Tractor sales signal confidence in agriculture
Agricultural machinery sales last month continued to register growth, indicating confidence in the sector’s outlook.Photo: Supplied
By Given Majola
DURBAN – AGRICULTURAL machinery sales last month continued to register growth, indicating confidence in the sector’s outlook.
In January, tractor sales increased by 28 percent to 445 units compared with 348 units in January last year. Last month saw the sale of five combine harvesters, a similar number as that of last year.
South African Agricultural Machinery Association (Saama) chairperson Karel Munnik said on Friday that market sentiment continued to be positive.
“Good crops, in general, good commodity prices and favourable rainfall in most areas are contributing to this. There are still quite a few variables which may affect summer crops, so there is some caution in the industry. Nevertheless, prospects look good in the short to medium term,” said Munnik.
Saama said initial estimates for the 2021 calendar year were quite encouraging, with sales likely to be up to 10 percent higher than in 2020.
Last month, FNB Agribusiness senior agricultural economist Paul Makube said that lower interest rates were positive for the agricultural sector, particularly at the height of agricultural activity and increased credit demand.
He said strong commodity prices had also to helped keep farmers afloat, although there were pockets of Covid-19-induced challenges, such as in the wine value chain.
“The extended reprieve will provide an opportunity for farmers to do the necessary refurbishments and replacement of machinery and equipment,” said Makube.
FNB Agribusiness said record-low interest rates, coupled with strong commodity prices, boosted machinery sales last year, as tractor and combine harvester purchases increased by 8.9 percent and 25 percent respectively year on year.
Makube said strong output by the agricultural sector would limit an uptick in food inflation, which was positive for overall consumer price inflation in the year ahead.
“We still expect the agriculture sector to post another stellar performance during 2021,” said Makube.
This week,Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said latest data from the agricultural sector reinforced the view that the 2020/21 production season could deliver one of the largest harvests on record.
The latest Crop Estimates Committee (CEC) planting data showed total summer grain plantings for 2020/21 at 4.2 million hectares, up by 6 percent from the 2019/20 season. This dataset comprised maize (white and yellow), soybeans, sunflower seeds, groundnuts, sorghum and dry beans.
There was an expansion in most crops, except sunflower seeds, whose plantings declined by 5 percent year-on-year to 473 300 hectares, the smallest area in nine years. This decline was mainly due to some hectares being shifted to white maize plantings in the western regions of South Africa because of favourable prices.