He also provides more information about the latest developments in the agricultural sector. 

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In this week’s insert, Sihlobo shares what agriculture machinery sales look like for the first nine months of the year.

“This past week, the South African Agricultural Machinery Association indicated that tractor and the combined harvester sales were up by 29% and 91% in September 2021 compared to the corresponding period last year, with 724 and 21 units sold.

“This placed the total tractor sales for the first nine months of this year at 5 382 units, up by 30% year-on-year (y/y). The combined harvesters' sales were also up 30% y/y over the same period with 197 units sold.

“As we noted in the previous commentaries, 2020 was also a good year in South Africa's agricultural machinery sales, so surpassing it means we are witnessing some good momentum this year. In 2020, the tractor sales amounted to 5 738 units, up by 9% from 2019. The combined harvesters were up 29% from 2019, with 184 units sold in 2020,” says Sihlobo.

He adds that these robust sales are supported by the large summer grain harvest and oilseeds harvest in 2019/20.

“Yet, 2020/21 was another excellent agricultural season and coincided with higher commodities prices boosting farmers' finances and, subsequently, the machinery sales. Importantly, this year's data also points to the farmers' optimism about the 2021/22 summer crop production season, whose planting has recently started in the country's eastern regions.

“Moreover, the favourable weather prospects of a La Niña, and attractive grain prices are other catalysts for a potentially good season with a decent area planted in 2021/22.

“Looking ahead, we think the agricultural machinery sales will cool off in the last quarter of the year. We fear that the rising input costs, such as fertilisers, herbicides and fuel, could add pressure on farmers' finances and thus lead to a change in machinery-buying decisions.

“Also, the planting will be in full swing, and there will be little incentive to invest in new machinery. Still, the pace of sales in the first nine months of the year convinces us that, in aggregate, the annual sales for 2021 could still be larger than the previous year,” concludes Sihlobo.

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