While Brexit may have caused market instability there could be light at the end of the tunnel. Richard Bradley speaks to industry experts to find out more.
With machinery sales expected to be down by 15 per cent in 2017, it may appear that Brexit has caused yet more market troubles.
To try and find out the reality and to see if anything can weight in the farmers benefit, we get the views of industry experts.
While the Agricultural Engineers Association (AEA) says Brexit has caused uncertainty among farmers, it says poor recent farm incomes, which were clear before the vote, are the main influence on the falling machinery market.
While sterling movements as a result of Brexit have meant a recent price increase of imported machinery, it has also helped to improve product prices and the single farm payment for 2016/2017.
Overall tractor registrations for 2016 are expected to be down about 2-3 per cent compared to 2015. According to the AEA, this minor fall, when compared to the fall in the overall machinery market, is likely due to the clearing of stock tractors which do not meet current engine emission standards.
As for a future outlook, after the large drops in recent years the AEA is expecting little change in machinery and tractor registrations for 2017.
Part of the global giant AGCO Corporation, Massey Ferguson makes up about 12 per cent of UK tractor registrations and says it has a much brighter outlook on the UK market than it did 12 months ago.
William Judge, MF’s national sales manager, UK and Ireland says; “Brexit has to come with complications, however it could give farmers as good a chance as ever to invest, as subsidies are remaining until 2020 and market prices are expected to climb.
“The next four to five years could see a big change in British Agriculture, which could provide a good opportunity for young farmers to start out in the industry; mid-sized farmers are likely to feel the biggest squeeze, however.”
Massey Ferguson says it does not believe the market will suddenly take off as commodity price rise, but it expects there will be a slow or flat recovery.
As a US-based brand, AGCO does not see any effect to the UK machinery market from ‘Trumpageddon,’ the shock election of Donald Trump as US president.
In the current market uncertainty, machinery dealers are reporting that farmers are extending replacement policies and searching out second-hand deals, rather than purchasing new.
This is backed up by the reports from Cheffins auction in Sutton, Cambridgeshire, where there was an increase in sales of £1m over its 2015 November machinery sale.
Bill Pepper, director of Cheffins, says; “The weak pound and a cocktail of rising prices for new tractors, a lack of new tractor registrations and a drop in trade-ins has brought dealers back to our market and has led to UK buyers vying against the foreign buyers, which has in turn pushed up prices.”