Agbiz Chief Economist, Wandile Sihlobo, says at face value a worrying agricultural machinery sales report could easily be viewed as indicating difficulties in the sector. However, this is more of a normalisation after a few years of robust sales.

South Africa's tractor sales for 2022 amounted to 9 181 units, up 17% year-on-year, and represents the highest annual sales for the past 40 years. The combined harvesters also had an excellent performance of 373 units in 2022, up 38% year-on-year and the highest yearly sales figure since 1985. The sales for the year before were also exceptional.

“These generally strong agricultural machinery sales these past few years were primarily on the back of large grain and oilseed harvests. In 2023, the tractor sales were down marginally from the previous year, while the combined harvester sales held the last year's momentum.”

Thus, the January 2024 sales begin a correction period. “While in the past, agricultural machinery sales would be read as one of the early indicators of the health of the farming sector, this time around, the sales should be read differently.”

The current downturn in tractor sales. Graphic: Agbiz 

Sihlobo adds the summer crop production conditions are relatively robust in fields across South Africa. The recently released Crop Estimates puts the preliminary area plantings for 2023/24 summer grains and oilseeds at 4.41 million hectares, up by 0.4% year-on-year.

“This increase is not limited to a few crops but across most summer crops except for soybeans, where plantings possibly fell by 10% year-on-year 1.04 million hectares, which is still well above the 5-year average area of 867 240 hectares.”

Weather conditions also have been broadly favourable since the start of the 2023/24 production season, thus supporting crop growth.

“We currently expect a harvest that will be broadly above the long-term average levels in major summer crops, which again illustrates that the weak sales are not mainly a production conditions issue but a lower replacement rate of machinery after excellent years of sales.”

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