Strong commodity prices, low interest rates, federal government tax incentives and excellent seasonal conditions have led to a surge in agricultural machinery sales around Australia.
Forecasts are predicting new and used sales of agricultural machinery will exceed $4 billion this year, a new national record for the sector.
The Commonwealth Bank has reported a 50% increase in machinery finance compared to the previous financial year, with the volume of finance for tractors up 41% and seeders up 72%.
Gary Northover, the executive director of the Tractor and Machinery Association, said, the sale of tractors was around 25-30% better than levels seen in previous good years.
“In terms of tractor sales, the average running rate over the last five years has been about 12,000 tractors per year. We are on about a 16,000 tractor per year pace right now,” he said.
Mr Northover said that one implement dealer reported a 100% increase in sales on the previous financial year.
“Since the pandemic broke and the government introduced its instant asset write-off scheme – that’s coincided with the best grain conditions and certainly the best prices and it’s a perfect storm.”
The trend is being echoed in Queensland where demand for trucks, vehicles, and motorbikes has seen a spike in sales.
“I’ve been out and about quite a bit recently on many properties and we’re certainly seeing a huge investment in upgrading water infrastructure, fencing, sheds, yards, even the houses are getting a renovation,” said Peta Ward, regional general manager of Westpac Agribusiness.
“Of course we’re also seeing the family farms, that are here for the long term, are looking at the neighbours or looking at buying more country.”
Ms Ward also said consumer confidence had extended to livestock, with significant interest in bull sales.
The record for Australia’s most expensive Angus bull has been set twice this year after Texas Iceman sold for $225,000 in July, before being beaten last month when Paratrooper R38 was sold for $280,000.
Service Labour Shortages a Concern for the Future
While the news of a buoyant machinery market is welcome, market expert Alan Kirsten said COVID-19 related delivery delays are an immediate issue for consumers and suppliers.
“Order books are full and there’s no sign of a decline in sales, but market share is being determined by what you can physically get hold of at the moment.”
During a recent presentation to machinery sales representatives, Mr Kirsten also highlighted the medium term issue of service and maintenance of equipment in a market that is already hampered by labour scarcity.
“That in itself is going to produce its own range of issues – not right now, but in three to five years’ time when we have to support and service the equipment that is going through now,” he said.
“We can’t find enough technicians and while [dealer networks] might be addressing this issue, it does not seem to be taken seriously by governments.”
“We need a lot of employment and to attract people to our industry, because supporting the equipment going forward is going to be the challenge.”
Mr Kirsten said that he expected the surge in sales to slow down by 2023.