This is a carousel. Use Next and Previous buttons to navigate

Doug Awe (right), store manager at Sloan Implement near Winchester, talks with customer Jim Freeman, who farms near Bluffs.

WINCHESTER – Implement dealerships are busy places these days.

On a recent morning at Sloan Implement near Winchester, customers were talking to salesmen, buying parts, and browsing. In the shop, technicians were busy repairing tractors and combines. Store manager Doug Awe called it a typical day.

"I think many are retaining older equipment," Awe said. "Some have been spending money on upgrades. But most are taking the good farm economy as a time to upgrade with better equipment – such as the planters. Some of the equipment that is 30 or 40 years old, considered by some to be antiques, is bringing top dollar on the market."

The only glitch in the equation is sales could be higher if manufacturers could build more equipment.

"Sales are good, especially with farm income being strong," Kyle Schumacher, one of the owners of Beard Implement Co. in Ashland, said. "We're still going against the resistance of manufacturers being able to produce enough units. We are allocated equipment on what we sell. We are a lot like car dealers in that regard."

"Sales are extremely high because of farm commodity prices and farmer equity. We were poised for this because of commodity prices before the pandemic. The shortages caused by the pandemic accelerated it even more. We’re looking at the coming year being strong again," Awe said.

"Getting equipment has been challenging and we have had to adapt by doing pre-selling of equipment," Awe said. "It has required us to forecast our new and used equipment needs further out. If you have a labor shortage, computer chip shortage, it interrupts things."

Chad Sanders, a sales representative for Sievers Equipment Co. in Auburn, agreed.

"The demand is there," Sanders said. "We are just having problems getting the equipment in that we have sold and are going to sell."

"Combines, tractors have not slowed down. Right now, I would say we are selling anything we can get our hands on," Sanders said. "If we have a tractor sitting on our lot, it'll last maybe three or four days. It doesn't take long. Whatever they think they need to replace, and it's here, they get it."

The COVID-19 outbreak caused a slight slump in the agricultural equipment market in 2020, according to a report prepared by Grand View Research. Restrictions imposed by governments caused temporary shutdowns of manufacturing facilities, leading to production delays. However, since government restrictions relaxed, the demand for agriculture equipment has experienced double-digit growth.

"We have always done pre-selling, but it is now a necessity. We used to do it for six months and now 12 months. Pricing can vary over those 12 months," Awe said. "We have had to get aggressive asking them to think ahead. The same day we are delivering something, we can also be talking about trading for another like it. That has been going on since 2020, accelerated in 2021 and will continue in 2022."

Awe said suppliers have done an outstanding job of keeping pace, but it can be difficult to communicate why delays are happening and keeping customers informed.

Sievers is taking a similar approach, according to Sanders. But sometimes it gets complicated.

"We are selling combines and tractors for fall of next year; trying to do that as we are looking 12 to 18 months down the road," Sanders said.

For example, Sanders said, he sold a used tractor in the spring, but he had to wait until a new tractor came in to conclude the sale. There were two other used tractors involved in the deal, too.

"So, if one guy pulls out, four sales are messed up," Sanders said. "We're doing the same with combines. It all hinges on the new one getting here."

Schumacher said despite the challenges, sales are good and used values are strong.

"Tractors have been strong the last two years. High horsepower tractors are the strongest in sales. We're starting to see smaller horsepower models coming in, but large horsepower continues to have high demand, low supply," Schumacher said.

"Pricing trends have been increasing due to short supply. The main driving force is price of steel, cost of transportation and shortages of precision parts such as electronics and other components," Awe said. "I don't see that changing until the supply improves. We expect it to continue for now. But it has been better in 2022 than in years prior."

Even with strong sales, a lot of farmers are hanging on to equipment longer.

“Purchases are a little more calculated on what needs to be replaced first. Part sales are up, but so are part prices. Demand for parts is still good, especially in tillers and planters – which are most likely to be rebuilt,” Schumacher said.

Used equipment demand is strong, Awe said, and in the case of tractors, stronger than the supply.

"They're not sitting around very long. We end up seeking out tractors to keep inventory up and have the flexibility to have short-term rentals available – that is filling the gap when someone has a problem with a piece of equipment," Awe said. "If you buy a vehicle and it breaks down, you can rent a car. If your tractor goes down, you rely on your dealer for a short-term rental."

Higher demand has also forced prices up over the past 18 months.

"It's not the fault of any one producer, it's just the time we are living in and the cost of inflation. The cost of metal and materials are going up," Sanders said. "The cost of a new machine is up about 10 percent, which is a lot of money on a $500,000 machine. It just takes more to build and costs more to get it here. Everyone's costs are going up."

New equipment has seen significant price increases because of higher manufacturing costs, supply chain issues, trucking issues, and manufacturers not getting the components needed to build new units, Schumacher said.

An increase in sales of new equipment creates more units in the area and is stressing parts and service departments.

"We are aggressive about stocking and selling parts, and hiring new technicians. Sales in those departments are seeing the same kind of increases we are seeing in equipment sales. If sales of new drops off, we expect to see it escalate for used equipment and parts," Awe said.

"Parts and service has been pretty good. New ones come in and then we have to get the trade-ins ready to sell," Sanders said. "We're shorthanded in our shop. We have hired a few guys. Getting there, but we need more help."