515-223-5119 [email protected]

[By Tom Junge, Iowa Field Director, 2013 | Keywords: Business, Inflation]

Having been away from the wholesale side of the farm equipment business for 21 years, I find it hard to keep up with the price of equipment. I remember when I left White Farm Equipment that the list price of a 12 row planter was $3,000 a row. Now I hear they are close to $10,000 a row. Dealers have told me about some of the price increases they have seen over the years, especially the large ones caused by the rise of the price of steel and the introduction of Tier 4 engines.

After talking to some dealers, I thought I would attempt to figure out the inflation rate of farm equipment. With the help of a few dealers and the use of the trade-in guide, I sought to compare similar products. I tried to go back 10 years, but for some products I trimmed it to 7 years to avoid another model change and the risk of not comparing apples-to-apples. I found it difficult to compare some products such as combines and larger MFD tractors due to substantial changes in horsepower, transmissions, capacity and optional equipment that has become standard equipment.

In the table below I calculated the annual compound interest rate and the time it would take for the piece of equipment to double in price. I also looked at what the older piece of equipment is selling for today compared to when it was new.

EQUIPMENT Selling or List Price* Year Annual Compound

Rate %

Time to double in price (Years) Current Retail Price of older model**
Gehl 5640E Skid Loader $38,220 2013 4.50% 16.0
Gehl 5640E Skid Loader $28,110 2006 $19,245
Bobcat S530 Skid Loader $28,680 2013 3.75% 19.2
Bobcat S175 Skid Loader $19,890 2003 $14,250
NH T8.330 Tractor $203,580 2013 3.80% 18.9
NH TG285 Tractor $139,990 2003 $85,600
JD 9460R Tractor $284,190 2013 5.60% 12.9
JD 9420 Tractor $164,890 2003 $113,400
JD 8285R Tractor $210,610 2013 6.00% 12.0
JD 8330 Tractor $139,600 2006 $129,436
Kubota M9960 Tractor $38,860 2013 4.10% 17.6
Kubota M9540 Tractor $29,270 2006 $25,828
Massey 5455 Tractor $63,640 2013 5.90% 12.2
Massey 5455 Tractor $38,060 2004 $29,970
Massey 9520 Combine $298,910 2013 6.05% 11.9
Massey 9690 Combine $165,910 2003 $97,200
JD 946 Disc Conditioner $35,990 2013 4.90% 14.7
JD 946 Disc Conditioner $22,320 2003 $14,800
NH 488 Conditioner $19,530 2013 5.25% 13.7
NH 488 Conditioner $11,710 2003 $7,785
JD 569 Round Baler $36,810 2013 4.50% 16.0
JD 567 Round Baler $23,650 2003 $13,162
NH BR7080 Round Baler $30,680 2013 3.75% 19.2
NH BR770 Round Baler $21,190 2003 $11,879
Brent 782 Auger Cart $39,900 2013 5.85% 12.3
Brent 776 Auger Cart $20,185 2001 $17,650
Brent 657 Wagon $23,200 2013 6.60% 10.9
Brent 644 Wagon $10,795 2001 $11,750
Hardi Global 4000 Sprayer – 80′ boom $54,961 2013 5.75% 12.5
Hardi Navigator 1100 Sprayer 80′ boom $31,420 2003 $16,750
Kuhn-Krause TL-6200 21′ $57,672 2013 6.55% 11.0
Krause 6161 Landsman 21′ $26,872 2001 $21,000
Average 5.18% 13.9
*Selling Price from 2003, 2004, 2006 and 2013 Trade-in guide or from old dealer price quotes
**Current price from Tractorhouse less 10%

With the inflationary rate of 5.18%, equipment on average is estimated to double in price every 13.9 years. If equipment followed the Consumer Price Index (CPI) which for the past 10 year period has averaged 2.24%, it would take equipment 32 years to double in price.

Due to this rapid inflationary rate on new equipment, it has naturally pulled up the selling price of used equipment. Just using the 9 items that I compared since 2003, they are selling on average for 62% of their original price. The low was the sprayer at 53% and the high was 72% for the Bobcat skid loader. Looking at all items, the winner was the Brent 644 wagon. It is bringing 109% of its original price.

Looking at the 2 tractors that were sold in 2006, their current value is 90% of the original price that the customer paid. It turns out that these purchases and many like it were good investments for farmers. They have been able to operate the equipment for many years and nearly maintain all of their equity. If you were to calculate the hourly cost, it would be insanely low.

It would be worth your time to look back on what the customer paid for the equipment he plans to trade in. If it is like some of the items in the table above, you can show the customer how low his cost of ownership has actually been. This exercise might be enough to ease his mind in making further investments in equipment.