Equipment finance: valuation pressure in ag

Agricultural equipment finance is tightening in parts of the farm economy as lenders and dealers confront a gap between what machines are worth on paper and what they fetch in the market. (fca.gov) The pressure is showing up against a broad slump in farm machinery demand. The Creighton University Farm Equipment Sales Index has stayed below growth-neutral since October 2023, and it fell to 16.7 in February 2026. (creighton.edu) National sales data point the same way. The Association of Equipment Manufacturers said March 2026 United States sales of 100-horsepower-and-up two-wheel-drive tractors fell 24.4% from a year earlier, while self-propelled combine sales fell 25.3%. (markets.financialcontent.com) An equipment appraisal is a written opinion of market value, while a valuation is an estimate of value. Farm Credit Administration rules require institutions to evaluate collateral and to document the sources they use to support market value. (fca.gov) That matters now because the market has been moving unevenly. Sandhills Global’s March 2026 data showed used high-horsepower tractor inventory down 18.44% year over year and used combine inventory down 10.69%, even as asking values in both categories were still lower than a year earlier. (monitordaily.com) The gap between dealer asking prices and auction results has narrowed from earlier extremes, but it has not disappeared. In March, Sandhills put the Equipment Value Index spread at 32% for used high-horsepower tractors and 37% for used combines. (monitordaily.com) That leaves lenders, dealers and borrowers trying to finance assets in a market where late-model machines can be scarce but still sell below older assumptions. Farm Credit East said its appraisers use current market data and agricultural property transfers to produce appraisals that reflect “what’s really happening in the market.” (farmcrediteast.com) The downturn traces back to the post-shortage unwind. AgDirect said delayed factory deliveries cleared in 2023, manufacturers released roughly two-and-a-half years of machines, and dealer lots in early 2025 resembled 2014 levels before the last major correction cycle. (agdirect.com) Costs rose at the same time. AgDirect said new equipment prices had climbed 40% to 70% since 2017, while interest rates had surged 212%, raising both purchase prices and the cost of carrying inventory. (agdirect.com) Used prices then reset fast. AgWeb reported in August 2025 that row-crop used equipment prices had dropped more than 20% since 2023, and Machinery Pete said high-horsepower tractor prices were down 18% to 23% from 2023-24 levels. (agweb.com) Farm income has not given the sector much room to absorb mistakes. The United States Department of Agriculture forecast 2026 net farm income at $153.4 billion, down $1.2 billion from 2025, after sharply revising its 2025 outlook lower earlier this year. (ers.usda.gov) So the financing fight is less about whether farmers still need equipment than about which machines justify new credit at today’s market values. In that environment, independent appraisals are becoming a practical way to reset collateral values before the next upgrade cycle begins. (fca.gov)