Farmers are still looking to invest in machinery which improves their business despite the industry’s serious profitability concerns.
At this year’s LAMMA Show, the UK’s largest machinery show, which is owned by Farmers Guardian parent company Briefing Media Agriculture, farmers and machinery dealers said people were still looking to invest in cost cutting measures to improve their profitability and help them ride out the current commodity downturn.
Agricultural prices have seen serious declines in recent months across the majority of commodities, meaning many farmers have been selling produce below the cost of production.
New and second hand dealership Farm Machinery Locator’s marketing executive Oliver Medwynter said: “Everybody is looking for that bit of kit which helps them plough their farm quicker and more efficiently."
He suggested one of the main differences in farmer buying habits in the downturn had been a move towards second hand kit as a viable option.
However, John Bownes, owner of Cheshire-based new and used tractor dealership John Bownes, said new tractor sales had held up reasonably well while the used machinery market was seeing difficulties. He suggested exports into Europe were important to this trade and the European farm industry was also seeing difficulties.
Farmers Guardian has reported over recent weeks claims from experts that lending to the agricultural industry may become more difficult in 2016. Farm business consultant Andersons suggested for those looking for finance either to invest or aid cashflow, the strengths and weaknesses of their businesses would be crucial in their attempts to gain finance.
Agribank’s Frank Sekula said while some aspects of the market were quiet the firm was seeing interest in renewable projects and investments to achieve economies of scale.
“People are running things a bit longer,” he said. “There is very little upside in price. I think people need to adjust their views and make sure they can run at these levels."
William Judge, national sales manager for AGCO, said those farmers with replacement policies were sticking to them and looking for new kit.
Clarence Bell, a suckler beef producer from County Down, Northern Ireland, said: “I think farmers have to invest but they are being careful at the moment.
“You can understand that given the situation the whole country is in.”
Tom Sawdon, an arable farmer from north Essex, echoed these comments and said there had been ‘quite a decline’ in agricultural prices.
“A lot of people are talking about the cost of machinery so they are feeling the pinch,” he said.
But he remained optimistic there may be a better outlook for global prices nearer to global harvests.
A range of farmers shared their views on the current state of the industry and how this is affecting farm investment. Watch the video below.