Aussie tractor sales bubble to burst

john deere 5100gn

Tractor sales are on the up but industry experts warn the bubble could burst this year. Last year, tractor sales rose 10 per cent, to 11,500 units, giving Australia five consecutive years of more than 10,000 units sold each year. Source: The Weekly Times Now

Agribusiness experts said the growth showed the strength of the sector and the ability for farmers and contractors to upgrade machinery, regardless of the season.

NAB agribusiness general manager Khan Horne said the bank was leasing “a lot” more tractors, a good sign confidence was high.

“I always follow leasing numbers because leasing new equipment is one of the best indicators that confidence in conditions is looking up,” Mr Horne said.

“I definitely believe the trend will hold until well into 2016 — there just seems to be a bit of buoyancy out there and high confidence levels.

“People are making money and they’re willing to invest, and tractors are a good litmus test.”

Machinery maker Case IH executive managing director Ray Osgood said favourable weather was one factor in the buoyant Australian market, as well as strong export demand.

“The positive performance in Australia has been linked to the demand in China for the commodities produced in this country,” Mr Osgood said.

However, agriculture machinery analysis company Agriview warned the bubble was due to burst as the rest of the world market continued to decline.

“Australia is out of step with the rest of the world in terms of new machinery demand,” Agriview managing director Alan Kirsten said.

“We are unique as being one of the few countries that has strong market conditions.”

Mr Kirsten said all major manufacturers had shown declining sales for tractors and combine harvesters — up to 25% in global markets in the past 12 months.

“Factories have cut production in response to poor US and European market conditions and this means Australia’s buyers might just have to wait to get that new machine,” Mr Kirsten said.

Compounding the issue is an Australian dollar struggling against the US dollar and euro, meaning prices of imported machines have been rising steadily.

Agricultural equipment manufacturer AGCO Australia marketing general manager Fergal Meehan said Australians could see machinery price rises of up to 5% this year.