The white-hot used agriculture equipment market is showing no signs of slowing down. Strong commodity prices and an underlying tight market for new equipment is fueling an unprecedented demand, with some instances of used equipment selling at a higher price than when that same equipment was purchased new off the lot.
We had a chance to visit with Mark Stock, CEO of BigIron, to provide some insight into the current market and what we can expect. Stock co-founded BigIron and was a pioneer in the development of the online auction site. Today, the company provides weekly equipment, land and livestock auctions across North America.
Can you provide a background on how the current used equipment market unfolded?
It was a combination of factors that came into play. First, we had strong commodity prices and producers were gearing up to take advantage of this by expanding their fleets. In the midst of this COVID hit, shutting down a lot of production lines and creating a lot of disruptions in the supply chain. We also have a lot of farmers starting to retire and are renting land out to bigger operations. These operations need bigger machinery to get the job done, and they are having a hard time finding that equipment. Orders are taking longer and longer to fill, so everyone is looking at the used equipment market.
How strong is the used market right now?
Its incredibly strong. Just one example of this happened recently in our online marketplace. We had a John Deere 36-row planter sell for $230,000, which was more than what the owner paid for the planter in 2013.
Any other impacts you are seeing?
Current prices of used equipment are also gaining the attention of farmers who may be nearing retirement. They see what the prices are doing, so we are getting a lot of inquiries. This group sees that they can get top dollar for their used equipment now, which may help them decide to retire earlier. Were also seeing that in our truck market. The usual cycle in this market is to drive the truck for 8 years, pay off the truck, and start over again by buying a new truck. But they are getting $50,000 to $60,000 more in the used market than their payoff. So they sell and do something else, because its hard to make a $60,000 profit driving all year long.
When might we expect to see the market get back to normal?
Normal has a very different meaning. There is a lot of demand and a supply pipeline that may take several years to get back to the way it was, even if we get back to a normal production cycle. There are a lot of backorders in place, and people need equipment to get the job done. So I expect the used market to remain very strong for the foreseeable future.
One thing the pandemic did was drive a lot of businesses to do more online. How did the pandemic impact the online auction business?
Registrations for our site have been astronomical. A lot of that traffic was driven by the fact that people didnt really have any other place to go to find what they were looking for. That was very good for our business. And of course, we had our auctions reaching more customers. We are averaging about 8 to 12 percent higher prices on average for all our equipment. Our online auction platform simply reaches more customers.
What makes your online platform unique?
We are more than just a site to list equipment. We have a team of professional representatives who assist farmers in selling their equipment. We take the right photos and videos, help them list the equipment, and expose their equipment listing to a large customer base. Today, its simply not enough to just put up an ad online and hope someone sees it. You have to ensure that listing is reaching the right customers. And while much of our equipment is sold to customers within 300 miles of the original listing, we also receive bids from across North American and across the globe. And having the right listing, with good video and photos, helps set our listings apart.
What about the producer who is thinking about selling some of their equipment inventory?
The market is as hot as ever, and its never been a better time to sell equipment. If you have something in your operation that you may not have used for a season or two, I would suggest you sell that equipment because you will be receiving top dollar. And in the case of some of our customers, they are selling equipment for more than what they paid for it. Its definitely a new marketplace.