Suppliers feel pinch as sales take a tumble
By Robert Harris
AGRICULTURAL suppliers are feeling the pinch as farmers cut back on inputs and machinery.
Prolonged depression in the sector will see a series of bankruptcies and takeovers which could raise input prices and reduce services which farmers now take for granted, merchants and dealers maintain.
"The situation is not yet desperate. But it is very, very worrying," says Jim Reed, director general of merchant body UKASTA.
Fertiliser sales showed the biggest slump, with volumes down 20% last year compared with 1996. "It was a catastrophic year for companies with big fertiliser sectors."
Although pig and poultry feeds held up, the sectors barometer, ruminant feeds, dived 15-20%. "With cows already going out to grass, there doesnt seem to be much room for improvement."
Agchem sales fell by almost as much, and combinable crop and grass seed sales dropped "a few %", says Mr Reed.
"It is too early to tell how this year is going to go. Fertiliser sales are just beginning to advance. Sales are likely to be stronger than last year, but it is unlikely we will make all the deficit up."
If the pattern continues through 1998, Mr Reed predicts further rationalisation. "Our members are already tightening their belts, and are laying employees off. Farmers still have plenty of choice but they might lose some of that if the situation continues."
Less competition could see prices rise, compounded by increased distance between outlets. Service will also suffer since sales and advisory staff numbers would almost certainly be cut, says Mr Reed.
Machinery dealers are no more cheerful, says Ian Jones of the British Agricultural and Garden Machinery Association. "The government doesnt realise how far agriculture affects other communities. Depressed is the word to describe dealers. They are looking for any scrap of business, and fine-tuning every deal."
The strong £ has hit second-hand tractor exports, he adds. "Farmers dont like being offered 30% less for their trade-ins. Tractor sales have dried up to practically nothing."
April and May will be the crunch time. "Members are looking for major sales then. If we dont see a lot of activity, the pressure will increase. Four dealerships have already closed their doors. I think more will follow."
Sales and service staff are the biggest casualties, he adds. "Farmers will lose the service they are used to."
Tractor sales, which fell 18% last year compared with 1996, are set to slip by the same amount this season, he predicts. *
• Fertiliser down 20%.
• Ruminant feeds down 15-20%.
• Agchem drop similar.
• Tractor sales down 18%.