“If u can, call me in a bit,” said my brother’s text. “Bidding on GPS.”
I dialed the phone at my desk in San Francisco and reached him in rural Iowa, where he took a break from a construction project to give me a Web site address. He’d been looking for a GPS monitor to use when planting corn, and he’d found one for sale a few hours south of his job site. Joining the buyers who parked their pickups at the central Iowa auction grounds were absentee viewers bidding on tractors, gravity boxes, field cultivators, and monitors via the event’s live webcast — including me, a California writer at a computer filling in for my farmer brother in Iowa, who couldn’t be at his.
These farm sale webcasts bring the auction block to the screens of bidders all over, erasing distance and providing access to those challenged by work schedules, inclement weather, or other conflicts. While visiting Iowa last December, for example, I joined my dad as he watched a live cattle auction on his desktop computer. The slow connection made for poor-quality video: imagine steers periodically locking in place for seconds at a time before resuming a jerky march across the screen. Still, the audio worked well, and it beat bundling up to drive to the sale barn in sub-zero temperatures.
Much has been made of technology’s evolving role in agriculture, from data-driven field management to drones that scan crops to electronic commodity trading.1 Online sales and simulcasts provide another example, and they’re reshaping the audience and atmosphere of farm auctions while influencing the approach taken by buyers and sellers.
Around the (auction) block
The day I watched that Iowa sale on my brother’s behalf, the lots included several tractors, a round baler, grain augers, and four planter monitors like the one he wanted. All four had similar features, but he’d researched each enough to know which would best fit his needs and his budget. As I heard the auctioneer rattle off incoming bids for lot #84, I watched the same dollar amounts flash on my screen. Bids quickly surpassed what my brother was willing to pay; the final selling price was $1,500 more than his maximum.
He mentioned later that he commonly sees higher-than-expected selling prices in online auctions. Some buyers don’t research the true market value of equipment, he speculated, while others get caught up in the competition – like video gamers who can’t put down the controller until conquering the next level.
I asked Greg Peterson, known in the farm world as “Machinery Pete,” if these theories hold true across the broader auction industry. Peterson, who pens a monthly Farm Journal magazine column and hosts a weekly show on the rural network RFD-TV, started tracking farm and construction auction prices in 1989. Farmers, dealers, lenders, and appraisers refer to his price guides when making decisions.
Peterson says that physical auctions still generate more dollars than online events, especially for big-ticket items, but he sees that gap narrowing. By cataloguing equipment values and educating buyers, he helps them navigate this changing field without being ruled by emotions or competitiveness.
“Our hope has always been that the numbers can empower people to say, ‘That price is way too high, and I’m going to sit this one out.’ But on the flip side, if something is stuck at $16,000 and you know eight of them just went for $22,000 or $24,000, you’ll know to jump on it,” he says.
Understanding long-term sale trends is particularly important for farmers bidding on major machinery. As farmers retire and their land becomes consolidated into larger holdings, the demand for bigger tractors, planters, and combines grows.2 New technologies make equipment more efficient but also add to the overall cost. And as new machinery prices skyrocket, the value of used implements also increases.
“If you took a standard tractor from the 1980s, say a John Deere 4440, that cost maybe $32,000 to $34,000 new. Now, that new 150-horse tractor will be close to $200,000,” Peterson says. “The price of new equipment has gone up about seven percent a year for a decade. That makes a really nice 15-year-old whatever – field cultivator, combine, tractor – very desirable. Our data will show that a 20-year-old tractor is worth 20 percent more than it was 12 years ago.”3
When auctioneer Bob Steffes founded Steffes Group in 1960, he presided over sales from the back of a truck with a portable amplifier in hand. “As opposed to the bold-voiced man with a cane and a cowboy hat selling from a hayrack, that was technology,“ says Scott Steffes, who started with his father’s company in 1980 and currently serves as president.
As the auction group has grown, the younger Steffes and his team continue capitalizing on tech. In 2009, the company shifted to carrying out some farm and construction equipment auctions entirely online with a new timed-auction division it calls IQBID. For one week each month, buyers everywhere can browse online listings and submit bids at any time. While they’re encouraged to inspect equipment in person, those too far away to do so rely on product information and photos provided on the Steffes Group Web site.
Online-only auctions work well for dealers looking to reduce inventory without disrupting ongoing operations with an on-site sale. It’s also a useful option for smaller auctions that might not otherwise attract a large pool of buyers. Steffes Group uses its IQBID system to simulcast its live sales too, streaming audio and photos as the auctioneer moves through the listings.
The webcasts have changed little from the auctioneer’s point of view, Steffes explains, but bidders and sellers can expect a different experience due to what he calls “the death of distance.”
“The dynamics of a live auction change when some bidders are not in attendance. Not everyone is walking around and kicking the tires,” he says.
Instead of examining equipment and asking questions in person, like on-site attendees do, remote Web bidders typically click through photos and read descriptions before making their sale-day offers. Steffes believes these distant buyers are willing to take more chances on what they buy.
“When people come to a sale or a dealership, they tend to be more skeptical and cautious. They walk around and look at equipment, and they wonder what might be wrong with it,” he says. “On the Internet, they look at pictures and maybe watch a video and think, ‘Oh, it can’t be that bad…’”
The most satisfied buyers he sees are those who have researched equipment features and prices and understand the market before they make a purchase. Because online sales draw a larger audience from a wider geographic range, there can be more competition than at traditional sales. Though it’s easy to assume that this dynamic pushes machinery prices upward, Steffes’s experience, like Peterson’s, suggests otherwise.
“My overall perspective is that you’re still selling to the same market, whether they’re in person or on the Internet, so the prices are often consistent,” he says.
But location can influence prices, he adds, and the Internet makes it easier for far-flung buyers and sellers to connect. In Iowa, where an average farm is 345 acres, a buyer might pay more for a moderately sized tractor than someone in North Dakota, where the average farm size, 1,268 acres, drives demand for bigger equipment.
Steffes notes one other distinction between online and on-site sales. “Especially with hard-to-find equipment and good-value items, rarely will Internet bidders win. Someone standing in front of the auctioneer will make that purchase,” says Steffes.
From field to Facebook
As a kid, I sometimes tagged along when my dad went to local farm sales. One auction in particular stands out. It was an early November day, and heavy gray skies dropped occasional rain showers mixed with snowflakes. Despite the cold, a crowd of farmers dressed in layers followed an auctioneer around the field, watching as he sold one piece of machinery after another. Dad bought me a cinnamon roll and got himself a hot coffee at a makeshift snack stand, and as we waited for our order, he talked shop with the other farmers.
For attendees accustomed to working long, sometimes solitary hours on their own land, these auctions presented opportunities to socialize and share information. Increasingly, online auctions are replacing those natural in-person networking opportunities with screen time. However, the digital channels that have reshaped auctions and restructured sale-related social ties also create new opportunities for engagement. The Steffes Group Facebook page features sale bills and photos, and more than 3,100 people follow the Machinery Pete Twitter feed.
“When I’m writing for Farm Journal magazine or the TV show, I always think of the local coffee shop,” says Peterson, imagining the conversations that retired farmers and their active neighbors have about sales, the status of crops, or what’s happening with the weather.
On his own Facebook page, Peterson shares equipment prices and reports from auctions around the United States and Canada. He also posts content designed to build connections, inviting readers to share their own pictures and stories.
“Machinery goes beyond what the assets are worth,” he says. “Lots of times, people have a connection to running Farmalls or John Deeres, or maybe someone’s grandpa had an Allis Chalmers. People have deep, personal connections.”
By sharing the stories behind a tractor being sold, Peterson adds context that’s not always evident in a list of features and hours of use.4 He also encourages farmers and other readers to interact – and they are eager to do so.
“When I post these things, it’s like a pinball machine. One post gets shared all over,” Peterson says. “It’s been unbelievable fun with the YouTube channel and Facebook. It basically feels like I can’t give the audience enough fun things to talk about.”
Photos courtesy Steffes Group
A 2013 United States Department of Agriculture report lists technology, changes in farm organization, and government policy as three major factors driving farm consolidation. A discussion is on pages 22 and 23 of the full report. ↩
Renee Brincks is a freelance writer who covers travel, food, beer, and culture. She contributes to American Way, Zagat.com, and Where San Francisco, among others, and recently explored Switzerland on inline skates. Renee splits her time between Iowa and San Francisco, where she grows plants in pots near her kitchen window.