Friday, 30 July 2021 09:55

Tractor and machinery sales on a roll, but challenges ahead

Written by  Mark Daniel
Kyle Baxter Kyle Baxter

Machinery dealers around the country have reported a substantial increase in sales of both tractors and farm equipment compared with the same time last year.

The Tractor and Machinery Association of New Zealand (TAMA) president Kyle Baxter says the big increases reflect a continuing catch up in on-farm vehicle investment, as farmers look to the future.

"This significant increase isn't an accidental one, nor a blip," he told Rural News.

"It requires sustained customer and supplier confidence over a 12-month period - because any required product is ordered and arrives in the country to meet their demand."

For the first six months of 2021, overall unit sales were up 35%, representing 450 more tractors sold than the same period in 2020.

When broken down into individual horsepower sectors, the under 50hp lifestyle sector increased more than 40%, while the 60-80hp segment - largely delivered into the horticulture sector rose by 50%.

The mainstream 100-140hp segment was up more than 30%, while 180-250hp cropping and contracting tractors increased by more than 50%.

While the market is predicted to remain strog for the rest of 2021, there are several challenges impacting on it, says Baxter.

"We are hearing from our members that ongoing production stoppages in global factories, due to Covid lockdowns and community outbreaks, continues to affect manufacturing timeframes.

"Europe continues to be a rapidly changing space by the day. As one country announces a 'return to normal' date, another country announces new control measurs to help stem the spread of the virus."

Meanwhile, global logistics dominate many discussions between TAMA members and their suppliers and customers. There appears to be no relief in sight, with increased shipping times looked set to continue well into 2022.

"Almost every point of the logistics supply chain is affected, with reports of delays of an extra 90 days in receiving a container load of equipment from Europe, not being uncommon," Baxter says.

"Reduced air cargo space, due to fewer flights globally, is also adding to the cost of air freighting spare parts and causing delays in getting urgent parts into the country."

He says the cost of shipping a container here has also increased drastically, coupled with the fact that some containers only carried one to four machines, driving up the freight cost of each item shipped.

Baxter also notes that raw materials used to build equipment are also under upward price pressure. He says many manufacturers are already signaling or passing on manufacturing price increases related to increased raw material costs.

"Our members are particularly concerned about the strong inflationary surge of raw materials, which is affecting many components used in the build of equipment," he adds.

Steel, representing 30 to 40% of the average production cost of farm machinery, has more than doubled in price from €550 to €1250 per ton. Meanwhile, aluminum has risen by 22% copper by 63%, rubber is up 67% and foundry products have increased by over 90% during the last nine months.

"Labour shortages remain another major concern for the tractor and machinery industry," Baxter says. "We need to be able to access overseas workers to help with the immediate shortfall for the upcoming season.

"We'll be working on behalf of our members, to ensure that these issues are highlighted and implementing possible courses of action to address this shortfall."

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