Farm investment hits £1.9bn – but not for long

After the best year for machinery sales for a decade, purchases are expected to fall back 10-20% in 2009, say manufacturers.

New orders are reasonably steady, reckons Chris Evans of the AEA. “They haven’t died out, but there is a degree of uncertainty in the market.”

This year has seen nearly £1.9bn invested in machinery on UK farms, with 14,728 tractors sold from January to September 2008, up 14.4% on the same period in 2007. Meanwhile, 1065 combines were registered in 2008, an increase of more than 40% on the 755 bought in 2007 and there was a 10%-plus rise in baler and forager sales.

“A drop in figures wouldn’t be disastrous, it would just mark the return to normal levels after a peak,” he adds.

Machinery manufacturers are viewing the market with caution, but, overall, seem confident that levels won’t drop back as low as pre-2007 levels just yet.

“Early indications are that sales will be a little down next year,” says Tony Cox of Massey Ferguson. “Those who have had the opportunity this year have cashed in on it and won’t need to invest again for at least the next 18 months.”

“A lot of farmers have taken the opportunity to invest in larger tractors and sales of 100-180hp tractors are up significantly this year.”

Tractor sales tend to track wheat prices and John Deere’s agricultural marketing manager Chris Meacock expects sales to decline over the next 12 months by 8-12%.

“Many have taken the opportunity while they can to replace kit. Those who have five-year business plans have more than likely stuck to them. But more infrequent buyers have taken the opportunity this year to replace larger pieces of machinery, something they may not be able to do in coming years.”

Despite a downturn, Mr Meacock doesn’t expect combine sales to drop back to the lows seen a few years ago. “We would estimate a 15-20% drop in combine sales next year,” he adds.

New Holland, like all manufacturers, has seen tremendous sales activity in the past 18 months. But this is also softening with the drop in grain prices, says marketing manager Dick Spencer.

“We still believe it’s going to be strong going into 2009, and that it’s not going to tail off dramatically.

“We’ve just had the best year in terms of sales in 10 years it would be highly unlikely that this will be repeated,” says national sales manager for Claas, Jeremy Wiggins.

He doesn’t expect there to be a drastic slump, though. “The first six weeks have been extremely positive, and a conservative estimate would put next year’s combine sales at about 75% of last year’s figures.”

Claas has seen an unexpected hike in the number of sales of the new Tucano combine, he adds. “We expected the Tucano to make up about 5% of total sales, but it’s been more like 20%, reflecting smaller farmers taking the chance to reinvest.”