Farm machinery sales break another record, up 27 per cent

The current agricultural machinery spending spree seems never-ending, but industry insiders say it can’t go on forever.

The farm machinery sector has enjoyed a “phenomenal” year, with tractor sales exceeding 17,000 units and combine harvester sales breaking the 1000-unit mark.

The sales frenzy topped last year’s 15,000-unit bonanza, and hasn’t been matched since the early 1980s.

Tractor and Machinery Association executive director Gary Northover said the industry expected the hot market to continue for another 12 months.

“It is a record year for the industry, sitting about 27 per cent ahead of last year, which in itself was a very strong year,” he said. “The crystal ball says we think 2022 will be quite solid. We’re not prepared to say it will be at the level we have seen in 2021, but I think it will be strong.”

Federal Government company tax incentives and low interest rates fuelled demand for new and used machinery, but aggressive advanced ordering by dealerships – aiming to avoid crippling supply-chain bottlenecks – was the crucial factor that ensured sales momentum never slowed.

New Holland general manager Bruce Healy.

New Holland general manager Australia and New Zealand Bruce Healy said the strategy kept the market sizzling all year.

“We sat down with our dealers and talked about what they would normally order, and that there was a global demand for equipment at our plants,” he said. “And that they had to make sure they had enough equipment in train to meet customer requirements. They have done that and will have stock.”

New Holland tractors on display earlier this year at FarmFest field days at Toowoomba. Despite a lack of in-person ag events, machinery sales hit record highs month after month this year.

Spare parts were also in high demand this year, in advance of the anticipated bumper harvest, with manufacturers putting on double shifts in warehouses, ordering aggressively and even chartering planes to ensure parts were available in Australia.

Farmers, meanwhile, have been investing in not just tractors and machinery, but also on-farm infrastructure including sheds, yards and grain storage.

Gippsland shed manufacturing company Bairnsdale Engineering has seen demand lift by 20-30 per cent year on year.

Sales manager Brett Cox said farmers had been investing despite an increase in costs of fabrication and installation, driven by escalating steel prices – which had nearly doubled in the past 18 months – and workforce shortages.

“What we are seeing is that clients are spending the money, even with the steel price rises and what they have to pay to get the jobs done. They are still proceeding, especially in the dairy sector and beef sector,” Mr Cox said.

He credited the government’s instant asset write-off scheme for keeping the industry “ticking along”.

Despite a strong outlook for next year, the TMA’s most recent quarterly survey of dealers showed a reduction in the level of optimism about the next trading period, Mr Northover said.

“At some point there has to be a saturation,” he said. “It has been roaring at very high levels.

“Having said that, order books seem to be quite strong for 2022. It is probably 2023 that we will see a bigger drop off.”

New Holland’s Mr Healy anticipated this year would end strongly, and sales next year would again be above the industry average.

“I don’t believe that it will be as high a TIV (total industry vehicle sales) as what we’ve seen this year,” he said. “I do expect it to still be well above normal.

“My fingers are crossed for the farming community that they have two fantastic years in a row.”