Shane Reagan had one word to describe how he felt after spending$255,000 for a used Case IH quad-track tractor at a farm auction near Williams in north central Iowa: Broke.
But he also felt pretty lucky. He and his 87-year-old father, Dennis, drove four hours from the St. Joseph, Missouri, area when they couldn't find the tractor they wanted, for the price they wanted to pay, closer to home.
Even though the red tractor was nearly a decade old,it had a new engine with only about 500 hours on it. Reagan said he saw a newer tractor with about 400 hours, and the sellers wanted $400,000.
There was another advantage to the Iowa equipment auction, said Tim Meyer, an auctioneer forSteffes Groupin Mason City: "You can take it home today," hetold farmers at the Williams auction.
At a time when finding new or used farm equipment is difficult, if not impossible, immediate possession hastremendousappeal, Meyer said. Long lead times for equipment delivery have farmers nervous they might not get planters by spring or combines by fall.
Supply-chain disruptions hitting all equipment manufacturers, complicated by , arerestricting supplies, whileabundant harvestsand high prices are putting cash in farmers' hands and driving demand.
Barclays analyst Adam Seiden wrote in a November report that the used farm equipment market rivals2012-13, when a widespread drought drove corn and soybean prices to new highs and U.S. farm income hit a record $143.5 billion.
Average pricing "is up on every vintage of equipment from 1-20 years old … a historical rarity," Seiden wrote in a November note, calling the used equipment market "incredibly strong."
U.S. farm income this year is forecast to be its highest since 2013at $116.8 billion, the U.S. Department of Agriculture said earlier this month. It's 23% more than in 2020, the agency said.
"Equipment that’s five, 10 years old is selling for more now" than when it was new, said Steven Nelson, a farm agent who works with Meyer at Steffes. For example, a 16-year-old trailer used to haul grain recently sold for $33,500. It probably cost $30,000 to $32,000when new, Nelson said.
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The shortage of good equipment is global — and so is the competition, said Rick Winegarden,owner of Sale Barn Realty & Auction in Pocahontas.
Winegarden said buyers at his auctions have shipped machinery to Canada, Mexico, the Ukraine and Bolivia, despite high transportation costs.
Reagan discovered he was bidding against two Canadian farmers participating online in the auction for the Case IH 550, even though the value of the Canadian dollar is only about four-fifths that of U.S. currency.
But prospects are that even withhigher prices for equipment — along with fertilizer, seed, fueland other expenses— farmers should still be able to scratch out a profit next year, he said.
"That's if grain prices stay where they're at, and if we can get a decent crop," said Reagan, who grows corn and soybeans with his family and runs a cow-calf operation.
Braving the wind to pay inflated prices
With temperatures in the teens and the wind gusting over 40 mph Tuesday, dozens of buyers atWinegarden's auction in Pocahontas were bundled in insulated coveralls and jackets.
But with 2,000 pieces of equipment to sell,Winegarden anticipated having 1,000 bidders on site and 1,000 more online.
Greg Casey, who farms near Algona with his brother Brian, hoped to buy a trailer to haul grain. However, the bidding flew over his $23,000 cap. Casey said the winning bidder "was determined to go home with it," no matter the price.
The trailer, often referred to as a grain hopper, sold for roughly $27,000.
Casey said he and his brother have been looking for a used trailer after buying a 25-year-old semitrailer truckfor a bargain $12,000 from a family friend.
"We caught him on a good day," Casey said.
On alot a couple of miles east of Pocahontas, about a dozen new and used grain hopperswere already sold, Casey said, adding that he and his brother will spend the winter shopping for a trailer.
"We can find them. Just not at the price we want to pay," he said.
Meyer, the Steffes auctioneer, said well-maintained equipment with low hours is snagging record prices. Overall, he said, used farm equipment prices are about 30% higher than a year ago. Barclays' Seiden puts prices about 18% higher this year.
Meyer said he believes that despite their elevated spending, farmers remain conservative, concerned about the costs they'll face to put in next year's crop.
Farmers report prices for commercial fertilizer next year are two, sometimes three times those theypaid a year ago. Reagan, for instance, said he's paying nearly 2.5 times last year's pricefor anhydrous ammonia at $1,410 a ton.
Mike Naig, Iowa's agriculture secretary, said farmersare concerned about next year and "whether they'll have everything they need to go into the field."
"That's reflected in the prices that people are willing to pay for used equipment," Naigsaid.
Casey said a friend wants to buy a used planter to "put in the shed" just to ensurehe has parts available for repairs in case of shortages.
"We're not hearing a lot of horror stories up here," Casey said, "but he wants to be proactive."
Prices expected to remain high
There's no sign that prices are going to moderate in the near term. The U.S. Department of Agriculture estimates this year's productioncosts are 8.3% higher than a year ago, with livestock feed leadingthe increase at13.5% and fertilizer pricesup 12.5%, and growers expect costs will climb.A Purdue University survey of farmers in November shows43% of respondents expect farm input prices to rise by more than 16% in the coming year.
"In November, 44% of producers said their farm machinery purchase plans were impacted by low farm machinery inventories," said the survey of farmer sentiment.
"When asked what their biggest concerns are for their farming operation in the upcoming year, nearly half (47%) of survey respondents chose higher input costs," the survey said.
Lon Hensley, who farms south of Williams, called farm machinery prices outrageous, saying "everything is about double the price" he expected.
Hensley, who is retired,helps out on the farm of his son, Jordan.The two caught two different auctions one day earlythis month, looking for equipment to replace machinery that was four decades old. Hensley bought a2006 Case-IH tractor for $61,000 with 7,319 hours on its engine.
Hensley said when he started farming in 1972, a new combine cost about $35,000 and came with both corn and soybean harvest heads, andfarmland hadn't yet reached $1,000 an acre.
Land in eastern Iowa south of Cedar Rapidsset a record this year at $26,000 an acre, a massive increase even with about 40 years of inflation accounted for.
"How can new farmers even get started?" Hensleyasked.
He said he feels better about the machinery's price at the sale near Williams,knowing the moneywill go to neighborsDavid and Janice Russell, who are retiring.
While the strong crop prices are a bonus, David Russell said the couple decided lastspring they were ready to quit working. It was midnight, and he had just finished planting and his wife was picking him up.
"They say you know when you know," said the 69-year-old, adding that the couple hope to spend their free time traveling.
Russell plans to put part of his 80-acre farm into the federal conservation reserve program that supports bees and other pollinators. "It will be for butterflies and hunting," Russell said.
Winegarden said the time was right this year for many farmers to retire. They had "a good crop and high prices.Everyone wants to go out on a good year," he said.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach herat deller@registermedia.com or 515-284-8457.
