4 December 1998

Tackle turns the corner

By Stephen Howe

FINGERS-CROSSED – thats the open verdict on the health of the UKs farm machinery industry.

For the first time after 18 months of negative news and falling farm incomes, affecting all sectors of the industry, a more positive picture is emerging, said AEA economist Chris Evans.

"The past six weeks have seen a growing number of positive factors," he said. "They include a weakening of the £, the lifting of the beef export ban, MAFFs aid package, including the retention of the calf processing aid scheme and devaluations of the Green £. Milk producers selling to Milk Marque have seen their first price rise in two years and there could be more increases in the pipeline," said Mr Evans.

He acknowledged that it would be some time before producers benefited from the lifting of the beef export ban. "Nevertheless its psychologically important and should help to restore confidence in the industry," he said.

Mr Evans also recognised that it will take time for all of the positive factors to filter through into machinery sales.

"The optimist in me wants to forecast a moderate improvement in sales by the spring. Any significant recovery will take longer and probably wont materialise until the autumn of next year," predicted Mr Evans.

Meanwhile, the UKs farm machinery industry is reflecting on the present condition of its home tractor market – the traditional barometer of farmers fortunes.

Year-to-date figures until the end of October showed a 37% decline.

"We dont expect any improvement for November. And this year the market will not make 10,000 units which is the lowest since AEA records began in 1964," said Mr Evans. But we should not forget that the average size is now 109hp compared with about 50hp then, he added.

Tractor sales are down across the country. Scotland and Northern Ireland have suffered the worst with falls of 45% and 41% respectively. Wales is down by 34% and the south-west by 37%. East Anglia has faired better; sales fell by only 18%, compared with the same period last year.

Sales of other machinery also faired badly; year-to-date figures revealing a 30% fall in value.

The picture for machinery exports is brighter. Despite the strong £, they have declined by only 5% on the year. "Tractor exports will reach an estimated £1bn this year placing that sector in the top 10 balance-of-trade earning industries," said Mr Evans.

Other machinery exports totalled £250m while over the same period, tractor imports fell from £220m to £110m. That gave the UKs farm machinery industry the biggest positive balance of trade for many years.