March machinery market: Improved outlook for sales

Machinery sales in March have been boosted by the Federal Government’s expansion of the instant asset write-off.

Brighter outlook: Widespread rain and government stimulus are providing a boost to the farm machinery market.

THE prospects for machinery sales in the agricultural sector have improved considerably in recent weeks despite the current troubles associated with the COVID-19 virus.

First and foremost, we have seen considerable rainfall in most parts of drought-affected Australia, which has led to a renewed optimism from farmers knowing that they can now get crops planted with a fair degree of certainty that they will yield results.

The broadacre market has a long way to go before we see large tractor and harvester sales return to recent highs, but the rest of the market is bouncing back.

Secondly, the Federal Government’s increase to the accelerated depreciation allowance, or instant asset write-off, from $30,000 to $150,000 is a major boost to the industry and has certainly been a driver for activity.

Finally, with agriculture being defined as an essential service, the TMA has been lobbying state and federal governments to ensure suppliers of machinery, parts and service are included in this definition.

I am pleased to say we have received advice from the federal Agriculture Minister that this is the case, which will prove to be a great encouragement to our industry to continue supporting agriculture in this country.

Sales in March enjoyed a strong bump, up 5 per cent in unit numbers but down 10.8 per cent in dollar terms on the same month last year and after what was a rocky beginning to the year, are now 3.2 per cent behind for the 2020 year to date.

Unit sales were strongest in the under 40hp (30kw) range, up 29 per cent for the month off the back of the accelerated depreciation incentives.

These now sit 3.3 per cent behind for the year to date. The 40 to 100hp (30-75kw) range was in line with last March, now down 9 per cent for the year and the 100 to 200hp (75-150kw) category had another strong month up another 16 per cent (10 per cent for the YTD).

The 200hp (150kw) and above range was down markedly, 21 per cent for the month and now 15 per cent behind year to date which explains the large difference between unit sales and turnover.

Around the states, Victoria continues to enjoy a bumper year, up another 32 per cent on the same month last year, now 15 per cent ahead for 2020.

Activity in the northern states remains mixed, with NSW up 13 per cent for the month, 6 per cent down year to date and Queensland down another 9 per cent and now 15 per cent behind last year.

The story in the west was somewhat grim, with Western Australia 30 per cent down for the month, 17 per cent down YTD, South Australia recorded its first rise for some time, up 27 per cent for the month, now 3 per cent ahead of last year.

In Tasmania the strong run slowed. It is 19 per cent down for the month and 4 per cent ahead for 2020.

Conditions for combine harvester sales continue to be very challenging with only a small number of sales completing again in March with no great prospects for the year ahead des­pite the improving conditions.

Baler sales have taken off again in March with a 51 per cent rise on last year. It was the same story for sales of out front mowers now 18 per cent behind the same time last year.

Regrettably the annual TMA conference, due to be held in July, has been cancelled and at this stage will not be held again until 2021. In the meantime, stay safe!