The Cost of Equipment

Purchasing machinery has always been one of the most significant business decisions farmers make. In the past five years, that decision has been shaped by volatile steel pricing, supply chain disruptions, component shortages, interest rate increases and record swings in asset values. As farmers look ahead to 2026, publicly available market data offers a clearer picture than at any point since 2020.

The bottom line: cost pressures remain high, equipment ownership expenses continue to increase and the market is stabilizing rather than retreating. Understanding what the published data tells us can help producers frame smarter decisions heading into the new year.

Inflation Has Moderated, Not Reversed

From late 2021 through 2023, farmers watched machinery sticker prices climb at an unprecedented rate. That escalator has slowed significantly. The farm machinery Producer Price Index, which tracks wholesale price movement, fell to 1.34% year over year in August 2025, according to a 2025 farmdocdaily analysis. This marks a substantial decline from the peak annual increase above 19% recorded in April 2022.

What this means for buyers is simple. Equipment inflation is no longer accelerating, but manufacturers have not returned pricing to pre-pandemic levels. The market has reset to a higher cost baseline, not a discount cycle.

Cost of Ownership Continues to Rise

Even as wholesale pricing slowed, the cost of owning and operating machinery continues to climb.

A 2025 report published by Agriculture.com, summarizing work by farm economists, noted that machinery-related expenses on typical Midwest farms rose from 136 dollars per acre in 2021 to about 171 dollars per acre in 2024, approximately a 25% increase. These figures include depreciation, fuel, repairs, labor and interest, illustrating the reality that higher prices are now baked into production systems.

This is consistent with USDA farm asset data. The USDA Census of Agriculture shows that machinery and equipment asset values on farms increased across size categories between 2017 and 2022, reflecting higher market pricing and investment levels. This reinforces the trend that farm balance sheets have absorbed higher machinery valuations, which influences replacement decisions, debt service and cash flow planning.

Used Equipment Markets Are Softening

One of the more notable shifts entering 2026 is the cooling of used equipment values.
According to Sandhills Global data cited by Farm Equipment magazine, asking prices for used tractors and combines fell between 6% and 7% year over year in 2025, and inventory levels in many categories continue to adjust downward.

This matters for producers in two ways. First, it increases the attractiveness of late-model used machinery as a capital alternative to new assets. Second, it introduces more pricing pressure on new iron, since buyers can compare cost and value more easily across channels.

While this does not signal a collapse in machinery values, it suggests that the upper limits reached in 2022 and 2023 are no longer holding.

New Equipment Sales Have Slowed

Demand indicators point to buyer caution. Industry reporting throughout 2025 shows significant declines in tractor and combine sales compared to previous years, according to coverage by AgDaily and other agricultural business outlets.

Reasons reflected in reporting include tighter margins, increased input and financing costs and delayed purchasing decisions. For manufacturers and dealers, weaker sales affect production planning, incentives and availability strategies heading into 2026.

Quick Statistics

• Machinery inflation cooled to 1.34% in 2025 
• Used tractor and combine prices fell 6% to 7% in 2025
• Machinery ownership costs jumped 25% since 2021
  

How Trends Shape the 2026 Landscape

Based on the data available today, several themes stand out that can help inform purchasing strategy, recognizing that markets evolve and none represent guarantees.

List Price Escalation Has Slowed

With the machinery PPI near 1%, sharp price spikes appear unlikely in the near term. However, structural cost drivers such as labor, research investment, technology integration and regulatory compliance remain elevated. This supports the view that prices will stay high relative to historical levels, even if they rise more slowly.

Used Markets Offer Leverage and Choice

With used values softening and inventory adjusting, some buyers may find late model machines at improved value relative to new units. This could change trade ratios, purchase timing and depreciation strategy depending on the size of the operation.

Financing Is a Larger Cost Variable than Sticker Price

Interest expense has become a central component of machinery cost. For many operations, borrowing structure, timing and repayment horizon matter as much as list price. This dynamic suggests that producers should place an increased emphasis on cash flow planning and total ownership cost rather than focusing on whether new prices rise or fall.

Planning for 2026: What Producers Can Do

Acknowledging these trends, the data suggests several practical considerations for buyers evaluating machinery decisions in 2026:

Compare late model used against new assets. With asking prices down and auction values adjusting, used machinery can reduce capital pressure while still improving operational performance.

Use cost per acre benchmarks before upgrading. With machinery ownership costs increasing 25% since 2021, farmers benefit from reassessing acreage thresholds required to justify upgrades.

Focus on total ownership cost, not just purchase cost. Financing terms, maintenance profiles and depreciation schedules often drive return more than list price alone.

Take advantage of timing flexibility. With softer demand, producers may find more negotiating room or availability options, though conditions vary by region and machine type.

Bottom Line: 2026 Decisions Require Discipline, Not Assumptions

Publicly available data paints a consistent picture. Machinery price inflation has slowed dramatically, used equipment markets are cooling and the cost of ownership remains above historical norms. Farmers considering upgrades in 2026 are operating in a stable but elevated cost environment rather than a discount cycle.

That reality positions 2026 as a year in which return on investment, cost per acre analysis, financing strategy and asset flexibility will matter more than hunting for bargains. In short, the market is settling, but at higher levels. Those who navigate it successfully will be those who pursue equipment that pays back rather than simply replacing what was traded off.

Farmers Hot Line Takeaway 

2026 is about disciplined equipment decisions, not discounts.

• Compare used vs. new 
• Recheck true cost per acre
• Focus on ownership cost, not sticker price
• Expect availability, not bargain pricing