Saturday, July 22, 2006

Auction market changing, more smaller sales

Greg Peterson
Publisher, F.A.C.Ts Report
7/12/2006, 5:00 PM CDT

Sometimes change comes at us fast. Other times it comes more slowly, so slowly it takes a while to pick up on it.

I've noticed a slow moving change taking place regarding farm auctions for used equipment. In 2006, there has been a much higher percentage of auctions featuring small, partial lines of equipment. Sales with as few as five to ten pieces of equipment up for sale. These auctions stand in stark contrast to the traditional view of the auction with a farmer selling out his entire line of equipment upon retiring.

A good example was the small sale back on July 1, 2006, in east-central Iowa. The auctioneer dropped me a note after the sale. Just three older tractors, an older plow and an old loader. It was a very successful sale, as evidenced by the 1963 JD 2010 tractor with only 1,250 hours that sold for $8,300. (Click here to see what other items sold for at this auction.)

I think of another auction firm I've known for years, one of the top auction companies in their state. Just this past year they have begun to hold evening farm auctions. Judging by the sale price reports they send to us, seems like these night sales are a big success. Think we could have imagined an evening farm auction three, five, ten, twenty years ago?

Why the move to the smaller, less traditional auctions?

Bottom line is, the world is a changing place. Factors including tax planning, the general aging of the farm population and the hectic pace of our work world all may be playing key roles in this shift to smaller, alternative auctions.

Tax implications are playing a big role in folks deciding to maybe sell some of their equipment privately over the years, selectively selling a few of their pieces of equipment at auction along the way. Folks just trying to figure new ways to manage the tax bite.

Next time you leaf through your local ag paper's auction bill section, notice on the bottom of the sale bills how many feature "consigned by neighbor" equipment. This means there's probably just a couple pieces of equipment.

I can't begin to tell you the number of calls and emails I've fielded over the last year from folks with just one or two pieces of equipment for sale. Sure seems like a lot more than at any other time in my 17 years of compiling auction sale price data.

As for the evening farm auctions, I guess it does make perfect sense given how busy folks are these days. What percentage of folks also hold some type of off the farm job? How much busier are all of us with kids these days? Making your auction available and accessible to a higher percentage of potential buyers is just smart business.

Looking down the road in my crystal ball, I think these trends will continue and possibly pick up steam. The Internet in particular should play a key role in helping bring together buyers and sellers of all types of farm equipment. This will be good news for both sellers trying to move that piece or two of equipment, as well as for time-strapped buyers struggling to find the exact piece of equipment they need.

Change, we don't have to like it but to succeed we need to be aware of it and adapt along with it.