Economy: Doing more with less

By Paul Dykes

Tractor sales  in the Bay of Plenty have increased more than 50per cent in the past year, with the continued success of the kiwifruit and avocado sectors.
Tractor sales in the Bay of Plenty have increased more than 50per cent in the past year, with the continued success of the kiwifruit and avocado sectors.

New car sales - once a barometer of the rural economy - have been through the roof in the past three years.

Before the removal of farm subsidies in the 1980s, this would have suggested that farmers were enjoying a great year, but that is no longer the case.

While 102,514 new cars were registered in 2016, breaking the 100,000 threshold for the first time and also breaking the record set in 1973, farm equipment sales were "horrible".
That's the word chosen by Andrew Giltrap, managing director of Giltrap AgriZone, which covers the Waikato and Bay of Plenty.

"It was worse than horrible last year. Tractor sales were way down, and it's all due to the dairy downturn."

Mr Giltrap estimates that all farm equipment sales were down about 30 per cent in 2016, but he can already see the improvement in 2017.

"This year is more buoyant. People are coming back to the market. Some had delayed their decision until now, and others have been forced to return because of equipment breakdown.

Sales this year suggest the market has recovered by about 20 per cent."

The dairy downturn impacted everything, says Andrew. Farmers cut back across the board. A lot of farm tractor work was eliminated because farmers were doing less, feeding out less, and reducing inputs wherever possible. A strong performance in the lifestyle tractor sector was the only bright spot in 2016.

"Tractor usage was down, and the industry suffered all the way through. Even tractor repairs were down, because farmers were doing fewer hours on their machinery."

He estimates farm equipment sales will return this year to levels last seen about four years ago.

"It's returning to a more normal level, although there is no normal any more - we live in more volatile times. All the signs are that the uplift will continue."

What we have noticed is that dairy farmers are focused on good-value-for-money deals ... newer tractors are more fuel efficient and attract lower maintenance costs.

For Duncan Harding, sales manager at Stevenson & Taylor in Waipukurau, 2016 was a very average year in the Hawke's Bay in the farm machinery business as sheep and cattle farmers endured four months of autumn/winter drought.

"We have had a very dry January 2017 and things were looking pretty grim in the farm machinery game, but we had between 80-280mm [ranging from the coast to the Ruahine Ranges] of rain in Central Hawke's Bay at the end of January, so some confidence has been regained," says Duncan.

"However, we need a follow-up very soon to keep things going and it will be looking good heading into autumn. On the other hand, the future is looking pretty bright for the horticulture industry and the dairy sector is making small, but good, gains. All in all, I think 2017 will be slightly behind average, but ahead of 2016."

In the Wairarapa, the unseasonal wet weather has given way to suitable conditions for making silage and baleage, and the farm machinery sector has been flat out keeping up with demand. The mechanics and parts suppliers have been kept busy servicing balers and mowers.

Stephen Alford, whose Manawatu-based company recently took over Power Farming Wairarapa, can also see a more settled 2017 ahead.

"Here in the Manawatu we have a more old school, conservative farming community. It is not reliant on a single sector, having sheep and beef, cropping and dairying within the mix. This means we don't seem to get the big highs, or lows, other regions such as the Waikato might get.

"We are still doing summer stuff such as cutting grass and the balers and mowers are extremely busy."

The New Zealand Tractor and Machinery Association (TAMA) president Mark Hamilton-Manns has the September year-to-date total tractor sales at 2381, just eight fewer than in 2012.

He says this demonstrates that overall New Zealand's primary industry was stable and was weathering volatility in the global dairy markets. The figures compiled by TAMA show sales declined only slightly overall, by 6 per cent, on the same period in 2015.

TAMA has represented New Zealand's tractor and farm-related machinery industry since 1949, representing almost the entire industry, including importers, manufacturers and retailers.

Several segments and regions recorded sales increases, such as the horticulture and viticulture industries in Northland, Auckland, the Bay of Plenty, Hawke's Bay and Nelson.
"Growth in horticulture and viticulture looks set to continue, says Mark.

"Tractor sales in the Bay of Plenty have increased more than 50per cent in the past year, with the continued success of the kiwifruit and avocado sectors.

"Sales in the Nelson region increased by 30per cent, driven by the buoyant viticulture and horticulture segments. Hawke's Bay sales were up 16per cent even before orchardists revealed plans to triple the number of apples planted over the next few years, which would be reflected in investment in tractors and other machinery.

"The consumer segment had increased about 13per cent during the year as residential customers purchased smaller 20-60hp compact tractors for their lifestyle blocks.

Additional sales volumes were recognised in hire fleets and some commercial applications."

Meanwhile, the Large Ag segment - covering 251-375hp tractors - grew by 15 per cent. He says these larger tractors are used for cultivation and ground preparation, seeding, or involved in hay and silage making in support of dairy, sheep and beef operations.

TAMA found that tractor manufacturers were positive about 2017, as shown in the heavy investment in research and development to improve technology, reduce maintenance costs and meet emission standards.

While sales in the traditional dairy segment (100-120hp tractors) had declined overall in the past year by 17.5 per cent, dairy farmers were showing that they're cautiously optimistic as many were still buying," says Mark.

"What we have noticed is that dairy farmers are focused on good-value-for-money deals when buying tractors. They're looking around for the best interest and maintenance deals, often delaying purchase for several months while they do so. Farmers know that newer tractors are more fuel efficient and attract lower maintenance costs, so buyers get a good return on investment with new machines."¦

- Wanganui Chronicle

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