Coronavirus: Uncertainty for tractor and machinery sales

Photo / File

The unknown effects of the coronavirus and a general election means 2020 is shaping up to be another year of uncertainty for tractor and farm machinery sales.

Although sales were down on 2019 compared to 2018, Tractor and Machinery Association (TAMA) president John Tulloch hoped 2020 would see previously deferred purchase decisions realised.

TAMA statistics showed that during 2019, overall machinery sales were 4382 units compared to 4531 of all types sold in 2018.

Tulloch said as these units included everything from $1000 sprayers through $500,000 harvesters, it was more useful for meaningful comparisons to focus on the key machinery areas of grass and forage harvesting.

These sales were 1787 units in 2018 compared to 1665 units last year: a decline of about 6.8 per cent.

In turn there were 4007 tractor sales in 2019 compared to 4640 in 2018, a drop of 13.6 per cent.

"Anything over 4000 tractor units is still a respectable result and showed we had a pretty solid year. And certainly within the machinery sector, we had a better year than many were expecting considering the conditions."

These conditions included uncertainties around government policy on water quality and emissions, plus challenges in obtaining finance as banks beefed up their equity reserves.

In addition, this year's general election and the effects of the coronavirus outbreak were also causing uncertainty.

Covid-19 could affect buyer confidence and there may be some impact on sourcing components from China, although this had not yet occurred.

"We just don't know the actual impact yet. It could end up being positive as New Zealand is known as a safe country for food production. We have stringent and well-recognised food safety systems so could be seen as a preferred supplier. But only time will tell."

Tulloch said the North Island drought conditions would have an effect on farmers, although contractors might have a good season as feed reserves have been used up, requiring restocking.

Farmers in Westland, Southland and Otago were also suffering after a wet, cold spring followed by summer flooding.

"The reduction in value of dairy company shares is also suppressing the mood and sentiment of dairy farmers even though the predicted payout of $7+ is still quite positive."

With all these factors it was hard to forecast how the tractor and farm machinery industry would fare by year end, he said.

"I would like to think that this coming season might give us a slight increase because some farmers and contractors have deferred purchasing so there's some pent-up demand to realise.

"Many are saying 'let's wait and see' but by the time they decide it could be too late to purchase in 2020.

"Factory lead times are becoming longer as the machinery becomes more complex and technical. People need to order much earlier now to ensure their order can be imported in time so it's important they make the buying decision sooner not later."