Keeping Up with Current Farm Equipment Market Trends
By Steve Carroll, Senior Property Loss Consultant
At this year’s annual WRC All Manager Meeting, we had the pleasure of having Steve Asmus from All States Ag Parts present on the current farm equipment market trends and how these trends affect the insurance industry.
In recent years, the prices in the used and new farm equipment markets have soared and Steve explained why:
- Lasting effects of covid-19
- Manufacturers are still having difficulty hiring workers
- Supply chain issues still exist, especially with replacement parts
- Shipping costs are at an all-time high, trucks are scarce and these additional costs are adding to the price of used equipment
- Inflation effect on farm equipment values
- Currently there is 16.5% inflation in values of used farm equipment
- The inflation rates drive up the cost of new and used equipment
- This makes it hard to determine how much of the current value is real value and how much is due to inflation
So, the question becomes, “due to these contributors, what does the future look like for farm equipment values?” As Steve pointed out, the commodity prices are higher and this will keep the farm equipment values on the high side, with inflation just adding fuel to the fire. However, once the inventories of parts and equipment are restocked, some of the inflated pricing on all equipment should be corrected. Based on Steve’s experience, these high equipment prices are unsustainable from all angles.
What does this mean for insurers? Steve discussed how it affects policy and claims issues:
- Policy Issues
- Factor in these increased values when selling/servicing a policy
- The inspection of the insured premises (including all equipment) is even more important than before when writing a new policy or renewing a policy
- Claims Issues
- If these values have not been accounted for, many of your insureds will be underinsured, which will lead to potential co-insurance penalties
- Finding replacement equipment for your insured is more difficult and more expensive
- Rental machines are almost nonexistent
Additionally, Steve’s main daily job is buying and selling salvage for All States Ag Parts, so he gave some insight about the effect the current market is having on the salvage side of business.
- Later model combines (2010 and newer) and tractors (2000 and newer) are bringing significantly higher prices for salvage
- Older equipment and parts salvaged from equipment that’s been damaged by fire are getting tougher to find a buyer for, mostly due to higher trucking costs
- With the tightened supply of new parts, used parts are becoming a more viable and sometimes the only option to repair equipment
We want to thank Steve once again for attending and presenting. You can find the presentation slides by logging in to the secure WRC website and going to Documents > Operational Assistance > All Manager Meeting Materials > 2022 All Manager Meeting.