Many farmers looking to retire or exit the farming industry right now are having to resort to online auctions due to social distancing guidelines, but some auctioneers say that could be a good thing.
Tim Nolan, owner of auction and real estate company Nolan Sales LLC in Marion, said while some people may find online auctions untrustworthy, they are here to stay as the internet becomes a necessity for a period of time. without mass gatherings. Nolan said there must be strict guidelines on how online auctions are conducted because some bidders fear prices could be inflated by bogus bidders.
“When they can see someone standing twenty feet away from them, bidding, that’s a whole other excitement,” Nolan said. “The more real it looks, usually the higher the prices.”
Nolan said he solved those problems by hiring an independent auction company to conduct his business’s online auctions. He said he believes that as the online auction market grows, transparency issues will be resolved along the way.
He also said online auctions can draw people into the auction who wouldn’t normally be there due to distance. Many companies also arrange transportation for their bidders if they win a long distance, including Nolan’s own company, for an additional fee.
Ron Roskopf, owner of Cow Palace cattle auction company in Hartford, said that while his company hasn’t held online auctions, he knows the auction market is changing rapidly.
As incomes have plummeted and commodity sales have plummeted due to the pandemic, Roskopf said sales will likely pick up towards the end of the year as more farmers look to reduce their operations in a tumultuous time in the agricultural industry. He said it’s a seller’s market right now, which is good for people looking to get out of farming, retire or even just replace their equipment.
“People are buying to replace…I don’t think there’s too much expansion going on right now,” Roskopf said. “The farming industry is not that good. They are paid poorly for milk. It’s supposed to happen, but we haven’t received it yet.”
BigIron Auction Company is one of the auction houses jumping on the online auction bandwagon. Co-founder Mark Stock said some bidders like the anonymity of online auctions and it’s easier to participate because people can work and bid at the same time from their phones.
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Stock said the best advice for people looking to sell right now, especially those looking to get out of the industry, is to patiently play the market by giving your items as much exposure as possible to attract the greater number of bidders. Stock also said machinery and equipment are hot items right now, especially if they’re well-maintained.
“We’re seeing some really nice late-model, low-hours equipment being auctioned off right now,” Stock said. “You have a choice of buying brand new for X dollars, or buying a used one that has 500 hours on it. People will go for the used one with low hours.”
Farmland for sale
Stock also said it was a good market to sell or rent farmland. While farm values have fallen in some places, he says, interest rates are at historic lows, attracting buyers. In Wisconsin, a study recently found that farmland values remain strong during the pandemic because there is more demand than supply.
Renting farmland is becoming an income alternative to active farming, said George Twohig, a land estate lawyer. This is partly because fewer children of farmers are carrying on the farming tradition in their families and instead use the land as an investment, he said.
Twohig also said that small farms also need to do more to compete with larger farms because of economies of scale in the agriculture industry, where efficiency is key. He said it was “essential” for farmers to keep abreast of modern technologies and methods while coping with changes in the farming industry, particularly in the dairy sector.
“Everyone in this business, in every industry now, is looking for ways to keep their business viable at the size they want and create opportunities for their children, family members who want to farm for another generation” , said Twohig.