Canada the biggest foreign market, Eideberg said.

"Tariffs will disrupt our North American supply chains,

increase the cost for equipment manufacturers, and threaten tens

of thousands of family-sustaining jobs."

Jamie Pegg, general manager of Frontier, Saskatchewan

machinery manufacturer Honey Bee, said the company would have to

scale back production to avoid an inventory buildup if tariffs,

or tariff fears, affected sales.

"Inventory is something that kills you," he said.

For Canadian machinery dealers, uncertainty is "creating a

terrible environment for business," said Nancy Malone, vice

president for Canada of the North American Dealers Association,

whose members buy machinery, fertilizers and other big-ticket

items to sell to local farmers.

Malone said she is lobbying the Canadian government to stave

off any retaliatory tariffs from Canada on U.S. farm equipment.

Meanwhile, Malone said, paralysis would reign.

"We wait," she said.