The farm equipment auction market is busy in 2018, and it is possible that could mean more farmers are calling it quits.
“There is pressure on some guys,” says Jim Huff of Sullivan Auctioneers out of Hamilton, Ill.
But Huff says he doesn’t know of many cases where farmers are scheduling land or equipment auctions because they are being forced out of business. Instead, he says, most of the situations he sees are older farmers who may have considered retirement a few years ago but decided to continue because they were making money and having fun.
Now, after several consecutive years of low commodity prices, they are deciding that this is a good time to hang it up.
Doug Hensley, president of real estate at Hertz Farm Management in Nevada, Iowa, says that is also the type of situation he is seeing. Most cases are not ones of farmers being forced out of business, but of farmers who have been considering retirement for a few years and who decided now may be the right time.
Whatever the reason, Huff says there has been some uptick in equipment sales activity. The good news, he says, is that used equipment has been selling well at auctions. Some of that may be due to farmers opting to buy used equipment instead of new equipment.
The number of farm sales has not risen, but some agland Realtors say it is possible they may see an uptick between now and the end of the year.
Hensley says he doesn’t expect any major drops in farmland rental rates in 2019, but it looks like there may be more last-minute discussion of those rates this winter. In the past, that discussion may have happened during the summer or after harvest. This year it may come later, perhaps after farmers talk to their bankers in January, he says.
That delay may be partly due to the uncertainty raised by NAFTA negotiations and a trade war with China. If some of those trade disputes are solved in the coming months, farmers could see a better outlook. If the trade issues are not resolved, it may lead to more negotiations over rental rates for 2019.
And it is important to note that while many farmers may not see profitability drop much in 2018, the present price levels and the structure of federal crop insurance could lead to lower payouts and less profitability in 2019, especially if the trade disputes don’t end. That could mean a different conversation a year from now.