Ploughing becomes trickier
Prices are tending upward
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.”