Andy Campbell, Tractor Zoom's director of insights, has pointed out that we have entered a new normal in commodity pricing. This implies that the demand side of the equipment equation is likely to be in a valley as well. As he stated, "Prices have followed supply, and supply is a leading indicator in our data that predicates a change in values." Currently, pricing on everything is on a downward trend, and the most capital-intensive equipment has been hit the hardest.

Year-End Outlook and Farmer Decisions

Campbell predicts that prices will remain lower and the sales volume will be lower through December. However, there may still be a year-end uptick as final harvest numbers come in and farmers make their year-end decisions. He believes that farmers will be more selective when it comes to equipment purchases. If a farmer needs a specific piece of equipment, they will still seek it out. There is currently enough supply that they can be picky and work with a dealer or look at auctions to find exactly what they need.

Self-Propelled Sprayers

According to Campbell, the supply of late-model used sprayers with fewer than 1,000 hours is about 70% higher than last year. These sprayers are still selling on dealer lots to some extent, but more are being unloaded at auctions. One of the steadiest pieces of machinery he tracks is the Case Patriot 4440, and its value has only dropped about 10% year-over-year. However, some higher-priced units like the Hagie STS12 have seen a nearly 33% year-over-year decline, and even John Deere 410R units have dropped 25% at auction. He adds that fewer higher-priced sprayers enter the market each year, so prices fluctuate more with the smaller pool of sales. This year, there have been quite a few more sprayers coming up for auction than before.

Quadtracs

Supply of Quadtracs began to rise in June 2023. From August 2023 to August 2024, late-model, low-hour units on dealer lots increased by 250%. This poses a problem for dealers as these later-model tractors cost around $500,000 each, resulting in high holding costs for units on the lot. Campbell suggests that if a farmer doesn't find what they want at auction by the end of the year, they can talk to a dealer. There are enough Quadtracs available to see if they are the right fit for their operation, and this is a good time to make a move. There has been a 20% drop in the value of Quadtracs, mostly since the end of the 2024 planting season. In 2023, there were strong end-of-year sales for 4-wheel-drive tractors, but recently, they have been facing challenges.

John Deere 8R Series Tractors

In the last year, the average prices for the 8Rs have dropped between 8% to 11%. But from August to September alone, they have dropped 16% to 18% compared to 2023 values. Campbell believes that there are too many machines in this horsepower range and too few interested and able buyers. This has forced dealerships to unload inventory pre-harvest into the end of the year. A similar situation occurred in 2014 when there was a surplus of machinery due to overproduction after several years of high farmer profitability. When higher yields returned, commodity prices fell, and the excess equipment supply drove values down. Campbell emphasizes that the same economic story of oversupply and low demand is repeating. However, what is different this time is that the oversupply is not as vast as before, and manufacturers have better allocation plans in place. Also, interest rates are different now, and the starting value of machinery is higher than it was 10 years ago. This time, the excess equipment supply should clear the market more quickly.

According to the USDA, a significant 68% of large crop farms are leveraging precision agriculture technology. This technology generates vital information that assists operators in decision-making, such as yield monitors, yield maps, and soil maps. The annual “Farms and Ranches at a Glance” report reveals that high-volume farms are heavy users of this technology, contrary to earlier reports suggesting a low usage rate nationwide.

Motivations for Adopting Precision Agriculture

Large operators have adopted precision agriculture (PA) technology for multiple reasons. They aim to increase yields, reduce input costs, and alleviate operator fatigue. By contrast, only a few small farms have employed this technology. The Economic Research Service explains that adoption increases with farm size as larger farms can derive more benefits from using these tools compared to smaller farms.

Usage Rates by Farm Size

Last year, the USDA reported that 27% of crop and livestock farms used at least one form of PA. This includes yield monitors, drones, and robotic milking. The equipment has been available since the 1990s but is often expensive. PA enables row-crop farmers to track production from small plots rather than entire fields and adjust inputs accordingly. The “farms at a glance” report examined PA by farm size and found high usage among large operators. In contrast, other reports have focused on adoption by state or crop. The 2023 Technology Use report stated that 27% of farms used PA, with rates exceeding 50% in major grain states.More than 8 out of 10 U.S. farms have gross cash farm incomes of less than $350,000 a year and are classified as “small” farms. “Large” farms have incomes above $1 million a year, and mid-size farms fall in between. Gross cash farm income encompasses revenue from crop and livestock sales, government payments, other farm-related income, and production contract fees. Since the 1970s, the USDA has defined a farm as any place that produced and sold, or could have produced and sold, at least $1,000 in agricultural products in a year. Large farms account for half of the value of agricultural production.Among large farms, information-generating technology and auto-steer systems are the most common forms of PA, used on approximately seven out of ten farms. Variable-rate technology is used on 45%, and drones on 12%. The ERS report stated that robotic milking was adopted by 19% of large-scale milk-producing farms. More than half of mid-sized farms use auto-steer or yield monitors, yield maps, and soil maps. Thirteen percent of small farms use yield monitors and similar equipment.

Benefits and Motivations

The motivations for farmers to adopt PA technology are diverse and in line with the stated benefits. For example, among the farms that adopted yield monitors, yield maps, or soil maps, many did so to increase yields (55%), reduce purchased input costs (41%), and/or improve soils or reduce environmental impacts (40%). On the other hand, reduced labor time and operator fatigue have also spurred farmers to adopt PA technologies with significant labor-saving potential.Earlier this year, a congressional report highlighted obstacles to PA adoption besides cost, including poor internet service and device incompatibility. The report stated that technologies that are relatively easy to use are generally adopted more quickly and widely than those that are more complex or require a large investment of farmers’ time and resources. Stakeholders also indicated that data-intensive technologies that require farmers to collect, collate, analyze, and respond to data have a higher barrier to entry and are less widely adopted. Among corn and soybean farmers, the use of auto-steer for tractors and combines is twice as common as the use of soil maps or variable-rate application of fertilizer and seeds.