THE USED PLANTER MARKET: THE PURGE AND REBIRTH
2009 – 2012 was a booming time for Agriculture around the world. Commodity prices were high, and on-farm income was at record levels. As a result, Ag Equipment Dealer's lots were filled with both New and Used Equipment. However, after the market crash of 2008, to promote the sale of goods and manufacturing, Section 179 and Bonus Depreciation were introduced to the tax code, and the sale of New Equipment exploded, leaving Used Equipment in a tough spot, especially Platers.
Unlike other machines, Planters have more custom features than other platforms. What one producer wants, the other doesn't. One likes Brand X Fertilizer Systems, while the other likes the factory option. The list of unwanted specs outnumbers the list of wanted. They will have to take off what is there and reinstall; you fill in the blank. The market quickly became saturated and overwhelmed with Used Planters because of custom setups and the number of Used Planters generated.
The Planter Purge of 2014 was no joke! Trying to sell a Used Planter was next to impossible. The cost to trade doubled from 2013 to 2014. Planters were lined up. Dealer Lots were lined with Planters like Old Equipment line Hedge Rows. Plenty of demand to trade, just not at the prices available. I remember watching one of the first auctions with several planters selling on the same auction. They brought 70% of the listed retail value, if I remember right. Pricing quickly eroded to 65%, then 55%, then below 50%, and further. The selling of a Used Planter happened at Auction Prices, or it would be sold at an Auction.
From 2014 – to 2016, Used Planters were sold into extinction. Few Used Planters remained, and the few still on Dealer Lots had pricing reflective of the current market and conditions. It still wasn't easy to sell Used Planters. However, it was more accessible to have a conversation with the customer about pricing and trade values. I am not saying any of the talks were fun. Just everyone knew the rules of the game going into the conversation.
Over the next four years, demand never really spiked. Instead, low commodity prices and the balance of New Planters sold created a strong balance of Used Planters easily digestible into the market. Of course, a few planters hung around a little longer than they should have, but Used Planters were not a problem for the most part. But, then, as Commodity Prices slowly increased, Planter Demand was made.
By 2019, Planter demand was an active conversation, buyers were making decisions based on trade cycles, and upgrading of Equipment was getting back to normal. More New Planters industry-wide were sold, and the groundwork had begun to presell the trades for the following season. The New and Used Markets were still in the balance, and the Planter Market was getting back on its feet. Then 2020 showed up at the party!
Lead time started to stretch, commodity prices fell through the floor, and supply chain issues appeared. CFAP and other Government Programs pumped money into the market, and if a machine was on the Dealer's Lot and it was available, someone would buy it. Unfortunately, the surge in demand devoured available New and Used Equipment Inventories and New Equipment lead times from factories delayed the availability of Used Equipment to sell.
Planters became more valuable and in higher demand. 2022 has New Planters lead time with mixed delivery dates. Some lead times are right on schedule, some are midway through planting season, and some will miss planting season altogether. The current situation will reverse the Planter Market's momentum and prolong recovery to a stable balance for many years. Like post-2016, there isn't any Used Inventory to sell into. The Used Planter traded for the New Planter is sold along with the subsequent Trades.
As the Planter Market catches up to New Deliveries, I see it having the softest landings. The reason, the cost of New Planter Technology will keep Used Planters in High Demand for the rest of the 2020s and well into the 2030s. Therefore, I have difficulty envisioning the Used Planter Market's complete meltdown like 2014-2016.
Planting Technology will be the most adopted and sought-after Technology in Crop Production and followed closely by Chemical and Fertilizer Application. Yields will need to continue increasing on every acre, and that starts with seed placement. As Newer Technology is introduced and Older Technology is slightly cheaper, the Used Planter Market stands to have the most to gain. Compared to New Equipment, Used Planters will maintain higher value percentages than other segments of the Used Ag Equipment. So for as bad as 2014-2016 was for the Used Planter Market, a more sustainable Used Equipment Market was born.
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