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Economy

Demand for new farm equipment outweighs current supplies

SARAH MCCAMMON, HOST:

Farm equipment - all those high-tech tractors and combines - it's one of the biggest expenses in agriculture. After a strong harvest this year, many farmers are trying to replace some of that equipment by the end of the year. But just like so many other industries right now, the demand currently outweighs the supply, so there's a big surge in prices for used farm equipment. From member station WFIU, Brock E.W. Turner reports.

BROCK E W TURNER, BYLINE: A new combine can cost far more than what most people pay for their house. It can easily exceed half a million dollars. The head unit, which removes corn from the field, alone can exceed $150,000. Farmer Brock Keesler (ph), who grows corn and soybeans on 500 acres in Greenville, Ind., knows that's outside of his budget.

BROCK KEESLER: Starting out, you know, I don't have the capital the big boys have. I don't have the access to banks. Banks will hardly lend me any money.

TURNER: Keesler and many other farmers are trying to take advantage of tax laws allowing them to write off equipment purchases before the end of the year. With new tractors and combines hard to find, many are turning to used equipment auctions, like this one in Monrovia, Ind.

UNIDENTIFIED AUCTIONEER: ...Thousand dollars? Sold for you. Who's next (ph)?

TURNER: Today, Keesler is looking for a combine and head unit. There are about a half-dozen machines he has his eye on. For farmers getting their start, purchasing equipment new is just out of the question. Even for those who can afford it, finding equipment can be exceedingly hard. Dylan McClure is a parts and sales representative at Stone's Farm Service in Greensburg, Ind. Many of the tractors on his lawn are already sold and awaiting final accessories.

DYLAN MCCLURE: There's some models where you order now - and it's not Kubota's fault - but, you know, you could select when you'd like it delivered, and a lot of those models are coming up June 2023.

TURNER: While we see similar supply chain challenges affect everything from a cup of coffee to a car, it's a unique situation for farmers in a number of ways. Many bought their seed and fertilizer well before today's price hikes. Pair that with a strong harvest this year, and many are sitting on money to invest now in upgrading their equipment. That's leading to prices of used equipment at auction much higher than just last year. And it's happening all across the country. Gary Schnitkey teaches farm management at the University of Illinois.

GARY SCHNITKEY: The reason why we see it go up is because farmers have disposable income, so they have money to spend, and the tax laws really, really favor purchasing equipment.

TURNER: And that's driving prices up. Farmer Brock Keesler bid on multiple pieces of equipment but kept getting outbid by other farmers, with the prices well beyond what he could afford.

KEESLER: If you find a really cherry piece of used equipment, things are bringing top dollar almost as much or more than when they were bought new.

TURNER: This is happening even as many farmers remain cautious about seeing significant profits again anytime soon, in part because the cost of seed and fertilizer this year have also soared. But many do have money to spend now if the price is right. Kurt Everett secures farm equipment for one of Indiana's largest farm auction houses. He worries about what will likely happen when the resale market inevitably cools.

KURT EVERETT: I'm overpaying for stuff, you know? Everything's way out of touch.

TURNER: In the meantime, Brock Keesler and other farmers will continue scouring dealerships and other auctions in hopes of finding equipment they can afford now to make their farms more efficient.

For NPR News, I'm Brock E.W. Turner in Monrovia, Ind.

(SOUNDBITE OF SPIRO'S "LEVEL 2 SMALL BATS") Transcript provided by NPR, Copyright NPR.