As a mild winter wanes, prices for both new and used machinery have seen downward pressure — a welcome sign for farmers looking to update equipment lines.

“Our used market is down a little bit from last year, but holding good,” said Chris Emberton, a representative for Wright Implement who was showcasing John Deere equipment at the National Farm Machinery Show, held in mid-February in Louisville. Wright Implement sells equipment at 15 locations throughout Kentucky and Indiana. “Things are optimistic, as far as not ‘dropping off,’” he said.

In the heavy-machinery market, Stan Taylor, representing Louisville-based Boyd CAT, says construction equipment sales are up, coal mining equipment is down, and agricultural equipment is somewhere in the middle.

UNCERTAIN FUTURE: Showgoers to the National Farm Machinery Show browse Boyd CAT’s products. Stan Taylor, a representative at the booth, said construction equipment sales are up, coal mining equipment is down, and agricultural equipment is somewhere in the middle.

“The ag guys I’ve talked to say it’s a mixed bag,” Taylor said. “They’re not sure where it’s gonna go.”

Equipment’s ‘new norm’

Shaking off pandemic-related supply chain hiccups, new and used equipment markets have emerged in a new norm. Machinery manufacturers are making up for lost ground. An influx of new inventory could soften used prices in the near future by “putting downward pressure” on asking prices, according to the most recent January market report from Sandhills Global, a media brand that connects buyers and sellers of equipment.

“Late-model inventory is building up on dealers’ lots, which can lead to lower retail pricing in the near term,” said Ryan Dolezal, sales manager at TractorHouse, a trading hub for spare parts and used equipment.

This outlook is in line with a recent trend. In December, Sandhill Global’s monthly report highlighted a “consistent decline in asking and auction values” of equipment due to “oversupply and softer demand.”

GETTING BIGGER: Modern farm machinery is getting more complex and bigger to meet demands. Pictured is Kinze’s new 567 planter at the National Farm Machinery Show.

Since last January, used farm equipment inventory has increased over 35% across the brand’s market share. Meanwhile, entry prices for new equipment are on an upward trend as the new machinery market skews toward “high dollar” machines, the report says.

“A typical combine costs 20% to 30% more than it did a few years ago,” Dolezal said. “However, those units are depreciating much quicker in the current market compared to past years.”

Larger machines

New machines cost more these days because they are larger and more complex than ever before. That size increase is being driven by nationwide consolidation of farming businesses. Agriculture as an industry is donning a more corporatized structure, according to Kurt Coffey, head of Case IH North America.

“What we’re seeing is a lot of consolidation,” Coffee said at a Florida launch event for the new AF11 Combine. “We realize MMA [macro-management of agriculture] consolidation is going to create larger farms, less farms. Hand in hand with that is the notion of professional farming. At times, it’s corporate.”

More broadly, more larger machines are needed to meet increasing demand for more food products and agricultural land. The global tractor market, for example, is expected to grow from 2,000 units shipped in 2023 to more than 2,500 annually by 2029, according to a recent market analysis by Arizton.

Cautious buyers

Anecdotally, as used price tags hold and new costs increase — at least for the moment — buyers are a little more cautious than they were before. That may be due to lower grain prices leading to tight margins this year. Equipment reps at recent trade shows say there aren’t many people on the fence these days. Buyers come to booths informed. They know what they need.

“It’s either ‘Yes, I'm for sure in the machine market,’ or ‘No, I’m not in the market,’’” said Mike Langridge, a representative at Alta Equipment. Langridge was at the brand’s booth at the New York Farm Machinery Show in Syracuse. 

MAKING UP GROUND: It’s been a few years since the pandemic impacted supply chains, and machinery manufacturers are making up for lost ground. New inventory is increasing at dealer lots across the country. Pictured is H&S Manufacturing’s new Twin-Flex Merger at the New York Farm Show.

Historically, farmers with year-end money to spend would show up with their checkbooks, looking to offset tax burdens. But that phenomenon has waned a bit, he said. “Folks are more mindful,” he added.

In this new norm, equipment dealers need to focus on customer needs, Langridge said. Those businesses will be well positioned to weather whatever marketplace volatility comes next — be it from a farm economy downturn or an outlier like the upcoming presidential election.

“Whoever is supporting the customer will have the best luck,” he said.

Jeremy Morse, who was representing Campbell, N.Y.-based Jim’s Equipment Repair at the New York show, agreed. “I think trust is still the biggest thing,” he said. “Farmers are more open to trusting someone and getting to know someone.”

This relationship is imperative to both farmers, who value trust when investing their hard-earned money, and to the dealers that rely on loyalty when the going gets tough. So far, Morse said business this off-season has been about average.“I wouldn’t say it’s strong, but it’s not slow,” he said, noting that lower interest rates have helped. As farms emerge from a mild winter, he’s optimistic that the marketplace will strengthen. The warmer weather “has people’s eyes on spring,” he concluded. “Since the start of February, we’ve seen an uptick.”