Tractor sales plunge last month as El Niño dries up sales

Agbiz said they thought the agricultural machinery sales would begin a correction period this year. Photo: EPA

Agbiz said they thought the agricultural machinery sales would begin a correction period this year. Photo: EPA

Published Mar 11, 2024


February tractor sales plunged almost 34% from 777 units sold in the same period last year, almost 31% down on last year, amid several headwinds, including El Niño, according to the Agricultural Machinery Sales figures released by the South African Agricultural Machinery Association (Saama).

Tallie Giessing, the chairperson of Saama, said just 18 combine harvesters were sold in February, 21 less than the 39 units sold in February last year. On a year-to-date basis combine harvester sales were now almost 53% down on last year.

Giessing said several factors contributed to the downturn in the agricultural machinery market and this had resulted in potential buyers of equipment now being very cautious in their approach to investing in new equipment.

“The El Niño phenomenon is expressing itself again, with high summer temperatures and lower-than-normal rainfall. Crops planted early in the east are looking good, but summer crops in the west of the country are not faring as well. The Crop Estimates Committee is predicting a maize crop for the forthcoming season almost 13% down on last year and soya beans almost 23% down.”

Saama said expectations were that, despite the market being very competitive, this 2024 calendar year tractor sales would be between 15 and 20% down on last year.

Agricultural Business Chamber (Agbiz) chief economist Wandile Sihlobo said these significant sales declines broadly reflected the normalisation of sales after a few years of robust activity.

“For example, South Africa's tractor sales for 2022 amounted to 9 181 units, up 17% y/y and the highest annual sales for the past 40 years. The combine harvesters also had an excellent performance of 373 units in 2022, up 38% y/y and the highest yearly sales figure since 1985.

“The sales for the year before were also exceptional. These generally strong agricultural machinery sales these past few years were primarily on the back of large grain and oilseed harvests. In 2023, the tractor sales were down marginally from the previous year, while the combine harvester sales held the last year's momentum,” Sihlobo said.

For this reason, Agbiz said they thought the agricultural machinery sales would begin a correction period this year.

“Thus, while in the past, agricultural machinery sales would be read as one of the early indicators of the health of the farming sector, this time around, the sales should be read differently for the reasons we stated above. The farmers planted a decent area of 4.4 million hectares in the 2023/24 summer crop season, up 1% y/y, which means that the lower sales do not necessarily indicate a decline in the area planted.”

According to Mordor Intelligence, South Africa Agricultural Machinery Market Analysis, the local agricultural machinery market size was estimated at $0.86 billion (R16bn) this year. It was expected to reach $1.15bn by 2029, growing at a CAGR of 5.9% during the forecast period (2024–2029).

“South Africa’s agricultural sector is one of the world’s most diverse, consisting of corporate and private intensive and extensive crop farming systems, including vegetable, fruit, nuts, and grain production. The well-developed commercial farming in South Africa is the backbone of the country’s agricultural economy,” it said.