Plough­ing be­comes trick­ier

Prices are tend­ing up­ward

Finweek English Edition - - Economic trends & analysis - JO­HANN VAN ZYL

SOUTH AFRICA’S agri­cul­tural sec­tor is usu­ally pleased when the rand weak­ens against for­eign cur­ren­cies, as agri­cul­ture is highly ex­port-driven, en­abling farm­ers to earn more for their prod­ucts. How­ever, trac­tors and other agri­cul­tural ma­chin­ery are the ex­cep­tion, be­cause they’re usu­ally im­ported.

The trac­tor in­dus­try kept its word dur­ing the pe­riod of a strong rand by pass­ing cheaper im­ports on to farm­ers in the form of lower prices. Now the po­si­tion has changed and prices are tend­ing strongly up­ward.

AgFacts statis­ti­cian Jim Rankin says that the prices of agri­cul­tural ma­chin­ery – trac­tors, har­vesters, balers and other im­ple­ments – have al­ready in­creased far more than the in­fla­tion rate over the past year. On an an­nu­alised ba­sis, the prices in Jan­uary were on av­er­age 11,8% higher and in Fe­bru­ary 12,4% (see ta­ble), which in­di­cates that they could go even higher.

Rankin says they should sta­bilise within the next few months, pro­vided the rand doesn’t fall sharply again. “The cheaper trac­tors over the past few years have helped to im­prove the ra­tio of new to old trac­tors. In 1993, the per­cent­age of trac­tors less than 10 years old was only 35,8%. It’s now risen to 61,4% of to­tal trac­tors and the num­ber of trac­tors newer than five years has risen by an over­all low of only 16 300 in 2002 to 24 050 units last year.”

Source: AgFacts

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