September

When Money’s Tight, Bidders Favor Higher Quality Machinery

When money’s tight, you can’t afford to waste any on machinery that might not be reliable.

That explains one of the key trends in recent Steffes auctions of farm equipment, according to president Scott Steffes.

It may seem ironic that the company’s auctions are getting great results when corn and soybean prices are below break-even levels for many farmers. But there are several factors at work, said Scott.

“Everybody’s looking for the most they can get for their dollar. Many can’t afford new equipment from dealerships, so they’re turning to auctions. But even there, they’re focused on the higher quality machinery – well maintained, clean equipment that will give them reliable service and utility,” he said.

In a September 5 auction in Cummings, North Dakota, an auction of tractors and equipment for harvest, tillage, grain handling and other functions brought 14 percent over company estimates. Across the board, live auctions were well attended, and online auctions achieved excellent results.

“Even with live auctions, most items sold are to bidders who aren’t neighbors, and over half are buying online. We’re able to deliver the results we do because of our substantial investment in building our online capabilities and getting the processes in place to support them. Any time you increase the universe of buyers, you’re going to improve your results for sellers,” said Scott.

He offered some advice to those who may be selling equipment in the fall: “Caring sellers make for caring buyers. It’s always a good idea to catch up on deferred maintenance and keep your machinery clean and in peak operating order. You will be greatly rewarded for the efforts when it comes time to sell,” said Scott.

He noted the company has had a steady stream of farmer retirement auctions for a wide variety of reasons. “We’re hearing many farmers with good balance sheets but no successorship plans, and they are simply not willing to reinvest or continue based on the current risks. Their window, waiting for better times, is too long and in many circumstances, they have already delayed their decision for a few years because of how good farming has been,” he said.

Others may find themselves needing to restructure their business, to realign with current markets.  Selling excess equipment and paring down operating expense makes sense and are necessary to survive waiting for better times.

“No matter what the cause, you’re always better off if you’ve been running a tight ship,” he said.