One of the first indications of a downturn in the agricultural producer space is a correction in machinery and equipment values. Equipment can take up to 30% of all budgeted farm expenses. Based on farm management data, machinery and equipment costs for high-profit farms are around $157 per acre for corn. For low-profit farms, it’s around $226 per acre. On average, that’s a difference of about 37 cents per bushel. Between 2013 and 2023, the investment in farm equipment for a 1,000-acre corn and soybean farm went up over $250,000.

On the heels of a significant buying spree of new farm equipment over the past few years due to profits as well as the desire to minimize income taxes, the purchasing appetite for new equipment has changed. If producers are making machinery and equipment purchases these days, it’s more likely based on a need, not a want.

The availability of new equipment, which was hampered by the COVID-era supply chain disruptions, is no longer an issue. In fact, the supply of new equipment is now outpacing demand in most equipment categories. Just look at the significant declines in purchases of new large tractors and combines: U.S. sales of combines in July 2025 were down 43.7% year-over-year.

New equipment has taken the biggest hit with respect to producer purchases. As I noted, many producers recently updated their equipment lines and from a production and efficiency standpoint, don’t need to make new purchases again soon.

In addition to lower commodity prices, tariffs – especially on steel and aluminum – have put farm equipment makers in a vise. John Deere recently estimated its tariff-related expenses to be $600 million. Machinery manufacturers as well as dealers are working to right-size their current business models and, as a result, are starting to announce layoffs or reductions in their workforce.

With new equipment prices still increasing, low commodity prices, increased interest rates and an uncertain outlook, producers in need of equipment are turning to used options. On average, it’s a buyer’s market for most types of used equipment. If you can, it may pay to hold off and wait on the sidelines for a while. Renting rather than owning equipment may also be an option.

Conversely, if you have equipment just sitting around not being used, it may be time to consider selling it to generate cash and working capital and turn non-earning assets into earning assets.