As news of large layoffs at ag equipment manufacturers makes headlines and auction prices continue to soar, producers are hesitant to invest in new machinery. But is the current situation actually a good time to buy? On the latest Unscripted podcast, host Tyne Morgan brings in Greg Peterson (AKA Machinery Pete) to help unravel what’s happening.
Peterson says that manufacturers aren’t the only ones downsizing their inventory. Farmers are also looking at their equipment with an eye toward reducing their fleet. The situation is complicated by low commodity prices. Data shows that in 2023 and 2024 we’ve seen the largest decline in farm income in history. Peterson advises producers to keep things in perspective. “We need to remember that ’21 and ’22 were the highest years ever,” he says, adding that the drop is “nowhere near what we saw in 2013 and 2014.”
Still, he understands the “silent stress” and “knots in the stomach” that many farmers — and equipment dealers — are feeling. At a recent auction in Missouri, he saw the most late-model equipment for sale than he’d ever seen before.
“The big underlying issue is the cost of new right now,” he explains on the podcast. “They’re all tremendous products, but we might have found the end of the rainbow as far as price.” Morgan and Peterson agree that at this year’s Commodity Classic in early March, the mood was upbeat as manufacturers displayed the latest models. “There was so much excitement,” Morgan recalls. “There was no angst. That’s changed.”
Peterson concurs, adding that he noticed a shift in tone — and pricing — in early June. While prices for corn and soybeans have continued to decline and producers watch their margins tighten, the cost of new equipment seems more and more prohibitive, even as dealers take pains (and make reductions) to move inventory. Peterson sees an opportunity for producers brave enough to buck the trend.
“When things get challenging, there are opportunities,” he explains on the podcast. “While others are pulling back, I’d go pedal to the metal. That’s what I recommended in 2015. Everyone was pulling back. That signals that you should be aggressive.”
EDITOR’S TAKE:
Recently there has been a very noticeable change in the overall economic outlook, as well as in the ag economy. The stock market is now sending signals, which could be perceived as a full-blown recession. Yes, people are now seeing the result of overspending by the federal government causing unprecedented inflation over the past three years. The compounding impact of inflationary price hikes, coupled with higher interest rates and declining real wages are taking their toll on the vast majority of our population. They are faced with the reality of being forced to cutback spending.
Ag commodity prices are making farmers/ranchers nervous as well. As this article suggests, prices are declining, the outlook is for a pretty sizable drop in net farm income due to much tighter margins on most commodities. Fortunately, land prices are still maintaining their value, thus, providing farmers/ranchers with a decent looking balance sheet. Covering operating costs will be the larger challenge ahead. But that’s where you can help! You have AgPack® in your arsenal. With the addition of our latest partners, AgPack® now offers farmers/ranchers as much as $40,000 in potential savings! Where else can they purchase a new or qualified used truck or SUV and get that kind of Return on Investment? Be sure to let them know about this amazing opportunity!
