Registrations of agricultural tractors, over 50hp, reached 10,842 units in 2015, a drop of 12.8 per cent compared to the previous year.
According to the Agricultural Engineers Association (AEA), this is the lowest unit total for more than a decade and clearly reflects the difficult conditions which farmers faced in a year where most commodity prices were very weak.
“The old adage of ‘up horn, down corn’ is definitely not the case at the moment,” comments Chris Evans, AEA economist. “Unfortunately, prices right across the board are down and that, unsurprisingly, reduces people’s spending.”
The short term outlook is not too rosy either, as Mr Evans explains; “At the moment, commodity supplies are outstripping demand. For the likes of grain prices to increase, it will need something like a major, detrimental weather event to take place over somewhere like North or South America, to readdress the supply versus demand balance.”
Unfortunately, for milk demand to increase, it would take the likes of China to change its dietary habits, or we need a population boom. “While the global population is growing, unfortunately it is at a slow rate compared to the amount of milk still being produced.
“The snowball effect of over supply is that producers end up producing more to counteract the low unit prices.”
Grain prices have particular impact on machinery sales, as half the value of all kit is sold into this sector, says Mr Evans. “The dairy sector accounts for about a quarter of the value of all kit sold, while beef and sheep is about 10-15 per cent, and the rest goes to other sectors and people who do not necessarily farm.”
Interestingly, a recent breakdown of 2015 tractor sales revealed 140-160hp tractors suffered the most, with 240hp tractor sales doing ok. “Regarding 240hp healthy sales, this can be attributed to people moving up a model range and possibly replacing two smaller tractors with one large one.
“Customers who often buy larger pieces of kit will also likely be sticking to a replacement plan. Conversely, people buying smaller tractors are more likely basing their buying decisions based on farmgate prices.”
The graph below shows how tractor manufacturers fared in 2014 compared to 2013. Unfortunately, these brand breakdown figures are only available one year in arrears.
Overall, figures are pretty static form 2013 to 2014, however, Agco as a whole increased its market share the most by 1.1 per cent. On the contrary, Claas slipped down the charts with 195 fewer tractors sold in 2014 compared to 2013.