More than half the tractors sold each year are registered in the first six months, so now that the June figures are in for 2023 we have a fair handle of how total tractor sales for the year are likely to pan out, and the story is of sales consistent with previous years.
2021 2022 2023 January 258 252 296 February 240 231 231 March 297 244 284 April 224 205 226 May 266 188 230 June 180 187 171 Total 1,465 1,307 1,438
In Ireland it appears that sales are returning to normal after the disruption of the past few years with 1,438 tractors sold this year, although this new normal compares very favourably with 2019 when 1,361 were registered up until June.
Mixed sentiments
Looking back over the previous three years the impression given is that, despite all the talk of component shortages limiting production, sales were not hit as hard as many feared. The number of tractors sold in the most affected year, 2022, showed only a 9% shortfall from the average.
This did not, however, refrain manufacturers from increasing prices, noting that such increases were due to their inability to produce machines courtesy of supply chain issues and spiralling costs.
Neither did it stop farmers buying the machines at these inflated prices with most trade estimates suggesting that the cost of buying a new tractor has risen around 25% over the past couple of years.
High commodity prices helped cushion the shock with milk prices in the region of 65c/L, but now that has dropped back and grain shortages with higher prices peaked last October, although the recent collapse of the Ukrainian grain deal has pushed them up again.
Steady as she goes
The trend in Ireland has been for sales to remain relatively stable over the year. January registrations were higher than the previous two years which has been attributed to customers delaying the collection of their machines until the new year.
Yet this is not a situation that is shared throughout Europe. Italy has recorded a mixed bag of results for this year so far, with new tractor sales declining and used tractor sales showing a significant increase over the last year, along with combines and material handlers.
This switch to older tractors has alarmed the trade as it maintains that the adoption of the latest technology is delayed, which will cause a loss of efficiency within Italian agriculture.
CEMA’s latest report noting that manufacturers’ stocks are now at an all-time high suggests that IT may have been rather too optimistic in ITS sales forecasts, and that IT could live to regret not trying harder to constrain prices in a market where demand temporarily outstripped supply.
Tractor sales in the US
The US has also been sending mixed signals with an overall decline in tractors sales so far this year of 9.7%, with the sharpest decline being in the sub 40hp segment which saw a loss of 13% compared to this time last year.
The two bright spots however, were the >100hp segment which went up 9.4%, while the switch to four-wheel drive gained further momentum with an impressive 45.5% increase, although the number sold is still a fraction of total tractor sales, just 1.4%.
Here in the west it appears that tractor sales have not been damaged to any great extent over the last few years despite the consistent talk of scarcities and supply chain shortages.
No one is denying that there haven’t been supply problems, especially with electronic components, and it is telling that the manufacturers of more basic tractors say they were able to supply machines from stock throughout the last three years whereas more complex tractors were often delayed.
The west, though, is just one part of a much larger global market and other parts of the world are showing much healthier sales; India is up 8% and Brazil 23%, but to a certain extent these figures represent the adoption of the tractor rather than ongoing renewal of an established fleet.
Reducing the gamble
Back here in Ireland the trade is undecided as to what 2024 will bring. All dealers agree that there is unlikely to be any great collapse in the market, but as to the extent to which it may shrink, or even grow, there is no consensus whatsoever.
It is pointed out that with the majority of machinery being bought on finance of one sort or another, costs are becoming far more predictable and consistent, which means buying new is not the lottery it once was when it came to borrowing costs.
One dealer Agriland spoke to also made the interesting observation that, thanks to mobile banking apps, farmers are always aware of their financial position and, as a consequence, are far more relaxed about planning their spending, knowing that their outgoings will also be consistent.
Recent rises in interest rates have not worried the trade too much. Exhibitors at the Farm Tractor and Machinery Trade Association (FTMTA) show all said that the subject hardly arose in discussing machinery purchases with their customers, and at 4% it is hardly excessive when compared with the rates that many farmers will have experienced in the not too distant past.
Altogether it appears that the machinery trade will continue much as before, there will of course be ups and downs but the sentiment in the trade is these will not be as dramatic as might have been otherwise expected.