Each year we receive a special management report from Ag Equipment Intelligence. This report surveys dealers across Canada in an effort to provide the outlook on the Canadian market for the coming year. Through this survey of our dealer members and the reports we have heard from our various dealer meetings, we are very optimistic that equipment dealers in Canada will be experiencing sales growth in 2007.
We believe that equipment dealers and their sales reports provide a good indicator of the agricultural economy in Canada. Our sales are driven by a number of factors; the most important, however, are weather and commodity prices. If the weather cooperates and our farming customers have a crop in the field, our members will sell equipment. Additionally, if commodity prices are strong, our farmer customers will buy equipment. If we have a combination of good crops and strong commodity prices, our members will see significant sales growth.
Our dealer members are coming off a solid sales year in 2006. Every category of farm equipment that is tracked by the Association of Equipment Manufacturers saw an increase in 2006 over 2005. There were 19,375 tractors sold in Canada in 2006. I should point out that these are figures for new tractors. This represented an 11.6% sales increase over 2005. Additionally, Canadian dealers sold 1,583 new combines in 2006, which represented a small increase of 1.2% over 2005. This increase, however small, is still significant, since our industry is facing consolidation of farmers across Canada as thousands of acres are taken out of production each year because of urban sprawl, population growth, and other factors.
Looking forward to 2007, Canadian dealers are demonstrating considerable optimism and have higher sales expectations: 51% of our dealers in Canada have indicated that they will see significant sales growth in 2007. Our dealer members are forecasting that every tractor size is expected to do as well as or better by a substantial margin than in 2006.
For other farm equipment, our members are forecasting healthy increases in almost every category. Global positioning systems, farm loaders, round balers, and lawn and garden equipment will lead the way. We also expect combine sales to remain consistent.
The only type of farm equipment for which we forecast a decrease is tillage tools, which include cultivators, plows, and discs. The decrease in this category is more reflective of changing farming practices for moisture retention and soil conservation than of levels of confidence in the industry.
Our survey also indicates that dealers do not intend to decrease their capital spending in 2007. In fact, a significant number of our members plan to increase their capital spending by over 10%. Generally speaking, dealers in Canada intend to up their investments in all areas of the business, and the service departments will see the greatest increase, as our members will be improving their facilities and service vehicles and adding technicians.
Attached with our presentation, which will be handed out after the translation is done, there will be a breakout of the region of our dealers' opinions on major issues and concerns for 2007, and a further breakout by province will also be included for your information.