Despite the robust performance of local agricultural machinery sales in the first half of the year, sales were expected to level off in the second half of 2022, according to Wandile Sihlobo, chief agricultural economist at Agbiz.
He ascribed the strong performance in the first six months of the year to the benefits derived from the solid production performance of the agriculture sector during the past two years.
According to him, elevated commodity prices, specifically for grains and oilseeds, were reflected in the machinery sales.
Tractor sales amounted to 4 133 units in the first half of this year, up 18% from the corresponding period last year.
At the same time, combine harvester sales reached 213 units, up 37%.
“We nonetheless remain doubtful about the outlook for the sector. Three major factors could slow agricultural machinery sales in the second half of the year.
“[First], higher farm input costs, including fertiliser, fuel and [other] agrochemicals, as well as increasing interest rates could have a negative impact on farmers’ finances in the coming months.
“Second, the strong agricultural machinery sales in 2020 and 2021 could lead to a lower replacement rate this year. South Africa’s tractor sales for 2021 amounted to 7 680 units, up 26% from the previous year.
“[Last], the 2021/22 summer crop harvests were down from the 2020/21 season, which would likely have negative financial implications for farmers,” Sihlobo said in a statement.
“We see the robust agricultural machinery sales of the first half of this year at a tail end of the good financial gains of the past years. The coming month, and probably the coming year, will bring some level of normalisation in the agricultural machinery market,” he added.
Meanwhile, Marketwatch.com recently reported that the global agricultural machinery market was expected to expand at a considerable rate between 2022 and 2027.
In 2021, the size of the global agriculture equipment market was estimated at just over R2,8 trillion, and was expected to grow at a compound annual growth rate 5% between 2022 and 2030.
Increasing mechanisation in the agriculture sector coupled with the surge in farmers’ income was mentioned as a primary factor driving the growth.