More Farmers Shopping for Used Equipment

The economic climate in agriculture is driving a trend toward shopping for used equipment.

Farmers are driving more than 400 miles to attend auctions selling used farm equipment, and online simulcasts are drawing participants from around the globe, says Matt Maring, owner of an auction operation in Minnesota. He also said farmers are spending $50,000 on replacement tractors that would otherwise cost more than $100,000.

While inventories of farm tractors have declined since reaching a 16-year high in April, stockpiles are still at record seasonal highs, according to the Association of Equipment Manufacturers. As farmers buy more used equipment, the glut is unlikely to be wiped out any time soon.

Greg Peterson, the founder of MachineryPete.com, has seen a 20 percent jump in the past year among farmers searching for low-horsepower machinery on his website. He also said he sees dealers showing up at auctions to find opportunities for strong profits on resales.

At a recent auction in Hammond, Ill., Peterson said it took about 17 minutes for a large tractor in excellent condition to sell, when it should take about three minutes in a healthy market. The extended time reflects the increase in bidders and an aversion to escalating prices.

Source: Bloomberg