By Farm Credit Services of America/AgDirect
A surge in machinery spending in 2021 compounded by ongoing supply chain disruptions left dealers facing one of the most severe shortages of farm equipment in decades.
While conditions are slowly starting to improve, low farm machinery inventories continue to impact sales and trade-in activity.
“We’re entering a new era of the equipment market and experiencing a huge shift in how customers plan for equipment purchases,” says Lucas Scheibe, an AgDirect territory manger in North Dakota. “Dealers aren’t stocking as much iron up front and are challenged with helping customers adjust to 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 which 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 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.”
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 a customer’s budget and hour range, but AgDirect is here to partner with dealers to provide product offerings in the form of a loan or lease that can help get customers into machines that would have otherwise been out of reach,” he says.
For example, AgDirect is currently offering leasing programs for customers 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 with no recourse to dealers. Customers 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 dealers be more successful in moving equipment 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 dealers as they shift or realign their business strategies in 2022.”
AgDirect offers competitive rates and terms for both new and used equipment purchases. Check rates, quote payments and compare options with our free AgDirect Mobile application, or learn more about AgDirect equipment financing by locating your nearest AgDirect territory manager or contacting the AgDirect financing team at (888) 525-9805.