Caution has been a major theme in the farm machinery market in recent years, with buyers relatively hesitant as grain prices strain machinery budgets. But, recent data show confidence among buyers is slowly improving, and for good reason: Experts say now is a good time to buy.
Recent federal data show U.S. consumer confidence is rising, with "consumers' assessment of current business and labor market conditions" improving considerably, likely foreshadowing an increase in economic growth in the next few months. That improvement is spilling over to the ag sector. A recent survey conducted by DTN/The Progressive Farmer (DTN/PF) shows crop producers' attitudes are improving despite a challenging grain marketplace. The Agricultural Confidence Index (ACI) showed an almost doubling of those who believe economic conditions will improve soon.
That optimism appears to be spilling over into the farm machinery sector. Though the grain markets remain in lower territory, more producers are returning to the market — both new and used — to cover essential machinery needs, reflecting growing optimism, says Charlie Glass, Farm Equipment Manufacturers Association (FEMA) Dealer Relations Committee Chairman emeritus.
“I’ve seen a significant difference in how buyers see the machinery market,” Glass says. “Technically, it hasn’t changed, but I think their attitudes toward it are changing.”
Considering the price fluctuations – or lack thereof – in many sectors of the machinery market, there’s good reason for that growing buyer confidence. Right now is a good time to buy, says used farm machinery expert Greg “Machinery Pete” Peterson.
“I’ve been telling producers that I realize this is a difficult time in agriculture, and it’s hard to be aggressive as a buyer, but you’ll never have a better opportunity as a buyer than right now,” “Buyers are going to get a great value right now,” says “Good used equipment values have been holding the last 18 months. Buyer confidence is coming back.”
Used farm machinery prices tumbled alongside the fall in grain market prices a few years ago. But, in the last year and a half, that decline has actually reversed and is now starting to rebound.
“We haven’t seen used values fall further since the end of 2015. Used values are holding after they saw the biggest drop I’ve ever seen from late 2013 to late 2015,” he says. “They’ve generally held and since about last November, they’ve started to tick up.”
It all adds up to a clear message for buyers: “Be a player in the marketplace. I know it’s tough out there, but you are going to get a great value right now. Don’t assume you’re going to have a better opportunity as a buyer later on.”
Peterson recommends buyers focus their machinery spending on specific needs and stay in close contact with their dealers and others to ensure their needs are met. Producers can maximize trade-in values by providing detailed maintenance histories and any additional observations that can show how well they’ve treated that machinery prior to upgrading.
“Farmers don’t tend to shine a spotlight on themselves. That’s not who we are,” Peterson says. “But, the more you can showcase how well you’ve treated a piece of equipment, the more value you’ll get out of it when you take it in to trade.”
Create an open dialog between buyer and seller
Considering the state of the grain and machinery markets today, it is of utmost importance to sustain the buyer confidence that’s slowly building. For sellers, that’s a matter of honesty, acknowledgement of challenging markets, and openness when it comes to marketing individual machines. Sometimes, that buyer-seller relationship is the product of a long-term working relationship, while in other cases, it’s the recognition that both buyer and seller will benefit from working together through this sluggish part of the grain market cycle.
“As a dealer, you can put any price on a piece of equipment you want. If it’s the right price, farmers are reacting and buying. So, make the equipment you’re selling stand out,” Peterson says. “For example, the more you can personalize a piece of equipment by showing its ownership history and maintenance records, the more real and honest you are. And the more you can show you respect your customers, the better off you will be. Putting a face on a piece of equipment and showing how well it has been maintained means a lot to buyers."
Sometimes, it's better for sellers to look at the bigger picture and think beyond a single purchase agreement. Perception is often reality in a market like farm machinery today, and the more you can demonstrate the true value of a piece of machinery and show you are willing to work with buyers by specifically targeting the machinery they need at prices on which both parties agree, the more you will benefit in the long term.
“Take control of the message. Why sit back and let market chatter and coffee-shop talk dictate your sales?” Peterson says. “The dealers who can control their message are the ones who will have successful results.”
A partner in confidence
With our knowledge, experience and dedication to serving agriculture, farmers can be confident in AgDirect as a financial partner for machinery purchases. We’re dedicated to agriculture and offer myriad financing options to fit any operation, whether buying used or new machinery. We offer financing for buying, leasing or refinancing, with fixed- and variable-rate terms from two to seven years. We also offer delayed payment plans with no prepayment penalties.
Want to learn more? Contact your nearest AgDirect representative!