Stressors abound for the agricultural machinery industry, which has been clawing through geopolitical debris for a while now. It’s been slow going, but could there be light at the end of the tunnel?
Cody Holst, general manager at BigIron, is optimistic there’s a glimmer ahead.
“It’s not bad. It’s not ugly. It’s not great, but it’s good,” he said. “In my opinion, we’ve put our lows in on used equipment. The commodity prices are coming back.”
As those prices rebound, buyers are returning to the auction house armed with information. They know what they’re looking for and are selectively willing to wait for the right deal. That’s a change in buyer behavior.
“We’ve just been waiting, not going anywhere. We are all in a holding pattern as farmers are trying to decide what direction to go because it’s a big decision,” Holst said.
Before this ongoing economic trough, buyers might have made several purchases heading into harvest or planting season. Now, Holst said, they’re thoughtfully making just one — and only when necessary.
“They’re putting in more homework and research into the items that they are going to buy because the extra cash might not be there,” he explained.
Choosing used
When they do reenter the market, farmers are choosing to buy used because prices for new machines remain elevated due to trade tensions and global uncertainty, said Mark See, used-equipment manager for Van Wall Equipment, based in Iowa.
Conversely, used equipment is a bit more insulated because it’s mostly domestic. Further, existing machines are not tariffed, nor are they subject to volatile adjacent markets such as the energy sector. This offers an opportunity for sellers looking to cash in on past maintenance efforts.
“We are selling more good used than we have in the past. Farmers are bringing good used to us. That’s where the difference is, the quality of the used and the hours,” See said, noting a successful 47-machine auction during this year’s Farm Progress Show.
“I was pretty pleased with the results of the auction we held,” he said of the show. “You go to auction; you can’t control your sale price, or the reward or the benefit. There’s a lot of exposure here. It gets in front of a lot of people.”
See also attributed the auction’s success to a slight turnaround in market prices recently. “I’m sure that helped some,” he said. “Right now, I think the used ag equipment industry overall has stabilized. It’s actually on its way up.”
Careful decisions
The popularity of auctions isn’t driven by declining new inventory, according to See. While manufacturers are scaling back production due to weakening demand, farmers’ shift to auctions reflects their desire to reduce risk.
Like Holst, See finds farmers are increasingly making careful, informed investments. With so much out of their control — higher fertilizer costs due to the Strait of Hormuz bottleneck, Trump-era tariff tiffs, unpredictable weather, etc. — managing equipment costs is one variable they can govern.
“There’s not necessarily a lack of new equipment. I think the dividing line is that investing in equipment presents risk,” See said. “It’s all about risk and managing the risk for the operator who’s buying that piece of equipment, taking it back to whatever size farm that they might be operating. I think that’s where the market differentiation is for one machine versus another.”
Capitalizing on the market
As the industry continues to plow through uncertainty, the playbook has become clear for buyers: Do all the homework and pencil things out well before the pen hits the paper. For sellers, it’s a little more nuanced. Does it make sense to slate a well-maintained machine for the auction block? If it is sold, what then?
There are many ways to right-size equipment to acreage. Savvy shifts can save money. For those positioned well to sell, the light at the tunnel’s end presents opportunity.
“For sellers who maintained their equipment well, it’s a good time to sell because if a producer can’t afford a new piece, they’re going to go try to find that good used piece,” Holst said. “If you have taken care of your equipment, then you are going to get a premium for it.”