Machinery sales decline 26% in January

Agricultural machinery sales were off to a bumpy start, with tractor sales in January declining 26% year-on-year (y/y) to 353 units and combine harvester sales 50% y/y to eight units, according to the latest sales data from the South African Agricultural Machinery Association.

Month-on-month tractor sales were down 34% and combine harvester sales by 74%.

Wandile Sihlobo, senior economist of Agbiz, said agricultural machinery sales were traditionally seen as an early indicator of farming sector health. This time, however, they should be seen as the start of a normalisation period following the high sales of the past couple of years, primarily on the back of large grain and oilseed harvests. In 2022, South Africa’s tractor sales hit a 40-year record high, increasing 17% y/y to 9 181 units sold. Tractor sales in 2023 were down roughly 8,7% y/y to 8 374 units, but still way above the industry’s five-year average of 6 500 units.

Combine harvester sales increased 38% y/y to 373 units in 2022, making it the highest yearly sales figure since 1985, and then increased by another 35% y/y in 2023, to reach 505 units sold.

Sihlobo said the 2023/24 harvest was expected to be broadly above the longterm average, but rising interest rates, the relatively weaker rand exchange rate and input costs, which were still above long-term levels, were adding pressure to farmers’ finances and, in effect, resulting in a lower replacement rate of machinery.

Tallie Giessing, chairperson of the South African Agricultural Machinery Association, said it was still too early to predict what would happen during the 2024 calendar year, but the consensus was that sales might be down 10% y/y.

“We think tractor sales will be down year-on-year by roughly 20% in February and March and pick up from then on.”

He expected combine harvester sales to be lower, as they were “niche machines”. The high combine harvester sales of last year could be ascribed to machines that were ordered the year prior, when harvests were good, but only delivered in 2023. –