Mar. 22--Duane Wallin knows the downturn is coming and is acting accordingly.

"We're trying to reduce our inventories. It's smart to do that when things are still going pretty good, because once things stop, it gets a lot more difficult," Wallin said.

Wallin is general manager of Colorado Equipment, a John Deere dealership that includes a store in Greeley along with seven others in Colorado and Wyoming. He agrees with the Association of Equipment Manufacturers that predicts sales of farm equipment will remain fairly good for the start of 2009, but then the recession will catch up and a downturn will result.

Wallin said as a group, Colorado Equipment is down in sales by 1.5 percent through the first of 2009, but the majority of that is a result in a fall off of construction equipment. Sales of farm equipment have continued strong through the first two months of the year.

The Association of Equipment Manufacturers released an updated forecast for selected categories of U.S. agricultural machinery sales recently, providing an abbreviated "snapshot" survey of manufacturers' predictions for 2009 business.

According to the AEM, in the past two years, sales of certain tractor types and combines have seen growth. A growth fueled by increased energy demands -- in part being met by ethanol production -- increased commodity prices and increased net farm income.

In January and February of this year, however, some tractor sales shrunk as much as 25 percent from last year. But sales were up 25 percent for combines.

Buddy Truesdell, owner of B&G Equipment of Greeley, a New Holland and Case IH dealership, said he agrees with that survey.

"I think that's pretty accurate," Truesdell said, adding that he's started to see somewhat of a slowdown.

"Guys are pretty nervous, but I'm not sure if they are more worried about water and its availability or with the economy," he said.

-- Farm economy factors

A decrease in demand for ethanol, due to dropping oil prices, is one of the factors behind the farm economy weakening, along with commodity prices falling drastically in the past year which have followed the decline in the general global economy.

On the financial side, the survey indicated that 41.7 percent of manufacturers feel that credit availability will decrease modestly, with the same percentage citing that credit availability will remain about the same.

Wallin said one good sign is that buyers are not backing out of orders for new equipment and dealerships can now get new equipment a little faster because the world demand has decreased. Russia, he said, recently turned back 200 orders for new John Deere tractors, so domestic orders that used to take 8-10 months to fill can now be filled in 4-6 months.

"The dangerous part of that is determining the value of trade-ins at the time the new equipment arrives," Wallin said.

He and Truesdell said the sale of construction equipment "is dead," as Truesdell put it, who added the biggest downturn in farm equipment sales he's seen has come from the smaller operators.

"The big farmers are sticking with their trade-in schedules, so far," Truesdell said. The sales of equipment to smaller farmers -- those with 25-30 acres -- is off 30-35 percent, but he said those farmers get the majority of their income from sources other than farming.

Both said some farmers are choosing to hold on to equipment and repair it, so that part of the business has shown an increase in the past year or so, as well.

Wallin said his group of dealerships recently signed a deal with Endurance Wind Power to sell small wind generators to farmers, which will give his group greater diversification.

The company, he said, is based in Canada, but most of the engineering on the units was completed in Utah. They will be perfect for farmers with electric pumps on irrigation wells that can't be hooked into grids, those wells in remote areas, or for dairy operations and similar operations.

Five of the units have been sold from southern Colorado dealerships, Wallin said.

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