Growing farmer confidence reflected in tractor purchases

With record summer grain crop harvests projected for South Africa, the country’s farmers were reportedly elated. This, according to Agbiz, was reflected in the farmers’ confidence to invest in buying new tractors for their operations.

Growing farmer confidence reflected in tractor purchases
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The SA Agricultural Machinery Association (SAAMA), said that the national machinery industry sold 493 new tractors in May 2017, for a 16,8% improvement on the 422 units sold year-on-year (y/y).

SAAMA added that the 2 559 tractors sold for January 2017 to May 2017 were only 0,3% less than the 2 567 units sold for the corresponding period last year.

And while the 24 combine harvesters sold in May 2017 were 7,7% down on the 26 units sold y/y, SAAMA reported that the 111 units sold year-to-date May 2017 were 12,1% more than the 99 units sold for the corresponding period.

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“Overall, crop prospects look very good. Although these excellent crop prospects have had an adverse effect on crop prices, the overall sentiment in the industry is positive,” said SAAMA’s chairperson, Lucas Groenewald.

Wandile Sihlobo, Agbiz’s head of Economic and Agribusiness Intelligence, said that SA’s agricultural machinery market was “vibrant”, driven by a robust recovery in agricultural production, and a stable domestic currency for now.

He added that while national grain and oilseed prices were under significant pressure due to large supplies, higher average yields/ha could possibly compensate for the lower grain prices.

“As a result, farmers appear to be making buying decisions partly based on these expectations,” said Sihlobo.

Agbiz expected SA agricultural machinery sales to remain stable in the near-term due to the combination of record summer crops harvests and the relatively stronger rand against the US Dollar.

However, the high costs of servicing the national farm debt, which was over R142 billion, remained a key risk that could negatively affect agricultural machinery purchases in the foreseeable future.

SAAMA expected SA tractor sales for the 2017 calendar year to be at least as good as the 5 855 units sold over 2016.