Tractor sales take a slump due to weaker rand & drought

The weaker rand and damaging drought are to blame for the slump in tractor sales during September.

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A report by the SA Agricultural Machinery Association (SAAMA) stated that 562 tractors were sold this year, 4% less than the 588 sold in September last year.

Combine harvester sales of 19 units were almost 19% up on the 16 units sold in September last year but on a year-to-date basis the sales were approximately 37% down on last year.

“The threat of significant price increases on agricultural equipment is probably driving the market in the short term. Farmers with the ability to do so will be buying current lower-priced stock in preparation for the forthcoming summer season,” said the report, which added that industry expectations for tractor sales this year were about 10% down compared with last year.

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Combine harvester sales were expected to be approximately 30% down.

Grain SA economist Wandile Sihlobo told Farmer’s Weekly that the slump in machinery sales was mainly because of the drought which had negatively affected production and had financial implications on farmers.

The rand, said Sihlobo, also had an impact because SA imports some of the machinery. 

“The rand to the US dollar was valued at R10, 99 in September last year and it jumped to R13, 67 in September this year, depreciating by 24%. This means that on imported goods inflationary pressures are added due to the weaker rand,” he said.

The output of the whole summer crop basket of maize, sunflower, groundnuts, soybeans, dry beans and sorghum decreased by 27% this year to 11,91 million tons compared to last year’s 16,45 million tons, Sihlobo said, adding farmers’ income took a knock as a result.