The Tractor and Farm Machinery Association (TAMA) is calling on the Government to take urgent measures to help its sector in the face of plummeting sales.
TAMA year-to-date figures to the end of September showed 3355 retail sales in all horsepower categories versus 2865 in 2017.
Tulloch says there was a cautionary approach to spending in the industry. However, despite this he says sales could hit 4500 for a calendar year record.
“Although the reduced Fonterra forecast of $6.25 to $6.50 per kg/MS (down from $6.75) had taken a bit of a shine off the optimism in the dairy sector.” [Editor note: The 2018-19 forecast has now fallen further to is $6 to $6.30/kgM]
Tulloch recently visited Europe and was shocked at the effects of the drought; some European dairy farmers will have to sell stock because they can’t get or afford extra feed, he says.
“That might translate into demand for our milk products.”
He says the sheep and beef sectors are still buoyant and the drop in the New Zealand dollar will further assist this buoyancy. The horticulture and viticulture sectors are also looking confident.
However, Tulloch says all farming sectors are also facing increased costs with high fuel prices and the currency drop.
“You also can’t control the weather, so seeing the effects in Europe it reinforces the need for all of us in the New Zealand industry to be in a strong position to withstand adverse events,” he told Rural News.
“For farmers, this means being in a robust enough position to ride out unfavourable weather or market conditions. It is also important that farmers support their local farm contractors as this retains strength in the industry.”
Tulloch says that in recent years some contractors – especially in the North Island – had had complaints regarding their prices and had faced deferred payment, meaning their business were being put at risk.
“In some areas, contractors were making a loss because prices had been driven so low.”
He said a new trend is also emerging where contractors are buying crops before harvesting them, then on-selling. Tulloch believes this also creates a further layer of risk for contractors.
“The contractor system is the most efficient use of machinery in a cost effective way. If this system falls over then everyone loses. It’s important that the system is supported as it helps create resilience across the industry.”