STRONG £THREATENS UKSEXPORTERROLE
The UKs role as a leading
supplier of used tractors to
farms worldwide could be
threatened if the strength
of sterling continues to rise,
reports Mike Williams
MANY of the used tractors traded-in by UK farmers and contractors are exported in a trade which was worth more than £100m a year in the mid-1990s when annual sales peaked at almost 17,000 tractors. Since then the export sales volume has fallen sharply, partly because the strong £ has created an extra barrier for overseas buyers and also because the reduction in new tractor deliveries in the UK has reduced the flow of trade-ins.
The biggest centre for the used tractor trade is the Cheffins Grain and Comins auction sale yard near Ely, Cambs. The tractor and machinery sales held there each month are said to be the biggest in Europe, and they attract both UK and overseas buyers to see about 500 tractors go under the hammer at each sale.
Up to 75% of the tractors sold each month are exported to a long list of overseas markets including South America, the Far East and the Middle East.
Export demand has held up surprisingly well so far in spite of the exchange rate, but any further strengthening of the £ will have an impact on the sales, says Bob Hall, one of the Cheffins Grain and Comins auctioneers.
"There is an enormous amount of business to be done in export sales of used tractors, but some overseas buyers are having problems with the exchange rate.
"The Irish have been easily the biggest buyers at Cambridge for many years," he says. "But the strength of the £ adds a 30% to their prices, and that is a big barrier to overcome.
"We certainly dont want to see the £ getting any stronger, and it the value starts to fall it would have a very beneficial effect on our export business."
So far, the volume of used tractors entered for each months sales has held up well, and this is an important factor in providing plenty of choice to attract the overseas buyers, but there is some concern that the reduction in the level of new tractor deliveries will be reflected eventually in the supply of used tractors.
The new and used tractor markets are closely linked. Strong demand and firm prices for used tractors can encourage dealers to be more generous with the trade-in allowances they quote when selling a new tractor, and the volume of new tractors sold each year affects the supply of used tractors.
One result of the slow-down in sales of new tractors is that the trade-ins coming on to the used market are tending to be older and have more hours on the clock, and this is creating a shortage of top quality used tractors with low hours.
"Tractors that have obviously done a lot of work and are in rough condition are difficult to sell, particularly the lower horsepower models," explains Stephen Wightman of Wightman Tractors at Carnforth, Lancs where milk production is the main enterprise. "The biggest demand in this area is for clean, late tractors with low hours, particularly in the 100 to 130hp range.
"We have no difficulty finding customers for that type of tractor. The biggest problem is that they are thin on the ground, and that may be because farmers who buy new tractors are keeping them longer and getting more work out of them before they trade them in."
There is a similar situation in the arable eastern counties, according to Mike Massey, agricultural sales director for the TNS group which has the Massey Ferguson franchise for much of Suffolk and Cambs.
Older tractors, particularly the smaller models in poor condition, are difficult to sell in East Anglia, and TNS has its own export outlets for some of these tractors, he says.
"The biggest demand is for good quality tractors with low hours. There is a very strong demand and we can always find customers for the right tractors," he says. "In fact, the main problem is finding enough of them to meet the demand. But customers are very selective, and its quality they are looking for." *
Buyers from the UK and overseas come to the tractor sales at Cambridge.
Some of the used tractors waiting to go under the hammer at the Cambridge auction yard. It is the low-hour, clean tractors that are in most demand.