Moving Iron Podcast Episode #150
On this Week’s Podcast My Guests, Aaron Fintel and Jordan Kite, of Agri-Service in Kimberly, ID, and I talk about the Hay Equipment Business. Since the current downturn started, Hay Equipment has been the most consistent at holding its value. This segment has never been a real barn burner or a slug. Since 2013, a steady and constant demand for Used Round Balers and Windrowers has been a bright spot for many dealer groups. Much of this is due to Cattle Prices during this same time frame.
The demand for Used Windrowers is real, but like many, price is driving market demand. Comparingly, Hay Equipment is much easier update because of the dollars associated. For the most part, Round Balers have a retail price in the high $40,000 and less range and Windrowers are in the low $100,000 range and less. Pricing all depends on hours, condition, specs, and in some cases, the seasonality. Looking at the market place, I don’t see this changing much. The demand for High-Quality Dairy Hay and Alfalfa is not dwindling, and Used Windrowers will continue to have stronger than average demand throughout 2020. I am looking for an increase in Used Values over the course of 2020.
Used Round Balers are similarly. They have neither been a barn burner or a slug, they have just been steady in demand. The demand for updating balers has everything to do with the price — both from the Equipment Segment and the Commodity it serves. Like Used Windrowers, Used Balers have a lower price point compared to a row crop tractor or a combine. The amount for a down payment is less and could have less impact on an operation’s cash flow. Like Windrowers, the demand for Hay and Alfalfa to feed the US Cattle Herd isn’t going anywhere. The market seems to grow every year due to weather, export demands, and increased animal production. Like Used Windrowers, I look for Used Round Balers to continue to have above-average demand, especially in areas of expanding Prairie Hay Production.
We can’t have a conversation about Hay and Forage and not talk about Self Propelled Forage Harvesters (SPFH). Used Forge Equipment is a tough business. From a Large Ag Perspective, the only thing more niched than a Forage Harvester is a Sugar Cane Harvester. This segment of equipment mostly depends on what happens with the Dairy Market. I say primarily because of the role extreme weather plays. Drought, Hail, and similar events sell Used SPFH, and this year is no different. Even with low Dairy Prices, over the past 6-12 months, there has been growing interest in older, cheaper ($200,000 or less) Used SPFH. This demand is coming from some buyers who have in the past used a Custom Forage Harvesting Crew to chop their corn.
Aaron brought up a good point around this. On-Farm Labor issues have trickled over to the Custom Crews. Like the rest of the Farming Community, it seems, Custom Crews have a labor issue and don’t have the workforce to service every customer. Now, 500 acres or less Grower are looking at buying their machine. I am not bullish on Used SPFH pricing, but I am looking to see the number of used SPFH Units drop through the end of 2019 and throughout 2020.
Lastly, the 150-200 HP Tractor is the Jelly of this PB&J Sandwich! Like the rest of this discussion, the 150-200 HP Tractor has seen a reasonably level demand since 2013. Baling and Chore type tractors have sold well and continue to do so. The beautiful thing about these tractors is their versatility. They can be a Loader Tractor, Baling Tractor, Bale Processor Tractor, Feed Wagon Tractor, and in some cases in the higher end on the HP Scale, a smaller Planting Tractor. They have many uses on the farm. I look for 150-200 HP Tractors to continue to stay on the same path and have similar demand through the end of 2019 and throughout 2020.
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