HAUESLERS Mildura-based group general manager Justin MacFarlane says broadacre farmers are looking at what could be the best season in recent memory.
Justin says several factors have combined to make this coming season potentially one of the best, on the back of regular winter rainfall delivering the confidence of a finish-off for cereal, hay and legume crops – coupled with a good outlook for market pricing and yield estimates.
“Added to that, Canberra’s accelerated deprecation tax incentive also provided motivation for local farmers to make purchase decisions ahead of the current season, which helped machinery dealers such as Haeuslers with securing the best pricing options for them,” Justin says.
“More importantly, it also gave us, and them, the greatest chance of securing production slots,” he says.
“However, not all factors are that positive as machinery dealers are at the mercy of factory capacities and the Australian allocation in the middle of a worldwide, new equipment demand.”
Justin says that is being compounded by third-party component supply issues to production factories, as well as the now all-too-familiar issues of shipping logistic delays.
He says an example of this is equipment is normally ordered 12 months before the seasonal need, and a combine harvester, for example, will need a range of components to make it a complete outfit.
That would include the combine unit, cutting platform, technology hardware and a transportation trailer – and all four would be coming from separate locations, domestically and possibly globally.
“Each supplier has its own issues with workload capacity, raw materials, component availability and freight logistics,” Justin explains.
“The machinery dealer is the final link through to the eventual supply to the farmer, who in the meantime is trying to make real-time decisions based on updates of delivery times to the farm,” he says.
“As a result of potential delays of one of the items, farmers who are trading used equipment as part of the purchase, are not willing to release their equipment until full delivery occurs, which is completely understandable.
“During the next few months, all these challenges and expectations will come to bear, and from all reports, watch out for Mother Nature and her expected wet spring, which will put further pressures on both dealerships such as ours and farmers with harvesting plans.”
Nationally, sales of agricultural tractors through to August have continued to plough onwards and upwards – surging 22 per cent on the same month last year.
And according to the Tractor and Machinery Association of Australia, they are now 2.5 per cent up on the year to date.
Its monthly update describes this as “a particularly strong result given the rush of buyers that occurred in June, keen to maximise use of the Federal Government’s temporary full expensing program”.
TMAA executive director Gary Northover says as his group has been reporting for some months now, the industry’s ability to still deliver tractors has been due to the regular forward ordering that has been occurring for the past two years in anticipation of supply challenges.
But Gary says if a farmer wants a “bespoke” tractor ordered from the factory, then delivery will be at least 12 months.
Indeed, he says most dealers now are resisting taking forward orders because of the uncertainty surrounding supply, combined with the price movements that are beginning to occur across the board.
“The big question being asked at present is when this incredible upswing will come to an end,” Gary says.
“With tractor sales running at around 50 per cent ahead of what has traditionally been seen as a great year, there is no doubt that this can’t continue,” he says.
“Delays in supply have served to smooth out the peaks in the market, but we are beginning to see signs of when the current boom might end.
“Ownership costs are rising steadily, with both purchase prices and financing costs rising steadily and the current tax incentives are in their final year.
“The challenge for dealers will be to get the timing right regarding inventory given the prospect of machines ordered 12-18 months earlier, might arrive at a period of weakened demand.”
