Drought slows agri-machinery sales

The prolonged hot and dry weather has seen a slow-down in retail sales of agricultural equipment, according to Dr Jim Rankin, secretary of the SA Agricultural Machinery Association (Saama).
Issue Date: 23 March 2007

The prolonged hot and dry weather has seen a slow-down in retail sales of agricultural equipment, according to Dr Jim Rankin, secretary of the SA Agricultural Machinery Association (Saama).

 “The positive sentiments felt at the beginning of the year have changed because of the drought. And in markets, sentiment is almost more important than the fundamentals,” he said. He explained that since farmers weren’t certain of how much their crops would yield, they were adopting a “wait and see” attitude, holding off their purchasing decisions until they were more certain of what their earnings would be.

 According to Saama figures, February tractor sales dropped almost 19% on last year’s figures. On a year-to-date basis, tractor sales are down 3% and baler sales are down 25%, while combine harvester sales are 23% ahead of last year’s figures. “Once harvesting begins and the true effects of the adverse weather conditions can be quantified, the market will then react accordingly,” said Rankin. H e said this would lead to slower sales in the next few months too. “Even if it rains now, I don’t think sentiments will change, because the rain will be too late for the summer crops,” he explained. Rankin said another factor could be that end of tax year purchases in February this year were much lower than last year, which was also due to the uncertainty of farmers’ earnings in light of the drought. – Gwenda van Zyl