The author is a managing partner in Elite Ag LLC, Leesburg, Ga. He also is active in the family farm in Rutledge.
I hope that everyone has had a great fall, and that the harvest has been bountiful! High feeder, fat cattle, and milk prices have improved the outlook for those in the livestock business, which is a nice change. Unfortunately, lower commodity prices for corn, wheat, cotton, and soybeans have severely narrowed the margins for many crop farmers, and input prices have been slow to respond and help boost incomes.
Like everything else, machines, parts, and services have all experienced drastic price increases in the last three years, and that was bearable with higher commodities and higher used equipment values. But, as soon as crop prices and farm income started to retract, so did machinery prices and values. The equity that had built up in our paid-off equipment has now shrunk along with falling grain prices.
In tough economic times, having gone out and purchased shiny new iron in the recent past only to see it take a 25% or more value decline in the first year doesn’t help the situation, especially if we are talking about a half million-dollar unit. Dealer inventory reduction auctions this summer have been crazy with no equipment category being safe from lower values. Late-model tractors, planters, sprayers, and combines all took major hits in overall value.
What does this mean for you?
A buyer’s market
If you still would like to purchase a new unit this winter or spring, there will be some awesome programs and low-rate financing from all manufacturers. This will be especially true if you are looking at used inventory or willing to purchase a new tractor on the dealer’s lot. Most manufacturers are offering incentives to sell the units that dealerships have in stock. This is because most dealers are not going to order another unit until they sell the ones in inventory. You may not be able to get every “bell and whistle” you would ideally prefer, but the extra discounts combined with low-rate financing will make it easier to sleep at night.
If you are not in the market for new equipment, then you could be in for some deals over the next year in more ways than one! First, as I mentioned earlier, there will still be plenty of late-model, low-hour used equipment hitting auctions everywhere. Dealerships are needing to free up cash and do not want to have it all tied up in used iron. You will need to do your research on what the value of each piece of equipment is ahead of time. There are many websites that can help you get the “Kelly Blue Book” current value of a unit. When you find what you’re looking for at an auction — and it’s within your budget — be ready to pounce on it before someone else does.
Another less common route taken is dealing with the equipment finance companies. I have spoken with several, and they all say that consumers of all types are returning or forfeiting their pieces of equipment rather than keeping up with the payments. Most say they have never seen so much repossessed equipment. As you might expect, there is some “red tape” that must be cleared before they can be sold, but there are some good deals to be had. Several of them even have their own website where the available equipment is listed.
I believe in the U.S. farmer’s spirit and work ethic, and I know that we will all make it through this rough time and be stronger for it on the other side. It’s going to take some time, patience, and belt-tightening. Be safe finishing up harvest and have a great holiday season!
This article appeared in the November 2024 issue of Hay & Forage Grower on page 32.
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