SA agricultural machinery sales reflect “high caution”

Reduced agricultural machinery sales for 2017 in South Africa reflect a “high degree of caution” among the country’s farmers, according to the SA Agricultural Machinery Association (Saama).

SA agricultural machinery sales reflect “high caution”
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However, it said that the current market situation for agricultural machinery was such that our farmers could hold back on their buying decisions for a while.

Saama Chairperson Lucas Groenewald said: “The stronger rand means that [agricultural] equipment prices have stabilised and good rains in most areas mean that the majority of farmers will harvest significantly better crops than last year. The excellent [2016/2017] summer crop expectations have, of course, depressed crop prices, though.”

Saama recently reported that South Africa’s new tractor sales of 675 units for February 2017 were 7,7% down on the 731 units sold in February 2016. The 1 153 new tractors sold nationwide for the year-to-date February 2017 were also 12,1% lower than the 1 311 units sold for the year-to-date February 2016.

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The association added that the 19 new combine harvesters sold in South Africa in February 2017 were 13,6% fewer than the 22 units sold in February last year. For the year-to-date February 2017 the 35 combine harvesters sold were 7,9% down on the 38 units sold for the year-to-date February 2016.

According to Wandile Sihlobo, Agbiz’s head of economic and agribusiness intelligence, national agricultural machinery sales so far this year mirrored the long-term trend “as farmers typically make large machinery purchases around February, just before the end of the financial year”.

“While conditions are largely positive in [South Africa’s] agricultural sector, we continue to view the escalating farm debt as a key risk that could potentially reduce some farmers’ ability to further invest in machinery. In 2015 the total [SA] farm debt was at R142 billion, a record level in a database starting from 1980,” said Sihlobo.

Agbiz said that national tractor sales could see a slightly downward trend over the next few months because summer crop plantings had been completed. However, tractor sales could gain momentum again around mid-2017 when winter crop farmers commenced their planting activities.

“The combine harvester sales could increase over the coming months due to an expected large summer crop output,” Agbiz said. “The total summer crop production is estimated at 16,21 million tons, which is a 72% annual increase.”

Saama also expected short-term agricultural machinery sales to continue at the current lower levels until farmers began harvesting summer crops and planting winter crops around mid-2017.

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

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Lloyd Phillips joined Farmer’s Weekly in January 2003 and is now a Senior Journalist with the publication. He spent most of his childhood on a Zululand sugarcane farm where he learned to speak fluent Zulu. After matriculating in 1993, Lloyd dreamed of working as a nature conservationist. Life’s vagaries, however, had different plans for him and Lloyd ended up sampling various jobs in South African agriculture before becoming a proud member of the Farmer’s Weekly team.