With 80% of Cheffins’ autumn sales linked to retirement, changing farming policies or farm closures, the auction market is providing an insight into a sector undergoing significant structural change. Bill King, Chairman of Cheffins, explains what how the firm's autumn calendar reflects what's going on in the industry.
Autumn is traditionally a busy time for agricultural machinery auctions, but this year we are run off our feet, in fact, we sold £4.8 million-worth of kit in the second week of September. At Cheffins we are now entering what will be our busiest period of auctions in our 200-year history. There will be twelve sales hosted in September alone, from Nottinghamshire, Suffolk, Hampshire, Hertfordshire, Norfolk, Cambridgeshire and Essex as well as our monthly machinery sale at Sutton.
When looking at these sales and talking to the farmers hosting them, there is a clear pattern emerging. Farm businesses are taking a fresh look at how they operate, and in some cases, whether they want to still be operating at all. A large proportion of the sales, in fact 80 per cent, are on behalf of farmers who are retiring, changing their farming policy, or in one case, selling the family farm all together. This trend is also happening among the largest agricultural businesses and estates in the business – including our sale on behalf of Velcourt, which covers off seven of the company’s farming bases, and the auction on behalf of The Euston Estate.
Machinery auctions have always been at the pointy end of what’s going on in the industry. Ever since we started hosting on-farm auctions way back in 1825, we have seen the rate of these fluctuate in line with developments in the farming industry, and most crucially, funding from the government. When the BPS was dropped, sales jumped accordingly, as it was withdrawn at a time when agriculture was already facing challenging times. Sales often give us an early indication of structural change within the industry. For example, when a farmer just sells a couple of bits of kit, he or she is probably reinvesting into the business or farm and upgrading, however when it’s a full dispersal sale, where we sell everything from tractors to tyres in the workshop, this usually points to something more fundamental.
While doom and gloom in the farming industry has been well documented, there is no one single reason why we are going to see so many sales this Autumn. It’s the combination of all of the pressures facing the industry; the weather, high input costs, changes to funding structures and continued uncertainty for the financial health of different farming models. For some farmers, the answer has been to retire or to go fully into contracting farming agreements – therefore capitalising on the value of their assets with the machinery coming first as part of that. We’ve also seen some farmers stepping away from traditional farming practices altogether, going big on diversification and grant funding schemes. High value machinery will always be one of the first things to be sold, over and above land or property and the quick turnaround time for auctions mean that the price achieved can be dropped into a farmer’s bank account within a matter of days.
Decisions are now being based more on business structure and financial viability rather than sentiment. There are questions being raised on whether owning large-scale fleets still make sense, or whether taking on farm contracting agreements might well allow them a cash injection on the farm at a time when it is most needed. The sale on behalf of Velcourt Ltd is a particularly good example of this. We have sold more than 600 items of machinery on their behalf as it has been rendered surplus to requirements following a change in focus for the business. At The Euston Estate, the decision has been made for the farm to be managed by a local contractor, following a long-standing relationship with that contractor. The result is that around 70 lots of machinery from across the Estate's 10,500 acres have been sold.
This is demonstrating a question across the industry, do farmers look to cash in now on high value pieces of equipment and consider more ad-hoc approaches to machinery ownership, such as lease or using a contractor for major operations such as harvesting?
However, there is a positive in this story for farmers. While the sheer number of sales definitely reflects the pressures the farming industry is under, we are seeing that the second-hand market is remaining incredibly resilient. Demand is still there for good quality machinery, particularly if it has come straight from farm, and buyers are UK-based as well as those from Europe and further afield. UK farmers are still buying, and alongside that the large-scale contractors are also needing to up the size of their fleets to counter increased acres being taken up. Selling to Europe also continues to be a cash cow, where farmers are not facing the difficulties which are being felt so keenly here. The European market has made the most of our machinery sales since Brexit, when they cashed in on the weak sterling, and that is still very much the case.
There’s an opportunity here for farmers to rethink their options at this point. They can sell up machinery and unlock capital at a time when it could well be most needed. A tractor which is perhaps surplus to requirements in Suffolk, might be very much needed in Spain.
What we are seeing at Cheffins is that autumn is not just a busy auction calendar, rather it is a reflection of conversations happening across kitchen tables up and down the country. Farmers are now making tough decisions on retirement, succession and business structure – while some might be leaving the industry, the majority are adapting to try and survive. For those selling, our priority is to get as much value as possible for every machine which goes under our auction gavel. That might just help alleviate some of the pressures being faced currently. Our aim is to identify exactly where each piece of equipment might be needed and broadcasting what we have available worldwide.
To view the calendar of sales at Cheffins, or to sell machinery, please visit - https://www.cheffins.co.uk/machinery-vintage-auctions.htm