How You Buy and Sell Iron
Jun 10, 2010
Ohio State researchers recently analyzed 2,500 responses from farmers on how they buy and sell used farm machinery and equipment. Brian Roe, Marvin Batte and Florian Diekmann of Ohio State University led an effort to learn more about U.S. farmers' attitudes and opinions about sales via auction, dealer, classified ad and the internet. For the full report, click here.
69% of the respondents bought and 40% sold (not including trade-in) used farm equipment in the past 5 years.
Here’s where they bought machinery from:
- 55% dealerships (55%)
- 16% auctions (16%)
- 10% classified ads (10%).
- Less than 5% bought from auctions or ads over the internet
Here’s how they sold machinery:
- 43% personal contacts or simple for-sale signs to sell their equipment
- 22% auctions
- 22% classified ads
- Less than 5% were sold via internet.
The number of local machinery dealerships that farmers had done business with during the past 5 years:
- More than 80% had done business with at least two dealerships
- 26% had done business with four or more dealers.
There were regional differences: Farmers in the South and West listing fewer dealer relationships than farmers in the East or Midwest.
When asked about the quality of the relationship the farmer had with the dealership that was most integral to current farming operations, they answered:
- 88% were pleased with the repair and parts service provided by the local dealer
- 77% were pleased with how they were treated during sales and trade-ins
- Nearly one in four farmers felt that the business relationship they have with their closest dealership could be in jeopardy if they ‘shopped around' to get a better price
Respondents were asked why they attend auctions and how much trust they would place in the quality of items sold in various auction formats. Here’s why the respondents said they attended auctions:
- gauging local market conditions and
- networking with other farmers and community members
- (they didn’t say it was a means of getting better prices or a fairer deal)
Farmers also said they were more likely to trust the quality of items being sold at local auctions more than those sold at regional auctions or internet auctions.
No doubt the internet will continue to change the machinery trade. Although a low number of respondents currently tap the internet for machinery sales and purchases, 55% of prospective buyers and 71% of sellers might consider using internet classified ads in the future.
I was surprised at the low overall rating of the internet in this study. I had a great conversation with a farmer this spring that said the internet has completely changed how he researches, purchases and order parts for his machinery. Another farmer who also sells machinery says that the exposure his machines have received online has spurred his business so much it could become a full time gig for him. Since this survey encompasses the past 5 years up until now, it’ll be interesting to see what it might show in another 5 years.