Tractor sales plunge in September as farmers wait for rain

Tractor sales plunge in September as farmers wait for rain

GRAHAMSTOWN – Tractors sales plunged by 29.3 percent year on year in September to only 431 units as farmers waited for rain according to Greg Cadman, the chairperson of the South African Agricultural Machinery Association (Saama).

“Although farmers in many of the summer-cropping areas have begun preparations for the forthcoming season, cold weather and the general lack of early rain have held them back. These farmers are now waiting for rain before committing to buy new equipment.

“The course of sales in the next few weeks will be determined by weather conditions. Industry forecasts for the 2019 calendar year have been adjusted downwards several times since the beginning of the year and are now at a level between 20 percent and 25 percent below the 6 700 units sold last year,” he said.

The last time there was a year-on-year increase in tractor sales was in October 2018, when there was a 13.9 percent jump to 817 units sold. In the first nine months of this year, tractor sales are down 22.1 percent year on year.

The September 2019 rainfall in the summer rainfall area has been between a quarter and a tenth of normal September rainfall. Lichtenburg in the North West for instance only got 1mm of rain during the month, while Estcourt in KwaZulu-Natal got 3mm, as did Heilbron in the Free State. Ermelo in Mpumalanga received 15mm.

The Agricultural Business Council (Agbiz) confidence index rose to 46 in the third quarter after easing to 44 in the second quarter from 46 in the first quarter. A level below the neutral 50-point mark implies that agribusinesses have a bleak view of business conditions in South Africa.

“It signals a potential mild uptick in SA agriculture GDP in the third quarter, but we generally expect SA agribusiness to underperform in 2019. We see a 2% y/y contraction in SA agricultural fortunes this year,” Wandile Sihlobo, Agbiz chief economist said.

He noted that although the uptick in confidence is always a welcome development, it was important to be mindful that the Agbiz/IDC Agribusiness Index has been hovering at levels below the 50-point mark for the past five quarters.

“We worry that remaining at these levels for a prolonged period could lead to declining investment in the sector, albeit this is not the case at the present moment,” he said.