A 15% reduction in tractor sales compared with August was posted by the Farm Tractor and Machinery Trade Association (FTMTA) which notes only the number of units sold, rather than the total investment.
This decline is being vaguely attributed to “the continuing impact of disruptions to global supply chains” although, once again, it appears that other vehicle types were not so affected.
Cars, for instance, enjoyed a 4% increase in sales during the same period.
Fewer units sold
In August 2022, the market for new tractors stood at 151 units which was 15% lower compared with the same month in 2021.
The year-to-date figures are 12% lower than the same period in 2021 with 1,840 new tractors registered in the Republic of Ireland so far in 2022, compared with 2,084 units in 2021.
Combine harvester sales are also down on the year, 30% less with 40 units this year as against 57 in 2021.
Telescopoic loaders, on the other hand, showed a strong increase of 25%, 40 units being sold in August of this year. Once again, these machines are subject to the same supply chain constraints as tractors, yet sales have increased.
Component availability easing
As presented by the FTMTA, the decrease in tractor sales is hard to reconcile with the idea that supply is the major issue constraining sales.
A full year after the supply chain crisis was at its most acute, manufacturers and dealers have adapted their ordering systems to ensure that stock flows in a more predictable way, and this will no doubt apply to the majority of component suppliers.
The word in the trade is that there are still shortages of certain items, but these are being managed more carefully and the situation is easing.
Early ordering recommended
Waiting times are said to be coming down and some manufacturers claim to be able fulfil orders within weeks rather than months. The key is to book a slot on the production line and finalise the specification later.
All this is based on conversations with dealers and manufacturers rather than on any stern statistical analysis, yet it does draw a picture that lies at odds with the notion of a component shortage being the sole cause of a reduction in sales.
This, of course, leaves the question as to what is actually happening in the market, and that may be rather more interesting than the simple cause and effect of component issues.
The actual number of tractors sold is just one metric of many, another angle is to look at the total investment in these machines.
Tractor prices have risen somewhere between 15% and 20% over the last year. Taking the average cost of a tractor in 2021 as €100,000, we might say that farming made an investment of €208 million in tractors up until August last year.
If the same tractor is costing €120,000 this year, then the total spend rises to €221 million, a 6% increase in total tractor purchases.
Investment must continue
These are very much back of an envelope calculations, and they ignore the great bogeyman of general inflation, but they do suggest that tractor sales, by value, are at least on a par with 2021.
It might be concluded that we needn’t feel too sorry for the tractor industry just yet, but manufacturers are struggling to contain price increases, and given the wild fluctuation in steel and energy costs, it is obviously difficult to fix prices too far ahead.
It should also be noted that a reduction in tractor unit sales also slows the introduction of more efficient machines into the national fleet, which is not conducive to reducing the farming sector’s use of fuel.