With harvest season in their tractors’ rearview mirrors, crop farmers are using the downtime of winter as preparation season.
Planning seed purchases. Calculating how much fertilizer they will need this spring. Considering—perhaps through gritted teeth—whether to pull the trigger on buying a major piece of equipment.
A new combine can retail for $420,000. A longstanding downturn in prices for corn, soybeans and milk has made it even tougher to commit such an enormous amount of money.
Some Janesville equipment dealers are more optimistic than others.
Leo Johnson, a co-owner of Johnson Tractor, called it a “surprisingly brisk” December for equipment sales. Generally, farmers wait to make equipment upgrades until they’re profitable, and there’s not much excess farm income because of low prices.
But strong corn and soybean yields in Rock County have helped farmers weather the financial storm, he said.
“Even though prices were somewhat depressed, the yields in this area were very good,” Johnson said. “Producers who were well capitalized made some money in 2018, and it reflected in our business at year-end when they’re making decisions to purchase equipment.”
He did say some farmers are making more repairs to extend the life of their old machinery. Farmers have high expectations because of how advanced machinery is now, and they want to see it last, he said.
When it comes time for an upgrade, he thinks most people who are accustomed to buying new equipment still will do so rather than buying used to save money.
At least one prospective Johnson Tractor customer is making repairs and switching from new to used.
Chris Gunn of O’Leary Gunn Farms south of Janesville said he repaired his old combine so he could run it two more years. He has squeezed 2,200 hours of life out of it, far more than the usual 1,200 to 1,500 hours he operates a machine before typically trading it in.
The combine he is considering trading for already has more than 500 hours of use. Compared to a new model, the used combine could save him more than $100,000.
“It’s really, really tough,” Gunn said. “We’ve always bought brand new, but now we’re looking at buying used just to save nickels and pennies.”
Up the road from Johnson Tractor, Mid State Equipment owner Chris Frodel said the sustained downturn has caught up with farmers and trickled down to her business.
She has seen more farmers bring in equipment for repairs rather than buy used machines. The company’s commercial and light industrial divisions have grown, offsetting some of the agricultural losses.
Like Johnson Tractor, Mid State Equipment had a solid December as farmers reviewed their year-end finances. But the long-term equipment sales outlook was still shaky, Frodel said.
“We need some consistent commodity prices. We need consistent dairy prices for those guys to catch up,” she said. “It’s just been a depressed market for too long. That’s what they need to start being comfortable spending again.”
Frodel said she does not expect a “huge uptick” in agricultural sales in 2019.
Johnson remains optimistic. Farmers don’t typically drop by in January to buy farm equipment, but the mild weather has made it less of a burden for them to visit the dealership on Highway 14, he said.
It’s unclear how far farmers can stretch the strong yields of 2018, but they have been helpful so far at Johnson Tractor.
“I really didn’t have any idea how much crop was really out there,” Johnson said. “Looking at what prices are, I wasn’t expecting a tremendous amount of business in December. I’m very pleasantly surprised.
“Maybe my expectations were too low.”