With the harvest now in full swing, some of Canada’s most precious agricultural commodities are being purchased on the open market.
In a move that’s making headlines and fuelling speculation, a number of farm equipment manufacturers have been selling their equipment in recent weeks on a wide variety of Canadian markets.
Many are selling the same farm equipment at slightly different prices.
The new trend comes after a wave of recent price hikes, including the biggest price hike on record, in April.
Many of these manufacturers say they are offering better returns on their investments and say they’re keeping costs down for the farmers they are selling to.
“If you’re looking at equipment, you want to buy it for the long term, not just the short term,” said Scott Ritchie, president and CEO of the Canadian Cattlemen’s Association (CCCAs) in an interview.
“If we can make it last longer, you’re getting the same price.”
Some farmers who sell their equipment on the farm say they can save $300 to $400 a month.
“We’re seeing prices go down, so we can afford it,” said Jason Krieger, the manager of the farm and animal services at the Rochdale, Ont.-based Dairy Farmers of Ontario.
The company that’s selling its farm equipment on Canada’s open market is The Farm Equipment Corp. (TEC), which is part of the TEC Group, an industry group.
It’s the largest private company in Canada with assets of $2.8 billion.
Its equipment is mainly used by dairy farmers, processors and retailers, and is marketed to consumers as well as farm and farm-related suppliers.
The TEC’s CEO, Mark McLean, says the company’s products are among the best-value on the market.
“It’s really hard to beat the price that’s being offered by the farmers on the land,” McLean said.
“And, as a result, they are doing the right thing.”
But the real issue with selling farm equipment to Canadians is the fact that it’s not a good investment for the farm itself, said Peter Pritchard, president of the Royal Society of Canada Agricultural Research Institute (RSACIRI).
“Farm equipment has a huge impact on the farmers that own it,” he said.
The most common way for farm equipment companies to reduce the costs of purchasing equipment is to lease it from other companies.
“They’re really going into debt on the equipment,” Pritson said.
But Pritbeck said there’s no reason for consumers to invest in equipment that they can’t afford to keep in the farm.
“You’re making a commitment to a family and a business that’s been doing that for a long time, so that’s a good thing,” he added.
The biggest reason many of these farm equipment deals don’t make a lot of sense is the lack of transparency around how farmers are being paid, said Mark Bouchard, a senior vice-president with the Canada Council of Agricultural Organizations (CCAO).
“It would be very good if there was a standard that would be applied for farm price,” he explained.
“But there’s not.”
Pritkind said the average farm equipment price in Canada is $300 a month, but it could be as high as $500 a month in some areas.
“For a farm in Saskatchewan, it’s $2,000 a month,” he stressed.
“So, for a small farm in the west, it would be $2 million.
So, it goes beyond the typical cost of a farm.”
The CCAO says it has received several complaints from farmers about what they call a “gift tax” on farm equipment.
Pritchard said it’s one of the biggest concerns farmers have about the new farm equipment pricing.
“I think it’s really a big concern for a lot more farmers,” he noted.
Pichard said many of the farms in the industry will sell equipment at a profit.
“That’s the bottom line, and that’s what we do,” he emphasized.
“Our goal is to make sure that farmers have the best equipment.”
But Pichsard said there is a need for more transparency around the costs associated with the equipment being sold.
“The truth is, farmers don’t have to pay the same amount of money for farm products,” he argued.
“Farmers can make the same money for a little bit more equipment.”
Pichart said it would help farmers and businesses that sell farm equipment, including those in the food sector, to have some sort of standard to track how much their equipment is being sold for.
“There needs to be some sort, some form of standard for this,” he suggested.
“Because there is not a fair standard to work with in terms of prices.”
The RCAE also raised concerns that many of those buying farm equipment are not paying their fair share.
“While we understand the need for transparency, there are a lot [of] farms that are not