Originally published 4/5/2022 on AgDirect.com.
Concerns about rising input costs and ongoing supply chain disruptions have impacted producer’s machinery purchase plans in recent months.
While conditions are slowly starting to improve, low farm machinery inventories continue to hamper equipment spending and trade-in activity.
“We’re entering a new era of the equipment market and experiencing a huge shift in how producers plan for equipment purchases,” says Lucas Scheibe, an AgDirect territory manager in North Dakota. “Dealers aren’t stocking as much iron upfront, and producers are challenged with scheduling purchases 12 to 15 months in advance versus following typical, seasonal sales patterns.”
Consequently, used equipment prices are up 20% in certain product areas, more hours are being put on machines by the time they are traded, and buyers are taking on more risk in selling their used equipment before their new machine is delivered.
“On the lending side, quoting slowed and some equipment deals were hindered or fell through altogether,” says Scheibe. “Now through April will be a waiting game to see what trades go through as well as the wave of early orders that were placed last year.”
“The spring season will be very telling of what’s to come and will have a big impact on buying and selling momentum through year-end,” he adds.
Looking ahead
Looking at the year ahead, interest rates are expected to increase; however, they will likely remain at levels that are still historically low. At the same time, inflation and rising input costs are putting a dent in producer’s pocketbooks.
“Overall, we’re expecting to see average trends in financing activity coming off the headwinds of rising interest rates and consumer prices,” says Scheibe. “Strong Q3 projections may inject some confidence moving forward and as supply chain issues get corrected, we should see prices on used machinery start to normalize.”
Meanwhile, strong used equipment prices have driven up auction activity and private party transactions.
AgDirect finances a large portfolio of tractors, and according to Scheibe, everything from small loader tractors to large framed 4WD track machines are currently in high demand. The used low hour sprayer market is hot, and combines are starting to tick upward. Scheibe says he has also seen more used tillage equipment moving than in previous years.
“Because of limited availability, it may be tough to find a unit that fits within your budget and hour range,” he says. “You may have to pay more for the equipment, consider purchasing out of state or even look at buying another equipment brand.”
“AgDirect is here to partner with producers and provide financing in the form of a loan or lease to help you get into machines that would otherwise be out of reach,” he shares.
For example, AgDirect is currently offering leasing programs for producers to take advantage of special residuals and lock in a low lease payment on planters, sprayers and combines.
- FPO, PRO and PUT residuals on new and used planters, drills, air seeders, air carts and toolbars now through June 30, 2022.
- PRO and PUT residuals on low hour used sprayers (no floaters) now through June 30, 2022.
- PRO and PUT residuals on new and late model (2017 or newer) combines now through August 31, 2022.
Additionally, AgDirect equipment financing includes flexible loan and lease options that can be tailored to fit a buyer’s specific cashflow requirements. Producers can apply online or work with their dealer to complete the simple application process and receive a quick response within one business day.
“Our goal is to help producers be successful with their equipment investments, whether that’s keeping them up-to-date on the rate environment or speeding up the transaction process,” says Scheibe. “Ultimately, AgDirect is here to support producers as they make purchase plans in 2022.”
AgDirect offers competitive rates and terms for both new and used equipment purchases. Contact your local FCS Financial office to learn more about AgDirect options.
