Strong demand, short supply?

Presented by

Machinery sales have continued to defy sentiment, but supply will be an issue this year, writes RICHARD LEWIS.

Strong demand, short supply?
2016 looks promising early as many companies report strong forward ordering for harvesting equipment, and tractor demand remains high in most areas.

The full year of new tractor sales saw an increase across the country of 10% from 2014 – a remarkable result that continues the run of five years straight of over 10,000 units sold for the year.

The 11,500 units sold in 2015 show the strength of the sector and the ability for farmers and contractors to upgrade their machinery regardless of the seasons.

Low interest rates and a need for technology are driving the demand, and we see no reason for this to abate in the year ahead.

Combine harvesters ended the year up 16% on the five year average of 700+ units delivered, while balers and haytools remained steady, with round balers making up 65% of the 800 units delivered around Australia in 2015.

The dry summer and drought conditions in parts of the country will drive hay production in those areas that have the season; therefore we are expecting the hay equipment market to remain strong through the 2016 season.

The concern of upward pricing pressure given the drop in currency has driven forward ordering at dealerships, and although there has been some uplift in pricing, the factories around the world recognise that demand is isolated to certain areas like Australia and price increases will have a negative effect on the demand.

Meanwhile, the TMA is busy representing our industry at factory, importer and dealer level by staying across regulators such as the road authorities and OH&S bodies, providing information on machinery and how it is used, ensuring any new rules or laws make sense for our industry.

Our conference this year promises to be excellent with over 170 delegates attending in 2015, and we are hoping to top 200 this year – save the date 19th July at the MCG.

We will have a vast array of speakers looking at our industry, focusing on dealers and technology.

Skill shortages and training remain at the forefront of issues in our industry, with the agricultural sector generally screaming for trained people, and we are staying close with Auto Skills Australia to ensure we are part of any developments in training young people needed for our industry.

2016 looks promising early as many companies report strong forward ordering for harvesting equipment, and tractor demand remains high in most areas.

Our concern is that demand for machinery around the world is low and factories have cut back production.

With Australia only representing 4-5% of global sales, we are concerned that supply may become an issue as demand remains strong – a good problem in most cases as dealers have the chance to move used inventory through the sales cycle to fill demand.

Any dealer who has been around for while will have seen this cycle over the years. Though it’s not ideal, it serves a purpose to clear yards and debt against trades and floor plans.

We look forward to the year unfolding and looking to the skies for that early break in Autumn to head into a good growing season.

*Richard Lewis is executive director of the Tractor and Machinery Association of Australia (TMA). He can be contacted via email at richard@tracfin.com.au.

You can also follow our updates by liking us on Facebook