A slight improvement in South Africa’s March 2023 tractors sales is positive, however, it still does not change the outlook of possible moderation this year. Following a few years of very encouraging tractor sales, Wandile Sihlobo, chief economist of the Agricultural Business Chamber of South Africa (Agbiz), expects agricultural machinery sales to cool off this year.
There has been a slight uptick in sales for March 2023, but it painted a mixed picture in other areas.
“The tractor sales were up by 6% y/y in March 2023, with 677 units sold. Meanwhile, combine harvester sales were down by 9% y/y, with 39 units sold,” said Sihlobo.
Slight pause expected
While this data did not surprise Agbiz, the organisation believes sales will slow down.
For example, South Africa’s tractor sales for 2022 amounted to 9 184 units, up 17% year-on-year and the highest annual sales for the past 40 years. The combine harvester sales amounted to 373 in the same period, up 38% year-on-year and the highest yearly sales figure since 1985.
“This year will likely be a pause from this robust sales period, for several reasons. Chief amongst them is that the possible replacement rate of older machinery will likely be lower this year as the past three years saw increased new machinery sales,” Sihlobo said.
The rising interest rates, he expects, will continue to pressure farmers’ finances. While other input cost prices, such as fertiliser and agrochemicals, have softened in recent months, the current price levels are still well above long-term levels, thus adding pressure on farmers’ finances.
“Importantly, the large summer crop harvest, currently estimated at 19.6 million tonnes, up 5% higher than the previous season, will likely not change this possible outcome of sales for the year,” Sihlobo said.
READ NEXT: AfCFTA: Turning imports into exports in Africa
Sign up for Mzansi Today: Your daily take on the news and happenings from the agriculture value chain
