Online auctions pick up speed as pandemic social distancing settles in
Many farmers looking to retire or get out of the farming industry right now are having to resort to online auctions because of social distancing guidelines, but some auctioneers are saying that might be a good thing.
Tim Nolan, who owns the auction and realty company Nolan Sales LLC in Marion, said that while some people may find online auctions to be untrustworthy, they are here to stay as the internet becomes a necessity during a time without mass gatherings. Nolan said there needs to be strict guidelines on how online auctions are conducted because some bidders worry the prices may get jacked up by fake bidders.
"When they can see somebody standing twenty feet away from them, bidding, it's a whole different excitement," Nolan said. "The more real it feels, usually the higher the prices."
Nolan said he resolves these concerns by hiring an independent auctioning company to conduct his company's online auctions. He said he believes that as the online auction market grows, the issues with transparency will sort themselves out along the way.
He also said online auctions can bring people into the bidding that ordinarily wouldn't be there because of distance. Many companies are also arranging transportation for their bidders if they win from a long distance, including Nolan's own company, at an extra cost.
Ron Roskopf, owner of the livestock auctioning company Cow Palace in Hartford, said that while his company hasn't done any online auctions, he knows the auction market is changing quickly.
While incomes have fallen and commodity sales have dropped off due to the pandemic, Roskopf said sales will probably pick up towards the end of the year as more farmers look to shrink their operations amid a tumultuous time in the ag industry. He said it's a seller's market right now, which is good for people looking to exit farming, retire or even just replace their equipment.
"The people are buying to replace ... I don't think there's too much expansion going on right now," Roskopf said. "The farming industry isn't that good. They're getting paid poorly for the milk. It's supposed to be coming up, but we didn't get it yet."
BigIron Auction Company is one of the auction houses hopping on the online auction train. Co-founder Mark Stock said some bidders like the anonymity of online auctions, and it's easier to participate in them because people can work and bid at the same time right from their phone.
Stock said the best advice for people looking to sell right now, especially those looking to get out of the industry, is to play the market patiently by giving your items as much exposure as possible to pull in the highest number of bidders. Stock also said machinery and equipment are hot items right now, especially if they're well taken care of.
"We're seeing some really nice, late model, low-hour equipment being sold on auctions right now," Stock said. "You have your choice of buying brand new for X amount of dollars, or buying a used one that's got 500 hours on it. People will go towards that used one with low hours."
Farmland for sale
Stock also said this is a good market to sell or rent farmland. While farm values have dropped in some places, he says, interest rates are at an all-time low, which is enticing to buyers. In Wisconsin, a study has recently found that farmland values are remaining strong through the pandemic because there's more demand than there is supply.
Renting farmland is becoming an income alternative to active farming, said George Twohig, an agriculture lawyer who specializes in land succession. This is especially because fewer children of farmers are continuing the farming tradition in their families and instead using the land as an investment, he said.
Twohig also said small farms are also having to do more to compete with big farms because of economies of scale in the ag industry, where efficiency is key. He said it's "pivotal" that farmers stay up-to-date on modern technologies and methods as they weather the evolution of the farming industry, especially in dairy.
"Everybody in this business, in every industry now, is looking for ways to keep their business viable at the size they want, and to create opportunities for their children, their family members who want to farm for another generation," Twohig said.