In this exclusive, Alan Eskow, vice president of BKT USA Inc., describes how BKT views the United States ag tire market today and what the market will look like in 2025.
MTD: Can you describe the state of the U.S. ag tire market? What is the replacement channel demand like right now?
Eskow: The agricultural tire market has shown a drop compared to the previous year, although the extent of this decline remains somewhat uncertain. Several factors have contributed to this situation. The high cost of seeds and fertilizers has increased farmers' expenses, while lower prices for raw materials - such as corn, soybeans and cotton - have squeezed profit margins, making it difficult for farmers to invest in new equipment and components, including tires.
The OEM channel, in particular, is experiencing hardship. Companies are cutting their workforce and reducing production as a result of the falling demand for tires. Despite the unfavorable environment, replacement tire sales are holding up well, thanks to a plentiful harvest in several areas of the United States. However, it is unlikely that a real increase in the demand for replacement tires will occur before early 2025, once the harvest has been completed and farmers' availability of resources are assessed.
MTD: What will the U.S. ag tire market look like in 2025?
Eskow: We expect the farm tire market in the United States to remain stable in 2025. The main variable that will influence this scenario will be the price of raw materials. If prices continue to fall due to reduced exports, many farmers will have less cash on hand, making it more difficult to purchase new equipment and components, including tires. In addition, if this year's crops are not profitable, obtaining financing for seeds and fertilizer will become an even greater challenge for farmers.
The costs of agricultural inputs, such as fertilizer and fuel, are likely to remain high, continuing to put pressure on farmers' product margins. In particular, conflicts in the Middle East might cause fuel prices to rise sharply, pushing up farm operating costs even further. This scenario will keep uncertainty high and further limit investment in new equipment, including tires.
Conversations with OEMs confirm that the market is not expected to improve significantly before 2026. The current market environment would suggest that economic challenges will persist for at least another year, negatively affecting both the demand for new machinery and new tires.
MTD: Are there any trends that ag tire dealers should look out for?
Eskow: From our viewpoint, agricultural tire dealers should pay attention to several emerging trends in the industry. A major one is the increased use of more powerful and heavier tractors often equipped with equally heavy implements. This has a direct impact on the choice of tires, which must be able to support this more impressive machinery and carry greater loads without compromising performance.
VF (very-high flexion) tires are becoming increasingly popular, especially for use on tractors. Their ability to operate at lower pressures, reducing soil compaction, is particularly beneficial to farmers. Moreover, IF (increased flexion) and VF tires for agricultural implements are also gaining ground, given the increasing mass of implements and the speed at which they are transported on roads.
Finally, the market is currently witnessing the introduction of many new tire sizes, driven by both OEM demands and mainstream demand. As a result, retailers have to manage their stocks more carefully, making sure that they meet customer needs and respond promptly to the demands of a rapidly evolving market.
