South African agriculture equipment dealers could be in for a bad year following poor sales in January 2024.
South Africa’s tractor sales were down 26% year-on-year (y/y) in January 2024, with 353 units sold. At the same time, combine harvesters were down 50% y/y, with eight units sold.
December tractor sales of 531 units were significantly (27%) less than the 729 units sold in December 2022.
For the 2023 calendar year, tractor sales were approximately 9% down on the 2022 calendar year. Thirty-one combine harvesters were sold in December, five more than the 26 units sold in December last year.
Calendar year 2023 combine harvester sales were significantly (35%) higher than those in 2022. With most summer crop plantings having been completed, the market is showing caution as to what will happen weather-wise in the next few weeks.
Initial predictions were that the El Niño phenomenon was likely to result in lower than normal rainfall during the critical January and February months.
Potential buyers of tractors therefore delayed their buying decisions until some degree of certainty in terms of rainfall developed.
“Present rainfall conditions are looking favourable, however, but rain will still be required through to the end of February in most areas.
It is still early in the year to be predicting 2024 calendar year tractor sales,” says Tallie Giessing Chairman of South African Agricultural Machinery Association.
Nevertheless, expectations are that, despite the market being very competitive and this driving sales, calendar year 2024 tractor sales will be of the order of 10% down on last year.
“At face value, this could be viewed as a worrying agricultural machinery sales report, indicating difficulties in the sector.
But we have a different reading of it. This is more of a normalisation after a few years of robust sales,” explains Wandile Sihlobo Agbiz chief economist.
“Generally strong agricultural machinery sales over the past few years were primarily on the back of large grain and oilseed harvests.
In 2023, tractor sales were down marginally from the previous year, while the combine harvester sales held the last year’s momentum. Thus, we think the January 2024 sales begin a correction period.”
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