Thursday, July 23, 2015

Are Farmers Hitting the Brakes on New Technology?

When my dad retired from farming, one of the first things he purchased was a nice late-model John Deere 4020. He still owns some land and uses this tractor for dirt work and land maintenance.  With the baby-boomer generation of farmers retiring, I assumed that values on older tractors would probably start to rise as these retired farmers purchase their childhood dream machines. But a recent post by Greg “Machinery Pete” Peterson got me thinking that increasing values on used tractors might be reflecting a different trend—is it possible the rise in used machinery prices is a sign of farmer backlash against new technology?

First, let’s look at the facts.  New machinery sales are down.  No question about it.  I’ve been reading that everywhere. It is not surprising considering the anticipated tight margins for row crop producers this fall.  For example, AgWeb recently posted:  Deere Sales face Pressure From Corp Prices Despite Recent Rally. The Ag Equipment Manufacturer’s Association reports that through June 2015, combine sales are off 41.7%, 4-wheel-drive tractor sales are off 44.6%, and 100hp+ tractor sales are off 17.7% for the same period in 2014.  (See report here:  Equipment Sales 2015)

Meanwhile, good, used machinery values appear to be up.  Machinery Pete has been reporting a surge in prices in well-maintained, older equipment.  These are machines that predate the introduction of modern, precision ag technologies:

I asked Machinery Pete why he believes some farmers are favoring these older machines in lieu of newer ones. His response was that the “high cost and complexity” of new machines, together with a tight supply of nice low hour older machines, was driving up prices.

There certainly has been a lot of discussion lately about farmers losing control of their farms through technology. Two WIRED articles have argued that farmers can no longer self-service their new tractors and that copyright laws have taken ownership away from farmers. The rise of cloud-based servers to help farmers analyze their crop data has also caused a lot of ag industry concern over who will own farmers' data in the long run.  

Could the high prices on older "low-tech" equipment be a sign of farmers' fear of losing control of their farms to new technology?  I don’t know.  But I think any manufacturer would be foolish to ignore this question. The real lesson here is for manufacturers and technology providers in the ag industry: farmers want new technology, but that does not mean they want to lose control. New technology should be designed with the farmer in mind.  

What do you think is causing this trend?

4 comments:

  1. I bought a used Massey 135 twenty years ago from a dealer. He told me it had a bad clutch but I might get a few years out of it. It still has the bad clutch and works as good today as when I bought it. Old tractors were well built and last forever. I don't know how farmers make money with equipment prices these days.

    ReplyDelete
    Replies
    1. Yes, its amazing that 20 and 30 year old equipment is still routinely used to farm.

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  2. I just love how different each kind of tractor is. When I was a kid, my uncle had the tall closed cabin style tractor. Maybe it was because I was a little kid, but I thought that the windows in the tractor were so huge. It would be fun to ride around in a tractor again.
    http://northpinemotors.com.au/product/massey-ferguson-6600/

    ReplyDelete
  3. I just love how different each kind of tractor is. When I was a kid, my uncle had the tall closed cabin style tractor. Maybe it was because I was a little kid, but I thought that the windows in the tractor were so huge. It would be fun to ride around in a tractor again.
    http://northpinemotors.com.au/product/massey-ferguson-6600/

    ReplyDelete

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