Supply chain issues are creating market, financing volatility in the equipment market
A financial expert says the price of new and used agriculture equipment has become more volatile because of supply chain disruptions.
Brent Verploeg with DLL – an entity of Rabobank – tells Brownfield equipment in the market is scarce because of missing parts. “Tires, certain plastic claps, certain computer chips and certain items that are missing to finish out that build. If you look at manufacturer’s lots, they’re full of equipment half built.”
He says the shortage of new equipment has many farmers buying used machinery and that demand makes it challenging to create financing options. “Are we over financed? Are we underfinanced? It’s a question so we have to do evaluations on each transactions that we look at. Typically, we’re ok but just like the commodity prices of all of the different markets out there, the values of equipment goes up and down just like the value of land.”
Verploeg says interest rates are another factor. “Today’s rate is probably going to be lower than it is 6 moths from now. So, the impact to the farmer, if he can delivery and buy the equipment today, his interest rate probably going to be lower, a little bit better and more desirable and that’s the main thing you’re seeing right now.”
He says many producers are buying equipment instead of leasing, which wasn’t as common before supply chain issues.
Brownfield interviewed Verploeg at the Commodity Classic.