What the Rate Signal Says About 2027 and 2028

By Jeremy Bess and Patrick Luce, economists and keynote speakers at Stantec Consulting

This is Part Two of a two-part series exploring how economic trends and interest rates affect the farm equipment industry. Read Part One, “Headlines, Rates, and the Farm Equipment Cycle,” to learn how interest rate trends can signal changes in equipment demand.

Because interest rates lead the farm equipment cycle by about two years, the signal for 2027 and most of 2028 is already providing directional insight. It points to muted growth in 2027 and a risk of renewed pressure in 2028.

How to Respond

Build 2027 plans around muted growth, with flexibility built in.

Set production and inventory plans for flat to modest growth. Lean on overtime, temporary labor, and flexible supplier agreements rather than adding permanent fixed costs.

Strengthen cash and the balance sheet.

Build liquidity, tighten receivables, and review refinancing exposure, maturity schedules, and opportunities to reduce sensitivity to higher borrowing costs.

Grow less cyclical revenue.

When farmers delay new equipment purchases, they tend to keep older equipment running longer. Parts, service, and aftermarket sales can help cushion a downturn. New markets or export channels can provide additional diversification.

What to Keep an Eye On

As planning season begins, keep tracking three numbers:

• The 10-year Treasury yield. Its momentum today offers a preview of demand roughly two years out.
• Farm machinery production. The Federal Reserve’s Industrial Production index for farm machinery and equipment shows where the industry stands in its cycle right now.
• Your own revenue or orders. Measured the same way, these indicators show whether your business is moving with the industry, ahead of it, or behind it.

Rates are only one of the forces at work. Commodity prices, farm income, trade policy, and weather all matter, too, and understanding how these factors fit together is essential to planning.

Turning Economic Signals Into Decisions

That is the conversation we will continue in New Orleans. Join us for the Economic Outlook session at FEMA’s 2026 Marketing & Distribution Convention, October 27–29 at the New Orleans Marriott. We will walk through where the cycle stands, which headlines deserve your attention, and how to turn them into decisions for 2027 and 2028.

Jeremy Bess and Patrick Luce, Stantec Consulting Services
Jeremy.Bess@stantec.com | Patrick.Luce@stantec.com