Generally, when a machine gets older, its value depreciates. But apparently, the same cannot be said of used farm equipment. The Minnesota Public Radio website reported that, at an auction last March, a 25-year-old John Deere tractor that had an original price tag of $54,000 in 1988 was sold for $70,750.
The surprising sale signaled two things: first, the booming agricultural economy initially only indicated by land prices and farm income, and second, the growing demand for old tractors. "The conditions in the used tractor market are just amazing. I've been tracking it twenty-three and a half years, I've never seen anything like it," Greg Peterson, who catalogs the actual sales prices of the machines, told the Minnesota Public Radio.
Peterson, or “Machine Pete” to some of his friends in the circle, explained that the industry boom can be traced to events some six years ago. The growth came after prices of corn more than doubled, giving a lot of farmers extra money to purchase new machines and update old ones. The trend went on until the farmers found themselves running short of supplies—sincefewer farms were going out of business, there were also fewer machines available.
Nowadays, whenever an auction puts old quality units on the block, buyers looking for used farm equipment for sale immediately jump on the opportunity, even if it costs them more than the machine's original market price. Another key factor why old farm equipment still manage to get a huge chunk of the market is the reluctance of farmers to invest in brand new ones. Prices of new tractors can go over $100,000, which is still a value higher than ones set for secondhand tractors at auctions.
Furthermore, low interest rates and tax breaks help the secondary market flourish. These enable more farmers to replace their existing equipment without getting too tight financially. Apart from going to auctions, they can also transact with several companies that engage in buy-and-sell and trade deals. There are also reliable companies that specialize in assisting farmers sell their machines by advertising these online, or in helping them find the specific equipment they need.
These companies, such as 411Farmnet, create a “farmer to farmer” connection that allows a farmer to communicate with others from different parts of the world and find the equipment they are looking for. This network also opens up more options and better deals, which translate to more savings and profitability.