2024-04-03

Uncertainty leads to record year for auctions of agricultural business machines

 

• Number of agricultural entrepreneurs quitting has risen by 17 percent

• Revenue from agri-auctions €17 million higher than the previous year

• Average age of entrepreneurs quitting is decreasing

 

 

In a time when agricultural entrepreneurs are confronted with growing uncertainties, rising raw material prices and shrinking margins are a daily reality that is irrevocably changing entrepreneurship in the Dutch agricultural sector. This pressure is causing farmers to reconsider their businesses at a younger age than before. The question of whether they want to or can still compete with the ever-changing market dynamics and climatic challenges over the next twenty years is increasingly coming up in conversations between Stef Hooijman, Agricultural Account Manager at Troostwijk Auctions, and agricultural entrepreneurs.

 

Record Year

In 2023, Troostwijk Auctions organized 189 auctions of agricultural business machines with more than 57,000 lots and 857,290 bids — a growth of 93 percent compared to the previous year. This is also reflected in the significant growth in revenue: from €25 million in 2022 to an impressive €42.2 million in 2023, €17 million more than the previous year. The number of Dutch entrepreneurs auctioning business assets also rose by 17 percent. According to Troostwijk Auctions, this is partly due to the growing uncertainty among agricultural entrepreneurs. On the other hand, the digital auction house notices that online auctioning is becoming increasingly common within the sector: “A growing group of agricultural entrepreneurs realizes that by selling their business, they take their fate into their own hands and create a turning point,” says Hooijman. “We also notice that the average farmer often wrongly thinks they have too few machines to auction, whereas entrepreneurs can already auction from just one machine. There is still a lot of untapped liquidity lying around in barns.”

 

Younger Entrepreneurs Quitting

The significant rise in the number of agricultural auctions is partly due to the prevailing uncertainty among agricultural entrepreneurs. “In conversations with our clients, I notice that the uncertainty is significant and that an increasing number of farmers see little perspective,” says Hooijman. “Ten years ago, when I auctioned a contracting business, the entrepreneur was often sixty-plus and without a successor. Nowadays, it’s entrepreneurs in their forties who question whether there’s still a future in the agricultural market or doubt whether they want to continue the work for the next twenty years.” Agricultural entrepreneur Johan van Weert (52), who closed his contracting business after 26 years, explains: “The market for livestock farmers is steadily shrinking, and more and more farmers are therefore stopping their businesses. A trend that I believe will continue in the coming years. After years in this sector, I decided to stop because I saw insufficient perspective to sustain it for many more years.”

 

Tractors in Demand

In 2023, 3,444 lots were offered in the tractor segment. Besides tires and rims, 4-Wheel Drive tractors and vintage tractors were particularly popular. Front Loaders and accessories also performed well in 2023. Most buyers come from Europe, especially from Belgium, Poland, Germany, and Romania. “Tractors are real attention grabbers within the agricultural auctions, both the vintage tractors, which are popular with enthusiasts, and the tractors coming directly from work,” says Hooijman. “Dutch farmers often bid on young tractors, no more than four to five years old, coming directly from work. This gives them the guarantee that they can start using them immediately and serves as a long-term investment. Slightly older tractors with more operating hours are mostly sold to agricultural entrepreneurs in Eastern Europe, such as Poland or Romania.”

 

Growing International Focus

Not only changing market dynamics but also climatic challenges are causing increased uncertainty among farmers. “Nitrogen and water quality will increasingly have a strong influence on uncertainty within the agricultural sector,” says Hooijman. “As a result, we expect the market for agricultural business equipment to increasingly shift beyond our national borders. We are already seeing growing demand from abroad, with bids coming from no fewer than 175 countries.”