Farm Credit Canada is forecasting a 7 per cent increase in new farm equipment sales in this country next year.
That's after two years of slumping sales.
FCC Economist J. P. Gervais says farmers often make equipment buying decisions based on their optimism about their financial situation.
FCC's report on higher farm equipment sales includes a projected almost 6 per cent increase in crop receipts this year and an increase of almost 4 per cent in 2017.
Continued low interest rates are also expected to boost equipment sales.
Gervais points out that while new equipment sales slumped in 2014 and 15, they really weren't all that bad compared to the past ten year average.
"2016 numbers probably going to be in line with the 10 year average. So yes, there is a slowdown, there is a bit of weakness but after all, at the end of the day, the end of the year, it could look very much like, on average, its looked for the last 10 years."
The FCC economist says some of the most successful operators have a well-defined plan for what kind of equipment they want to replace over a 3 to 5 year period.
"Everybody needs to have an idea of, okay, this is what makes sense for me, given my size, given what I want to achieve in terms of marketing and production and so on but most successful operations have a very well defined plan of what kind of equipment they want to replace at what time over a period of 3 to 5 years."
Gervais argues equipment sales are usually a leading indicator of farm health - so stronger sales would suggest a healthy farm sector.
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FCC Chief Economist J. P. Gervais points out strong new equipment sales prior to 2014 made the 2015 sales appear low, even though they were in line with the 10 year average.
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Gervais forecasts crop receipts will go up almost 6 per cent this year and another almost 4 per cent next year.
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Gervais expects rising crop receipts to be one of the driving forces behind a rebound in new farm equipment sales.
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