Increased tractor sales indicates new investment

There has been a positive start to 2007 with registrations of agricultural tractors (defined as over 50hp) rising by 15.2% to 3362 units. Through the full year 2006 there had been a modest rise of 4% in the market and suppliers had hopes of a further modest progression in 2007 based on improved product prices and a prospective earlier distribution of the single farm payment.

At the same time expectations were not pushed too high as it was recognised that some sectors, notably dairy, continue to suffer poor profitability and therefore those farmers were likely to remain cautious.

In the event many product prices have been at least as good as expected (although recent reductions in some grain futures markets do underline that need for caution) and there has been a tangible rise in confidence in much of the farming community.

The SFP arrangements remain unsatisfactory but at least most farmers have received a partial payment already and can expect their top-ups within a known time frame. All this invokes a willingness to consider investment, as is reflected in the good sales numbers. So far there has been some variation in different parts of the country. The AEA analysis is divided into 10 regions and on provisional data three show an actual decline compared to last year – these are Wales the South West and Northern Ireland.

All these regions had comparatively strong sales last year and so perhaps this is a return to more normal conditions but also they may all also be considered to be largely dairy and livestock areas and so probably reflect poorer income positions.

The areas showing the biggest rises in the first quarter are more generally associated with the arable side of farming with the Yorkshire and Lancashire region showing a remarkable improvement of over 50% with the West Midlands also showing a strong rise.

Scotland also registered an increase of more than a third but it has to be noted that sales in that country in the first quarter of 2006 were rather subdued and this may be a reversion to nearer a normal pattern.

Orders appear to remain firm and so it is likely that the full year 2007 will see an advance on last year.


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