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In this episode hosts Casey Seymour and Aaron Fintel of Moving Iron LLC sit down with Tim Short of Australian Harvest, a 3 store dealership in Australia.

During their conversation they discuss how the dealership has been communicating with customers about supply chain and low inventory challenges. They also discuss some of the weather differences as Australia enters the winter season.

Click to watch the VIDEO REPLAY of this podcast.

Full Transcript

Kim Schmidt:
Hey, I'm Kim Schmidt, executive editor of Farm Equipment. Welcome to Farm Equipment's Used Equipment Remarketing Roadmaps podcast. In this episode, host Casey Seymour and Aaron Fintel of Moving Iron LLC sit down with Tim Short from Australian Harvest.

Kim Schmidt:
Okay, let's jump right in. Here's Casey, Aaron, and Tim talking about how business in Australia differs from here in North America, and how they're dealing with the supply chain and inventory challenges.

Casey Seymour:
So Tim is a guy we met online, and he talked to us back and forth, got him on here. He works for a Case dealership over there in Australia. So Tim, tell everybody where you work at, and kind of the geographical area that you guys cover.

Tim Short:
In Central West of New South Wales, a state on the eastern coast of Australia. We are about 400 K's west of Sydney, and we have three dealerships. The townships we operate in are Narromine, Warren, and Gilgandra. Predominantly dry land wheat. We do have irrigated cotton. Macquarie Valley is one of the founding cotton growing valleys in Australia, so it makes up a large portion of what we do. We also have a large portion of livestock, being sheep and cattle. You'd love that Aaron, sheep.

Aaron Fintel:
Absolutely, except they're the wrong kind. Oh, not the Dorpers. There's more and more Dorpers.

Tim Short:
We run Dorpers as well. Yeah. Let's see.

Aaron Fintel:
A lot of Rambouillets though, right? Australia's the land of the herb Merino.

Tim Short:
Merino. Yeah. Such good wool.

Aaron Fintel:
Yeah.

Tim Short:
Wool. Wool, wool.

Casey Seymour:
Yeah.

Aaron Fintel:
Yep.

Casey Seymour:
Rambouillet, huh, because-

Aaron Fintel:
I'm done, guys. I'm done. I had my little geek. I had my little geek out so I showed your man. I'm good.

Casey Seymour:
It's good. Yeah.

Aaron Fintel:
I about went down there and started stuffing wool bags in German hubs, but we don't have time.

Casey Seymour:
Yeah, no. So Tim come on, you know we're going to talk a little bit about what's happening there in Australia. So Australia is the complete opposite of what we're at right now and different times of the season, those things kind of going on. So for instance, we're in T-shirts.

Aaron Fintel:
Right.

Casey Seymour:
And he's in a hoodie inside.

Tim Short:
It's cold.

Aaron Fintel:
Yeah. Yeah, it's...

Tim Short:
Yeah. It's cold where, which is quite unseasonable for this time of the year. We're not usually as well as what we have been. So we're coming out of the back of, or off the back of three really super wet winters. And the challenge we have at the moment is, and again, we're directly opposite to you with your weather. You guys are quite dry, which is unseasonable.

Tim Short:
We're struggling to finish off winter crop planting. And also too, especially in the Macquarie Valley, we're struggling too. There's some guys that are not even 50% through pick. In a normal year, we would be well and truly done.

Aaron Fintel:
Okay. So you're-

Tim Short:
So would-

Aaron Fintel:
Would be involved down in. Yeah.

Tim Short:
Yeah, we are. And I was talking to a farmer the other day and he was saying, "The challenge is going, this is going to be the challenge at harvest time because because there's so much time between when they first started planning to when they're going to finish. It's going to be stop, start, stop, start, which is going to be a challenge."

Casey Seymour:
Harvest nightmare.

Aaron Fintel:
Yep.

Tim Short:
Yeah. That's it. That's it.

Aaron Fintel:
Hurry up. Hurry up and wait.

Tim Short:
Yeah. Yeah, that's it. That's-

Casey Seymour:
Hurry up and wait.

Tim Short:
So yeah. So complete opposite to you guys.

Aaron Fintel:
Yeah.

Casey Seymour:
So unfortunately, you're not the complete opposite of us when it comes to equipment availability and getting stuff to you. I've got to imagine that we're struggling over here and where most of the stuff's getting in manufactured. And I got to believe just because the lead time is getting stuff across the ocean, out of ports and everything else that you just have got to have this huge extrapolation of what we think is bad. You probably wish you had. So I guess, as you're looking at that situation right now, Tim, what are some of the struggles you're seeing and how are you communicating that with your customers? And then guess also, what are your customers reaction to that?

Tim Short:
So I guess we've been in this path for a little while now. So in terms of communicating with our customers, it's the weekly, or as soon as we have know the information we're passing out on to our customers. It's the only way to be.

Tim Short:
Probably 90% of the customers who've been in this we've been, this has been our normal, I guess you could say. So whilst they're not overly happy, they're accepting of the situation. They know that's just life now. And I think what we're going to start to see is we're probably going to start to see those opportunistic guys have to start planning their equipment purchases instead of, so gone are the day. Gone are going to be the days where they wake up and they want, and they're like, "Oh, I need a new Magnum. I'm going to go buy one today." That isn't going to happen.

Aaron Fintel:
Right.

Tim Short:
So they're going to have to be more planning. Okay. And your guys probably do this better than what our guys do in terms of when they're going to plan to put machines in. So yeah. I think it's going to change their purchasing decisions and planning.

Aaron Fintel:
Yeah.

Casey Seymour:
Well, and we noticed that like with the early order programs this year, they were open for about 30 seconds. We had-

Aaron Fintel:
Yeah, I did hear that.

Casey Seymour:
Right. We had everything already done, already in the hopper and it's go, click enter, done. The world sold out like instantly.

Tim Short:
Yeah.

Casey Seymour:
So it didn't take very long.

Aaron Fintel:
Yeah.

Casey Seymour:
Man, it is. It's just crazy. Even you get, it used to be, you could not talk a guy into ordering a planter in June. He's like, "I just got done. How am I supposed to put my name on something now that I won't see for a year?" And now it's like, please put your name on this and we hope we see it in a year. And he's like, "Yes, get two of them because that other one will be two years later and that'll be my second trade, so.

Aaron Fintel:
Yep.

Tim Short:
Yeah, absolutely. We've had customers do that as well with the same thing. Right over, well, I've got one and I'm waiting for it. So by the time that one gets here, I'm probably going to be not far off needing another one. So I might as well put the order in for another one now.

Aaron Fintel:
Right.

Tim Short:
And we've been a little bit, same with combine harvesters. We've always had the early order program and people have been prepared to wait. It's probably not drama is not actually getting combines. It is more so the fronts that we're having trouble with. And I think that's a worldwide issue from one of the front suppliers.

Casey Seymour:
So last time you were on, you were talking about used equipment and kind of how the buying pattern of used equipment buyers were and those kind of things. And you were talking about the late model, low houred stuff. There was questions about why would you be getting rid of this stuff this early?

Casey Seymour:
Have you seen any change in that with guys that are like, "You know what? I have a chance to really maybe make a few dollars by selling this, assuming that I've got one to replace it with." I mean, are you seeing some of that trickle down where you've, maybe there's a little more openness to some late model, low hour stuff in your area?

Tim Short:
I think it is starting to change, but I think that the scarcity of equipment is starting to change that mindset. So there's a tractor sitting on the fence. I need it. I'm going to get it because if I don't, someone else is going to. That's probably not so much the questioning more so now compared to what it was earlier. They're just like, "We're going to book that."

Aaron Fintel:
Yeah. Right. There it is. It's available now. I'll take it.

Tim Short:
Yeah. That's it. That's it.

Aaron Fintel:
Right.

Casey Seymour:
Are you seeing some transactional stuff between farmer to farmer type of thing? Are you seeing some of that kind of stuff where they're circumventing the whole process altogether and just selling more stuff on their own?

Tim Short:
Yes. Yeah. A lot of guys, and in some cases we're also encouraging that because we don't have to deal with it.

Aaron Fintel:
Yeah.

Tim Short:
And to be fair, they're going to get more money, which is going to reduce their changeover. So yeah, we're saying that. The only danger with that is because it is so easy to sell at the moment, they're all going to think that it's very easy-

Aaron Fintel:
Forever.

Tim Short:
That selling is a very easy process, but it's not because when it's tough, it's tough. So yeah.

Aaron Fintel:
Soak it up now guys because the how much is that? 169. Okay. Write it up. Yeah. It's going to end and everybody's got to learn how to sell again. Yep, yep. That's-

Tim Short:
That's right. Yeah.

Aaron Fintel:
But given what we've noticed a lot of here, which ties into the guys selling their own machinery, this whole gamut is you might have a tractor that brings 100 at an auction, but never in a million years would we even ask that. We're still at like an ask 90 and take less and you get so much feed into that world. And guys going, "Well, everything's up, everything's up. Everything's up." Well, certain things are up.

Aaron Fintel:
Everything's hard to get, but certain things are up. Not all of it is up. The banged out high hour stuff, it's still a commodity. It is what it is. So you run into, we're seeing more and more of that, which is fueling to piggyback with what you guys are doing, the here's our number. You might get this. You're more than welcome to have at it. So yep.

Tim Short:
Yeah, yeah. That's right. And it works well. It's a fallback position and yeah, go for it.

Kim Schmidt:
We'll get back to Casey, Aaron and Tim in a moment. But in the meantime, mark your calendars for January 9th and 10th for the 2023 Precision Farming Dealer Summit in St. Louis. The 2023 Precision Farming Dealer Summit offers a mix of general sessions, featuring top industry experts, profit boosting dealer to dealer panels and highly interactive round table discussions. To learn more and to register, visit precisionsummit.com. Now back to Casey, Aaron and Tim, as they get into the cotton harvest and planting season down in Australia.

Casey Seymour:
So right now, you're in the middle of a cotton harvest, right? And you've got some planting going on, so seeding going on, some wheat and those kind of things. So I guess talk about that a little bit and what you see happening there. I know you've got some weather struggles, like you talked about. It's wet. So whether you're planting or harvesting right now, when it's wet and nasty out, it always sucks. So I'm sure you got just the most upbeat and happy customers on the planet right now. But if you were to take a step back and take a look, I mean, price of cotton right now is doing really well. Obviously, well, the price of wheat's doing good too. So I guess in your area, are you seeing more wheat get planted and more guys planning to look at cotton?

Casey Seymour:
Especially cotton going into spring, a lot could change between now and then. But do you see a lot more wheat acres going in and are you seeing a lot more upbeat kind of thought processes around wheat than anything else right now?

Tim Short:
Yeah, there is. There is a lot more up, like they're all very buoyant at the moment because commodities are up that been a long time since it's been like this. The other thing too, especially with cotton. So, because 99% of the cotton grown here is flood irrigated.

Casey Seymour:
Okay.

Tim Short:
So our water storage dams are full. So there is depending on scene, but there is probably two to maybe three years of water stored. So cotton growers are excited about that. Yeah. So we're looking at, it's going to look very favorable for the next three years, especially in that cotton sector. And I can't see pricing, I can't see the bottom falling out of that anytime soon in terms of dry land work in cereals.

Tim Short:
Yeah. There's a lot of wheat going in. They're probably cut back on their oil seeds. So we do grow a lot of canola here, but probably not as much as they do in the south. They've probably cut that back a little bit just due to the wet conditions. But yeah, that's going to be the challenge, I think, because some guys have started. It was dry, but they started. Then it's been wet. Then they've had to stop and they've started again. So harvest time is going to be a real staggered harvest.

Casey Seymour:
Right.

Tim Short:
However, in talk, getting out and talking to farmers. Yes, it's a challenge, but they're like, "We'd prefer to have this than dust."

Aaron Fintel:
Yeah. Oh yeah, absolutely.

Casey Seymour:
Sure. Yeah, absolutely.

Tim Short:
There's a lot more opportunities in what they're doing. And couple that with livestock as well. A lot of these bigger dry land guys have got a flock of livestock. So they're still bringing really good money as well, so that they're not chasing feed and water and things like that for them.

Casey Seymour:
All right, Tim. So looking out right now, I guess, as you look out what going through the end of the year here. I mean you're in winter, right? Your winter months right now, so you're in the middle of winter. First day of winter was two days ago for you. So you have that going on and that. So I guess as you look through this going into spring, are you getting any kind of indication? Are you seeing anything, some light at the end of the tunnel, that's going to break open a little bit and get the supply of the parts and equipment and those kind of things to you?

Tim Short:
Yeah. It's a good question. I've thought a lot about that. I think the only way it's going to fast track is if we have a slowing in demand. Now in Australia, we've just had a change of government as well. So that's something that's happened since and we've got record inflation. And obviously, the only way to keep a lead on inflation is to increase interest rates. Now a lot of us work on subsidized interest rates, be it from CNH Capital or John Deere Financial.

Tim Short:
However, those interest rates will still rise, I think. And I think that may start to put the brakes on, which might start to slow the market, which will allow manufacturers to catch up. That's the only thing I can really see. Or if we do, if the Bureau of Meteorology is completely wrong and we go into a nano phase and our conditions back off, that's the only thing. That's the only thing. There's got to be something that's going to be the leveler, I guess. And it's going to be one of those two things I think, to slow that market down.

Casey Seymour:
Something to hit reset a little bit.

Tim Short:
Yeah. That's it, the reset. Absolutely. Absolutely. I'm not sure what your thoughts are on that with what you are seeing in your markets.

Casey Seymour:
I think we're seeing something very similar to now. I mean, we look at we're switching from a La Nina to an El Nino phase as well. And that for us means that we're going to just go from a warmer, dryer type of climate to more of a cooler weather type of climate and kind of give some really good opportunities to see some things there. We have a few other things that are kind of in play right now, if you look at our weather patterns and those kind of things that could have a dramatic effect on overall production. And not in a lack of production, but a really huge upscale in production and what that looks like over the next couple of years.

Casey Seymour:
So we have an opportunity to really see some things move in a direction that take us down from this $7, $8 corn thing to something more like maybe it's 4.50 or five bucks. Maybe it's six bucks. Who knows what that looks like?

Aaron Fintel:
$5 corn's a new three.

Casey Seymour:
Yeah. It's weird to say that, but then you start looking at right now. I mean, if you look at our futures right now, I want to say July wheat is 10.65, which has come down quite a bit.

Aaron Fintel:
Oh, yeah.

Casey Seymour:
It was almost 13 bucks there for a minute, so.

Tim Short:
Man, that's unreal.

Casey Seymour:
So we've seen some stuff there, but I think a lot of this stuff is settling down. Again, the inflationary thing, just like you talked about or record, not record high inflation, but we're the highest inflation we've seen in 40 years, since the '80s. And what we've got going on there.

Casey Seymour:
So there's a lot of headwinds that we're facing against right now. But I can't say that when we set back and take a look at the overall marketplace, that there's any lack of demand, right. Interest rates have come up. No, God, I bet interest rates have risen four and a half percent since the first of the year.

Aaron Fintel:
Doubled.

Casey Seymour:
So we went from-

Tim Short:
That's your cash rate. Is that your cash... That's your basis cash rate from the reserve bank?

Casey Seymour:
Yeah. Well, no, I'll take that back. No, from our reserve bank, we've gone up a point and a half. Now we're supposed to see the three quarters of a point, jump up. I'm talking like the lending institutions that John Deere Financial or AgDirects, those kind of folks. We've seen, we went from right around two and a half to three to here we are almost hitting right about six, depending on what it is.

Casey Seymour:
And we're going to see some jumps next month and see what those things happen. But with all that being said, nope, I have yet to see anybody go, "You know what? This interest rate thing is just, it's too scary for me. And I'm going to back off right now." I've not seen anybody do that yet. I really thought when we hit five and a half and 6% that we would see some of that, but we haven't. And I don't know if you're seeing something like that, where you got customers that are sitting back going like, "Oh man, this inflation deal and interest rates, dah, dah, dah. I mean, maybe we should stop a little bit." But kind of what you said earlier, doesn't sound like they are either.

Tim Short:
No. No, it's not. We're not seeing that. And I can remember many years ago, I can remember selling or financing equipment at eight and half percent. And the market was still buying it at eight and a half percent. So there is always going to be an appetite for that. But I think coming out of, and I guess we've got some younger farmers, especially in our area that are coming up, the next generation, who've not seen that in the past 10 years. So it'll be interesting to see how they deal with that.

Aaron Fintel:
Yeah. I mean, you see that a lot with the up and comers, if you will, and those guys going, "Wow. 6% interest be like, you could put a one in front of that a few decades ago." So hold on, man. It could get wild before it gets better. But no, I think, and that's just the world we're in. Not in any, there's nothing, one single soul can do about it, except deal with what you're given.

Casey Seymour:
That's exactly right.

Tim Short:
That's exactly right.

Casey Seymour:
We've got lot opportunity, I think, to see some stuff happen. It will be interesting, though this is something and you tell me what you think here too, Tim, what you see in your areas is that once the factories get caught up and everyone's getting their stuff like they're supposed to be getting. A lot of this, I'll take it at any price thing is going to go away pretty quick.

Tim Short:
Oh, yeah.

Casey Seymour:
Right.

Aaron Fintel:
Hopefully.

Casey Seymour:
Yeah. Once supply and catches up with demand. So I guess where do you see that from that perspective? Are you seeing something similar to that?

Tim Short:
Yeah, I think it will. I think it will. But you know what'll happen. Supply will free up and we'll be off screaming out in Australia, which will bring back demand.

Aaron Fintel:
Right.

Tim Short:
And unfortunately, so because realistically, yeah. The next drive period is not that far away. So based on records. So we and you guys-

Aaron Fintel:
You guys have drought like the rest of the world doesn't.

Casey Seymour:
When you guys have drought-

Tim Short:
Yeah, we do, so.

Aaron Fintel:
It is crazy drought.

Tim Short:
It is. And I guess the last drought that we've just come out of, or the three year drought from about '17 to about '20 was by far the worst that anyone has ever seen in living memory. And I guess everyone's because it was so severe and for so long, people are still struggling with a little bit of PTSD from that, if you know what I mean. If it hasn't rained after two weeks, people are going, "Oh, shit."

Aaron Fintel:
Yep, absolutely.

Casey Seymour:
It's getting dry.

Aaron Fintel:
Yeah.

Tim Short:
So yeah.

Aaron Fintel:
It didn't rain this week. Turn that tractor off.

Tim Short:
Yeah. Yeah, that's it. But yeah, I think that's probably what we're going to see, Casey. I think, yeah. I would agree with what you're seeing down there in terms of [inaudible 00:21:57] that [inaudible 00:22:00] than any problem, is it's quick evaporate.

Casey Seymour:
Yep. And when it does, it's going to cause a big problem.

Tim Short:
It is.

Casey Seymour:
A big problem. I mean a bigger problem, not just for the dealers, but I mean the whole market. I mean, it's just going to be a big chain reaction-

Tim Short:
And that's-

Casey Seymour:
... across the board.

Tim Short:
That's the challenge, I guess, for dealers is picking when that happens, because you don't want to be loaded with inventory when that does happen, because our customers have to order so far out. We've got to do the same thing. So at what time do we put the brakes on? That's why we have to be analyzing what's going on so we can maybe start to pick a pattern so that we can rule up on the ordering and get retail what's coming our way. Because, that floor plan interest can be quite relentless.

Aaron Fintel:
Oh, yeah.

Casey Seymour:
Yeah. Yeah. They want to, they like getting paid.

Aaron Fintel:
They don't ever forget about it.

Casey Seymour:
They never do. They're like, "I sent that bill, didn't we?"

Aaron Fintel:
Yeah.

Casey Seymour:
I'll get them next month.

Aaron Fintel:
Well, we sent that check. It's number 6893. Oh, okay. You're good.

Casey Seymour:
Yeah. That was close. They almost caught us.

Aaron Fintel:
Yeah.

Casey Seymour:
Yeah. Yep.

Aaron Fintel:
Got us.

Casey Seymour:
Yep. Well, good stuff, man. Tim, anything else you want to make sure we talk about here before we close down the podcast?

Tim Short:
No, I think that's about time. I think we've covered most things that are happening, so yeah. It's just going to be interesting to pick that. You know that's slow. I think that'll be the next thing for focus for us as we're always picking when that market's going to turn around or when that demand's going to slow.

Aaron Fintel:
Right.

Casey Seymour:
Yeah. I already got it. I already have my day picked when it's going to happen. I'm just not going to tell anybody.

Aaron Fintel:
Yep. See, exactly what I thought. I told you guys. I mean-

Tim Short:
Yeah. When it happens you can say, "Yeah. That's it."

Casey Seymour:
See, I told you the whole time.

Tim Short:
Yeah, that's it.

Casey Seymour:
I've had them in my head the whole time.

Aaron Fintel:
Yep. So.

Casey Seymour:
All right, Tim. Well, I appreciate you taking the time to be on here. I know you're on your Saturday afternoon right now so I appreciate you taking the time to be on here, man.

Tim Short:
Yeah. No problems at all. It's always a pleasure to catch up with you guys. Thank you.

Aaron Fintel:
How's the rugby season?

Tim Short:
Yeah, not too bad. We're six from seven and we've got a rugby game this afternoon. So yeah, we've got our young fellows playing on the senior ground. So that's a big thing for them.

Aaron Fintel:
Right on.

Tim Short:
So yeah. Yeah.

Aaron Fintel:
Hell yeah.

Casey Seymour:
That'll be cool. All right, my man. So Tim, folks want to reach out to you get more information about what it is you're doing, man. What's the best way to do that?

Aaron Fintel:
The best way to that is obviously by my email, which is Tim@3rm.com.au.

Casey Seymour:
Okay. Aaron, what's the best way to get ahold of you?

Aaron Fintel:
Call me, text me at 308-760-1193. Also, on Facebook and LinkedIn by my name, Aaron Fintel, Fintel on Twitter, the ag Twitter verse at Aaron Fintel and email. Aaron.fintel@movingironllc.com. And what about you, Mr. Seymour?

Casey Seymour:
You can find me on Facebook, Twitter and Instagram at Moving Iron LLC, LinkedIn at Moving Iron Podcast. And you can see us all on the YouTube channel that we have here. That's the Moving Iron Podcast YouTube channel and it's the video version of what we're doing here. So check that out. You can also, if you want to see all the stuff Moving Iron related, go to movingironllc.com and you'll see a blog post, the library, Moving Iron Podcast, plus all the information for the Moving Iron Summit coming up in Nashville, Tennessee, September 6th, 7th, and 8th, which I hope to see you at, Tim. Hopefully, can make the trek across the ocean. That'd be great.

Aaron Fintel:
Start paddling, buddy.

Casey Seymour:
You by the time. Yeah, just go. You'll be here before you know it. And so you'd run. If you're interested in that, check that out. All the information is there or you can send me an email at Moving Iron Podcast, movingironpodcast.com and I'll get back to you as soon as I can. With that, I am Casey Seymour with Aaron Fintel and Tim Short. That's some smart folks.

Kim Schmidt:
Thanks Casey, Aaron and Tim for sharing your conversation with us. You can keep up on the latest industry news by registering online to receive our free newsletters. Visit www.farm-equipment.com. For Casey, Aaron and Tim, as well as our entire staff here at Farm Equipment, I'm Kim Schmidt. Thanks for listening.

Sound Effects: Jahzzar - Magic Mountain