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Serving: IA

Drought Impacts All Aspects of an Industry

As crops dry up, a lot of fallout could be expected beyond the corn field.

Images of shriveled corn, dry-cracked ground, and even reminisces of past droughts are common now. We've even created a drought-focused site to help you keep up on key issues impacting crops -

But how can drought impact the equipment side of the business? Turns out it could be hitting the business in a number of ways. I chatted with Jerrod Westfahl, founder and president, Purple Wave Auction Co., about how this kind of weather can impact equipment auctions and even equipment sales.

His company concentrates on web auctions of equipment, often by dealers or local governments trimming surplus supplies. "That dealer reduction auction is looking for a cash buyer," Westfahl says. "That means asking someone to write a bigger check than if they were buying a new piece of equipment with a smaller down payment and a deferred payment plan for the balance." For an auction sale, the buyer is often writing a check for a low-six-figure number for a slightly used machine. In a time of uncertainty, will they be willing to write that check?

Westfahl says it's possible those buyers - in this time of uncertainty - will re-evaluate their equipment needs and step back. So far, he says used equipment values in auctions and the industry, have held steady compared to 2011. However, we're entering another key part of the auction season that gap between "spring harvest" and "fall harvest" when quite a few online and live auctions take place. "I would expect to see [in the next few weeks] if there is some softening that it would manifest itself here in the next 10 to 12 weeks," Westfahl says.

And there's another factor to consider too. We're about to enter the early order window for next year's equipment. Special deals, early order incentives and the sales push is on for new gear for 2013. How will this drought across the heart of the Corn Belt play out? That remains to be seen, but we will be watching what's happening and report back what we hear in this blog.

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