Tractor sales, regarded as a proxy for business confidence in the agriculture sector, fell again in February.
Tractor sales in February were 7.7% lower than a year earlier, at 675 units, the South African Agricultural Machinery Association (Saama) said on Tuesday.
That follows a 17.6% decline in January, and an 11.3% fall for full-year 2016 to 5,855 units, Saama data show.
Tractor sales were hurt in 2016 due to uncertainty about crop yields and exchange rates, as it was unclear whether the global weather pattern had transitioned from the dry el Nino cycle to the wet la Nina cycle. Issues around land restitution issues and farm workers’ shares in farms added to the uncertain conditions for farmers.
In 2017, maize farmers now face a new pest: fall armyworm, which the Agricultural Research Council’s Plant Protection Research Institute has confirmed is affecting local farms.
"The current lower levels of sales reflect a high degree of caution in the market," Saama said.
"The current market situation is such that farmers can hold back for a while on their buying decisions.
"The stronger rand means equipment prices have stabilised and good rains in most areas mean the majority of farmers will harvest significantly better crops than last year.
"The excellent summer crop expectations have, of course, depressed crop prices, though.
"The industry expects short-term sales to continue at the current lower levels, improving later when farmers start harvesting."
Industry expectations for 2017 are that overall tractor sales should be at least as good as those in 2016.
The first estimate from the Crop Estimates Committee for the 2017 summer crops showed that maize production would increase by 79%, groundnut production by 399%, sorghum by 100%, dry beans by 82% and soybeans by 44%.
Statistics SA’s fourth-quarter gross domestic product growth figures showed the agriculture sector contracted 0.1% in the quarter.
SA’s overall GDP shrank 0.3% from the previous quarter, and the growth rate for the whole of 2016 was 0.3%.
With staff writer
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