Corn planting

High prices breed high prices - an old adage that has never been truer than 2021. While farm inputs and commodity prices continue to increase, farm equipment and machinery costs continue to plague producers.

As pandemic pressure slows, it is nice to believe that equipment prices and availability might eventually settle into a new “normal” but with continued supply shortages the end of rising equipment costs is difficult to envision.

“I’ve been selling equipment basically since 1988 or so, and I’ve never seen anything like this where you can’t find used equipment,” said Cook Auction salesman Kevin Hemme. “This is new territory.”

While 2020 faced short term shortages of critical items like toilet paper, a larger issue for technological and mechanical items was brewing as factories closed due to labor shortages and disease outbreaks.

Even domestically made or remanufactured products became hard to procure, not to mention objects of foreign origin like microchips. The result was an increased demand for readily available used equipment.

“Starting in January of 2021, we were noticing that there was less used equipment available,” Hemme said. “There were less new equipment sales for the dealers, which in return gave us less used equipment out there for us to purchase and resell. As the year has gone by just almost continuously, especially after July 1, has gotten worse and finding good quality used equipment is starting to get very difficult.”

As delivery and sales for new equipment slowed, used equipment, especially like new equipment, began to draw more attention and higher prices. Hemme estimated an increase in price of all used equipment by 25% beginning in 2021.

“It’s very hard to find something late model, low houred tractors, combines or even tillage equipment,” Hemme said. “Now, what we’re buying seems to be maybe a little bit older models, and yet we’re still trying to buy quality.”

Hemme said Cook Auction’s dedication to sourcing quality used equipment has not waivered, but the distances they have had to travel to obtain that equipment has greatly increased.

“Our business has been pretty good because we work hard,” Hemme said. “We have buyers all over the United States that are buying equipment and those buyers work hard weekly to find us equipment to resell.”

Similarly, farm equipment buyers are also more willing to travel in search of just the right product at the right price. While in-person auction attendance remains higher than normal, online bidders are increasingly common.

“What has changed is our internet buying has grown,” Hemme said. “Again, all year long for people even locally, but more importantly, people further away. They’re buying just off the internet because we have something that they want and they’re not able to find it close to them.”

Internet activity has also increased retail sales for Cook Auction in between their scheduled online and in-person auctions, a significant change in 2021.

Hemme cautioned buyers searching for equipment online to do their research in advance and to investigate in person before purchasing.

“Still spend the time to go look at the piece of equipment and don’t just purchase it online,” Hemme said. “It is still hard to purchase a $100,000 tractor and never look at it except pictures. And, even if you’re five miles or 600 miles away, in my opinion, it would be to your advantage to take the time to go look at that piece.”

As far as seeing an end in sight, Hemme said new equipment sales could pick up as early as this summer, but used equipment sales could potentially remain high for a while, until trades and deliveries become more constant.

“When the new equipment finally does come in, there’s going to be somewhat of an influx of used equipment, although a lot of dealers have even sold the trade equipment already,” Hemme said. “I think in the first six months is where they’re finally going to get new equipment in. They’ve already got the one trade in and normally, you know, high dollar pieces of equipment whether combines or tractors, normally there’s about five trades before you ever get finally rid of the last piece of equipment that you traded for.”

Hemme said that typical rule of five trades could lead to an eventual build up of used equipment in the system and the eventual lowering of used equipment prices and demand.

“Somewhere along the line, the corporate dealers are going to trade for a lot of equipment and they’re going to get a glutton of used equipment on their lots,” Hemme said. “Now, I wish I could predict when that will be.”

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