In agriculture, few metrics carry more weight than Net Farm Income (NFI). It’s the industry’s north star, shaping farmers’ confidence, spending decisions, and long-term investments. When NFI rises, optimism follows. When it falls, the ripple effect touches everyone from OEMs to dealers to parts suppliers.
According to the USDA’s February 2025 forecast, NFI is expected to rebound by 40.7% following sharp declines in 2023 and 2024. But this recovery comes with a caveat: much of the projected increase is driven by temporary disaster relief, not sustainable, market-driven growth. As the American Farm Bureau Federation notes, farm finances remain fragile, especially for crop-focused operations facing high input costs and tightening margins.
That’s why 2025 marks a critical inflection point for OEMs. With equipment purchases still under pressure, the aftermarket isn’t just a source of revenue—it’s a strategic lifeline.
Companies that treat service parts as a core capability will be better equipped to support farmers, strengthen dealer relationships, and build long-term resilience across their networks.
What Happens When Net Farm Income Falls?
When margins are under pressure, farmers don’t stop farming—they stop spending.
Big-ticket sales are often the first casualty. Farmers delay or cancel equipment investments, opting to stretch the lifespan of what they already own. Older machines stay in the field longer, requiring more frequent service and more reliable access to critical parts, especially during peak seasons like planting and harvest.
And with fewer new sales to cushion the bottom line, dealers rely more heavily on parts and service revenue and expect more support from OEMs to meet customer needs without delays.
In short, when NFI goes down, aftermarket dependence goes up. Yet many OEMs are still using planning and pricing models built for growth, not resilience.
The Strategic Shift: From Capital Sales to Lifecycle Support
Too many OEMs still operate with planning models that favor new unit sales. Inventory is aligned to new product launches. Pricing reflects cost-plus thinking rather than market sensitivity. Parts strategy is reactive, not predictive.
But the economics are clear. According to McKinsey, aftermarket parts and service can deliver margins up to four times higher than new equipment. And in times of macroeconomic volatility, these margins help stabilize revenue and deepen customer loyalty.
The opportunity now is to take a more deliberate, responsive approach to aftermarket strategy. That means inventory planning, pricing, and dealer support that reflect what’s happening on the ground, not just in the sales forecast.
3 Ways to Align Aftermarket Strategy to Farm Profitability
1. Rethink Parts Planning Around Seasonality and Risk
Use NFI forecasts, crop calendars, and regional fleet data to align inventory with the realities of farm operations. Prioritize critical components that could halt operations during planting or harvest. And adapt planning cycles to respond quickly when local conditions shift.
2. Use Market Signals to Inform Pricing
When farm income drops, price sensitivity rises. Ditch one-size-fits-all pricing in favor of regionally adjusted, value-based models that consider part criticality and customer type. The goal isn’t just margin protection—it’s long-term trust.
3. Treat the Aftermarket as a Relationship Business
When farmers can’t afford new, they rely on OEMs and dealers to keep existing equipment running. Invest in dealer enablement, inventory visibility, and predictive analytics to ensure your aftermarket operations are responsive, proactive, and resilient.
Conclusion: When the Market Dips, the Aftermarket Must Rise
The rebound in farm income shouldn’t lull OEMs into a false sense of security. Underneath the numbers, financial pressure persists. The smart money isn’t just betting on new equipment sales. It’s investing in a more responsive, more intelligent, and more customer-focused aftermarket.
If you want to support farmers through the next downturn and protect your margins along the way, now’s the time to rethink your aftermarket strategy.
Want to explore this further?Farm economics are changing, and your aftermarket strategy should too.Our new eBook explores five strategic levers OEMs can use to improve parts availability, reduce downtime, and build resilience across global ag equipment networks. Download the guide |