SA’s tractor sales rebounded strongly in January, marking the first positive sales growth after 21 consecutive months of decline and signalling positive sentiment in a sector that contributed to a GDP contraction in the third quarter.
Sales rose 27% to 457 units, the latest data from the SA Agricultural Machinery Association (Saama), showed.
Agricultural machinery sales serve as a barometer for the health of the sector, which is a crucial, albeit modest, contributor to GDP. Output from the sector, a big employer and source of foreign exchange, plummeted by 29% in the third quarter, the biggest quarterly decline in output since 1970 and leading to a surprise 0.3% contraction in GDP.
Improved sentiment in the industry could signal broader economic stability, as evidenced by retail sales, which notched up their ninth consecutive month of growth in November and which showed their strongest quarterly performance since 2022, with an above-forecast surge of 7.7%.
While January’s tractor sales figures offer a glimmer of optimism, Saama warns of challenges ahead. The increase in January falls short of the past two years’ monthly average of 617 units, while combine harvester sales declined to five units from eight in January last year, a mixed bag that underscores the fragile state of the sector.
“Summer crops are still in an important developmental stage and will require more rain in several areas to sustain them,” the association said in a statement. “Many of the summer crops are quite patchy and it will only be at harvest time that farmers will be able to assess production of their crops. Some decision-making by farmers on capital purchases will therefore be delayed.”
The R100bn-plus sector has come under pressure in the past year, weighed down by unfavourable conditions, including drought, which affected the output of field crops such as maize, soya beans, wheat and sunflower. Adverse weather conditions also hindered the production of subtropical fruits, deciduous fruits and vegetables in parts of the country.
The midsummer drought of the 2023/24 season led to a 23% decline in summer grain and oilseed production, putting farmers under financial strain. Higher interest rates throughout 2024 also added further pressure on the sector.
Wandile Sihlobo, chief economist at Agbiz, said last year’s sharp decline in agricultural machinery sales was not solely due to bad weather or high interest rates. He said that an overextended boom between 2020 and 2023, fuelled by improved farmers’ income and higher commodity prices, had resulted in an inevitable market correction in 2024.
“Improved farmers’ incomes supported the higher sales due to ample harvest and higher commodity prices at the time. Thus, there was bound to be some correction, leading to a moderation in sales in 2024.”
Sihlobo noted that 2025 could offer some relief. “In 2025, the interest rates have eased somewhat from last year’s levels. The agricultural production conditions also promise a recovery, although there are differences region by region in the potential pace of recovery.”
These dynamics were likely to support the tractors and combine harvesters’ sales this year, he said, adding that “especially if we consider that some farmers may again possibly start with machinery replacement”.
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