The evolution of power in SA's agri machinery market
Farmer's Weekly|May 14, 2021
It is unlikely that South Africa’s commercial agriculture sector would have achieved its internationally respected status were it not for the investment that farmers have made in mechanisation. Lloyd Phillips spoke to a number of experts about some of the main agricultural machinery sales trends.
Lloyd Phillips

Since 2000, South Africa’s tractor park, which is an estimate of how many of these agricultural machines there are in the country in any given year, grew from 75 276 units to 93 020 units by the end of 2020. These estimates were compiled and published by AGFACTS, a local company specialising in analysing and reporting on trends in major capital agricultural machines and implements, and are an important indicator of how South Africa’s commercial farming operations are faring financially.

AGFACTS’ founder and chief executive, Dr. Jim Rankin, who is also the secretary of the South African Agricultural Machinery Association, says this indicator is especially true of national new tractor sales that, by annual total value alone, represent approximately 60% of South Africa’s total agricultural machinery market.

“A farmer may buy a particular new agricultural machine to do a specific job. The farmer may also buy a new machine to replace an older one that has been doing a particular job.

“When the country’s agriculture sector is doing well, farmers have the money to buy new machines. Farmers also use purchases of new agricultural machines as a way to take advantage of the legally permissible opportunity to pay less tax,” Rankin explains.

Paul Makube, senior agricultural economist at FNB Agribusiness, says that motivating perceptions that new agricultural machinery sales are an indicator of sentiment and economics in South African commercial agriculture in a given year is the fact that during the country’s recent nationwide drought of three consecutive years, when commercial farmers were “forced to tap into their own reserves to cover their capital obligations”, activity in the new agricultural machinery sales market “flattened” (see Graph 1).

However, as the drought subsequently broke for much of the country, especially towards the end of 2020, FNB Agribusiness experienced a definite increase in its financing of new agricultural machinery purchases.

IMPORTED MACHINES CHANGE THE LANDSCAPE

Writing in various monthly AGFACTS Newsbriefs, Rankin said that while South Africa’s new tractor sales in years immediately preceding 1981 were commonly around 15 000 units annually, various factors had contributed to a gradual, but significant, reduction in annual sales figures since then. Much of this change began in 1993 when the South African government, based solely on commercial motives, chose to repeal a long-time law requiring only South African-made engines to be fitted to new tractors sold in the country up to then.

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