REGIONAL—Customers trying to buy planters, tractors and other agricultural equipment are having a harder time finding what they need this spring.
It’s not that dealerships have run out of inventory to sell, although it certainly looks that way when service manager Tyler Schemper surveys the equipment yard at O’Brien County Implement in Sheldon.
“It’s pretty empty out there,” he said.
Light inventory is a problem dealerships all over N’West Iowa are running into as ripple effects from manufacturing shutdowns and setbacks last year due to the coronavirus pandemic create supply shortages and delivery delays for new equipment.
O’Brien County Implement sales manager Jeff Schemper described a waiting game. Dealerships have plenty of equipment on order, but what used to be a three-month wait for a tractor is closer to nine or 10 months.
“We have one new combine over there. We have another one on order. But we probably couldn’t get a third one by this fall,” Tyler said.
“In the past you probably could have,” Jeff said.
Tyler said the delays created a tight squeeze during spring planting as new planters ordered by farmers barely showed up in time.
“We sold several new planters and they were promised to us in March, and they came in the beginning of April,” Tyler said. “It’s not a good feeling when you sold a planter and the guy has already sold the trade-in planter and the new one doesn’t hit the yard until April when the season is a few weeks away from starting. That was a little tighter than we wanted.”
Delays have cost O’Brien County Implement business this spring as delivery dates for seasonal equipment like lawn mowers and skid loaders continue to be pushed back.
“We’ve got numerous machines on order and the delivery date keeps getting pushed back on those,” Tyler said. “They don’t really give us a pandemic-related answer, what part is holding the process up. It’s more of, ‘Here’s your delivery date and we’ll see what we can do to get it to you by then.’”
Some of those delivery dates are as far back as August.
With new equipment slow to arrive, farmers are hanging on to their used inventory, driving up costs and driving down inventory for dealerships.
Mulder Implement, located six miles west of Rock Rapids, deals in used farm and agricultural equipment. Sales manager Jon Denekas said scarcity of used equipment has driven up costs considerably.
“We’re trying to buy it now for what we used to sell it for,” Denekas said. “With the commodity prices and the money that the government’s put out for PPP, everybody seems to be flush with cash and there seems like the overall demand for good used equipment is higher, so the price goes up.”
Mulder Implement sources from new dealerships around Iowa, South Dakota and Minnesota, often buying older models or traded-in used equipment dealers do not want to pay to repair and resell.
“We get green stuff from red dealers, red stuff from green dealers. We have a lot of connections dealershipwise,” Denekas said.
Used equipment became harder to find and more expensive almost as soon as the pandemic hit last spring. Turnover of Mulder Implement’s inventory is about the same as usual, even with higher prices, but Denekas said he tries to keep the yard from filling up too much in case prices drop again.
“When it switches back to normal, hopefully you don’t have all this machinery you paid a lot for,” he said.
Trends in what farmers are buying also is unusual. Many are buying harvest equipment well in advance.
“We were selling a lot of harvest equipment before planting season,” Denekas said.
He suspected it was because farmers wanted to get ahead of the demand and stock up in case delays continued through the rest of the year.
“Normally, you sell tractors and planters and spring tillage stuff and combines and attachments and fall tillage stuff in those seasons, but you were selling everything and it still is the case,” Denekas said. “Anything you can get your hands on, just the fact that you can get your hands on it.”
‘Year of setbacks’
Kyle O’Toole, store manager for C & B Operations in Sibley, said extreme limits on the availability of equipment is likely to continue.
“You have to keep in mind we’re just now seeing the shortages from a year of setbacks,” he said. “I’m definitely expecting the next 12 months to be in the same boat, to be facing similar challenges before we see any real difference. It won’t be a 30-, 60-day turnaround. I think it will take a full year before we get back on track 100 percent and even then we might be facing some similar issues, it’s hard to say.”
O’Toole said that between fear of part shortages, aging out equipment and government payments from the last year, demand is higher than usual.
“There’s a lot of guys that are to an era in their equipment line that are needing to be upgraded, and now is as good a time as any to do it,” he said. “We’re seeing it in all sectors of our business, whether it be planters, tractors, combines. And we see it day-to-day more so with our parts over the counter.”
C & B Operations is a John Deere dealership. What used to be a two-day turnaround time when ordering parts is regularly four to five days, something O’Toole has not seen in a long time.
He attributes these delays to ripple effects of the coronavirus pandemic and the ways it has affected the United States and other countries responsible for manufacturing many of the parts in the agricultural industry. He said Deere was able to keep pace with demand for a while last year, but warehouses are empty and new parts are not showing up as quickly.
“We’re at the point where we’ve used up what our factories and warehouses could hold and now we’re relying on shipments from abroad,” O’Toole said. “Every industry is seeing that.”
The C & B Operations dealer group includes 38 locations across the Midwest, something the company has been able to leverage to avoid shortages by sharing inventory between locations and with other dealerships.
“At the end of the day we want to make sure that we’re not the roadblock for a customer being able to get through the season,” O’Toole said. “We’re trying to do everything we can to be part of the solution instead of part of the problem.”