Just before Christmas, I attended an estate sale in central Iowa covering that auction for our Successful Farming YouTube reports.
I can’t say I necessarily watched in disbelief when a 2004 Deere 7720 with 4,506 hours brought a final bid of $89,000.
$89,000! That was easily 30% to 40% more than that tractor would have brought two years ago!
By this point in the year, the feeling of disbelief has grown old. I had gotten used to seeing price records being smashed left and right for used machinery.
It certainly has been a year for the record-breaking prices. (See more machinery sale records at the end of this story). And it’s a year I think we all pretty much wish would go away.
The most severe shortage since WWII
Because of COVID and a perfect storm of other factors including a release of pent-up demand for replacement machinery that started a year ago intersecting with a massive shortage of manufacturing components, agriculture suffered through one of its most severe shortages of machinery since World War II.
READ MORE: What led to the machinery shortage of 2021 and what to expect for 2022
So $89,000 for a Deere 7720 didn’t necessarily surprise me.
Earlier in the week I was talking to Tim Meyer of the Steffes Group (the auction firm conducting that estate sale I was attending), and he related that in November 2001 a 20-year-old Deere 8310 with 7,562 hours brought $124,000 at an auction they’d conducted in Minnesota!
“Oh, that’s nothing,” Tim quicky pointed out to me. “There are farmers buying used Wilson grain trailers with ag hoppers and paying more than new prices for them.”
Yes, this was a year for the record books.
Like new prices for used equipment.
What happens next?
So, what happens from here on out?
Well, the troubles manufacturers are facing getting components for anything from computer chips to rollers) are going to hang around for a while. But there is a light at the end of this tunnel.
Some manufacturing supplies have already improved. And by next fall, if not sooner, industry experts like Curt Blades of the Association of Equipment Manufacturers (AEM) expect farm machinery manufacturers to be at full capacity-plus. “Manufacturers and dealers have suffered from lack of sales of new machinery since 2013,” Blades reminds us. “They desperately want to meet farmers’ demands.”
And so new machinery sales will return with relish later in the year ... and farmers will continue to “retool their food factories” (a favorite quote from the late Will McCracken of John Deere) with gusto.
This will set up a swing away from scarcity to a land of iron plenty with rows of tractors and combines once again swelling at consignment sales. In two to three years I predict we will see prices of late-model large machinery soften and then fall as more new iron sales from 2022 and 2023 hit the used market as trade-ins.
“One thing for certain, if you’re looking for a leading indicator or some inkling of where we’re headed next, I have a little secret,” imparts Scott Steffes of the Steffes Group. “Follow the auctions. Yes, it can be just that simple. You see, the auction method of marketing is ‘true price discovery.’ We’re always the first up, which we’ve been experiencing these last several months, and I can assure you auctions are where you’ll first see what happens next, which also always occurs.”
Other used iron sale records
Record-breaking sales from the Steffes Group just during the month of November:
