Large spring deliveries of Tractors and Equipment meeting local demand
Recent large deliveries of tractors and equipment reflect strong demand throughout the country on the back of strengthening commodity prices, according to Tractor and Machinery Association (TAMA).
President Kyle Baxter said the second half of 2021 continued the exceptionally strong sales growth of the first half compared to 2020. Overall tractor deliveries to the end of November reflect an average increase in demand by 27%.
“There has been significant growth across the traditional lifestyle 0-60hp segment, which increased by more than 35%, while the 60-100hp horticulture, orchard, viticulture segment up 20% and the 100-120hp dairy sector up 9%.”
The biggest increase was in the 120-250hp mainly arable and dry stock farming sector, which increased 42% compared to 2020. The big agriculture outlays of 250hp+ increased by almost 36%.
“Tractor sales are only one measurement of the state of the industry and we’re also seeing increased equipment demand. Both locally manufactured and imported equipment are all reporting strong demand.”
However, whilst New Zealand is experiencing fantastic growth in tractor and equipment deliveries, so are many other countries across the globe as commodities prices remain favorable.
“Many local and overseas suppliers are stating that production for 2022 is already nearing maximum capacity on large, specialised equipment. There is limited capacity to accommodate new orders that haven’t already been forecasted or placed with the manufacturer. Quarter 1 and 2 2023 delivery time becoming very much a reality for a lot of this type of product.”
This level of global demand plus the inflation of shipping costs and extended ocean shipping timetables all add to the challenge of ensuring equipment deliveries to local customers, Mr Baxter said.
“TAMA is encouraging its members to discuss equipment requirements for spring / summer 2022 and autumn 2023 with their customers as soon as possible.”
Record low unemployment levels and international border restrictions continue to add further challenges across the sector due to the shortage of skilled technical staff. TAMA members are reiterating the same messages as many other NZ businesses: that Covid restrictions and compliance with Covid requirements are adding to the reduced efficiencies across many areas of their businesses, further increasing the challenges presented each day.
On a positive note, TAMA dealership members report a strong uptake of apprentices during this current season. This is helping to future proof the technician support side of the sector, and the recruitment of apprentices is set to remain a key factor for the years ahead across our members, he said.
“As 2021 draws to a close, our many TAMA members will continue working closely with their customers to manage expectations and plan ahead for 2022 and 2023.”
TAMA 2021 Conference postponed
22 August 2021
Unfortunately, due to the Delta variant being in New Zealand, TAMA has decided to postpone our conference to next year. It will now be held in Christchurch on Friday 26 August 2022. We are hugely disappointed with having to make this decision so close to the actual event as the enthusiasm from the industry (members and non members) has been superb. This enthusiasm does mean, however, that when we do get in front of each other in 2022, it will be an even more fantastic event.
New Zealand tractor and equipment sales continue to grow
13 July 2021
The first half of 2021 has got off to a superb start for sales of farm equipment.
Tractor and Machinery Association of New Zealand (TAMA) president Kyle Baxter said there had been substantial sales increases across all tractor horsepower segments and equipment compared with the same time last year.
Mr Baxter said the big increases reflected a continuing catch up in on-farm vehicle investment as farmers looked again to the future.
“It’s fantastic to see the confidence continue across all of the sectors, and in turn this confidence flowing into wider economy.
“This significant increase isn’t an accidental one, nor a blip, it requires sustained customer and supplier confidence over a 12-month period in that the required product is ordered and arrives into the country to meet current demand.”
The overall increase in actual units delivered across New Zealand was 35%. This represents an additional 450 tractor sales compared to the same period of 2020.
Sales in the under lifestyle 50hp sector increased over 40% while sales numbers in the 60-80HP segment, which are predominately delivered into the horticulture sector, increased around 50%.
“Not to be left out of the rising market, sales in 100-140HP segment are up more than 30%. Tractor deliveries into the larger end of the market, focused on 180-250HP cropping and contracting tractors, increased by more than 50%.”
Whilst the market remained strong and looked set to remain so for the rest of 2021, there were several challenges impacting the market, Mr Baxter said.
“We are hearing from our members that ongoing production stoppages in global factories due to Covid lockdowns and community outbreaks continue to affect manufacturing timeframes. Europe continues to be a rapidly changing space by the day, as one country announces a ‘return to normal date’, another country announces new control measures to help stem the spread of the virus.”
Global logistics dominated many of the discussions TAMA members were having with their suppliers and customers. With no relief in the short to medium term horizon, the increased shipping times looked set to continue well into 2022.
“Almost every point of the logistics supply chain is affected. Delays of an extra 90 days in receiving a container load of equipment from Europe are not uncommon. Reduced air cargo space, due to fewer flights globally, is also adding to the cost of air freighting spare parts and causing delays in getting urgent spare parts into the country.
“The cost of shipping a container here has increased drastically. This, coupled with importers of agricultural equipment generally only able to ship one to four machines per container due to their size, is driving up the freight cost of each item shipped.”
Mr Baxter said while strong commodity pricing was fantastic for the New Zealand agriculture industry in terms of the export value of ag-related produce, there was a sting in the tail.
Raw materials sourced to build the equipment were also under immense upward price pressures. Many manufacturers had already signaled or passed on manufacturing price increases directly related to the increased price of the raw materials.
“Our members are particularly concerned about the strong inflationary surge of raw materials, which is affecting many components used in the build of equipment.”
The price of steel has more than doubled in one year (from 550 euros per ton to 1,250 euros per ton). Steel, depending on the type of equipment, represents 30 to 40% of the average production cost of farm machinery. There have also been substantial increases in the prices of aluminum (+22%), copper (+63%), rubber (+67%) and foundry products (+90%) over the past nine months across the Asia, USA & Europe, where much of the New Zealand farm equipment is sourced from.
Labour shortages remain another major concern for the tractor and machinery industry, he said.
“The lack of skilled labour is paramount in the minds of all our members. We’re all training young people and taking on apprentices but the industry needs more skilled people than we currently have available.
“Like many others in the primary industry, we need to be able to access overseas workers to help with the immediate shortfall for the upcoming season. We will be working on behalf of our members to ensure these issues are highlighted and to implement the possible courses of action to address the shortfall.”
Agricultural machinery demand continues to be buoyant
4 May 2021
Growing demand for agricultural machinery and equipment has kicked 2021 off to fantastic start, according to the Tractor and Machinery Association of New Zealand (TAMA).
The momentum began to build during spring and summer of 2020 as the result of increasing customer confidence, said TAMA president Kyle Baxter.
Mr Baxter said he was seeing and hearing first-hand how strengthened commodity prices were giving farmers and rural contractors the confidence to invest in new equipment.
Overall tractor sales were up more than 19 percent for the first quarter (to March 31) compared to 2020. There had been increases across every horsepower sector, with some stand out results in certain sectors such as a 30% increase in the sub 40HP sector plus a nearly 60% increase in the predominantly cropping and contracting segments of 150HP-plus.
Investment in the 40Hp-150HP sector, which represents mainly horticulture and dairy, experienced a more modest growth of 8%, but this could increase quickly as new equipment arrived in the country, Mr Baxter said.
Border control issues were a continuing challenge, however, affecting both the supply of staff and of equipment.
“The current border restrictions have left many TAMA members short-staffed and this is extremely stressful for individual members, staff and customers. We know of course we are not alone in this problem as it’s affecting most industries. As we look to the second half of 2021, with vaccinations and digital travel passports becoming more prevalent, we are hopeful of border control relaxations to assist with the flow of skilled staff for our members.”
Continued inbound and outbound supply chain challenges were also impacting members but conditions were on the improve.
“Global manufacturing constraints are still very much a reality, as plants continue to work through Covid restrictions in their respective countries, but the flow of equipment into New Zealand is increasing steadily. This will offer much welcome relief for customers who are requiring new pieces of equipment to be put to work straight away.
“TAMA members who manufacture in New Zealand are enjoying continued growth in customer confidence and strong demand for their equipment but are also experiencing issues in fulfilling their export market orders due to global shipping constraints.”
From a finance point of view, conditions were positive for the sector with the combination of strengthened confidence and commodities resulting in the big lending institutions looking favourably at the agricultural industry.
“This appetite to lend into agriculture will certainly help continue stimulate the sector further as we go into the 2021 season.”
Tractor industry remains optimistic for 2021
18 January 2021
The tractor sales industry finished 2020 on a strong note with December sales up 18.4 % on 2019.
Tractor and Machinery Association (TAMA) president Kyle Baxter says that while 2020 definitely posed challenges for the industry, the current mood of members is positive.
Overall tractor sales for 2020 were down 15.3% compared with 2019, with sales for the bigger machines (375+ HP) particularly affected with a drop of 25%.
Mr Baxter says nobody in the industry was surprised with the reduction in sales for the high-end tractor investments: “Tractor distribution companies had been envisaging a reduction in sales going into 2020, however, as a result of the pandemic sales reduced slightly more than expected.”
Certain HP sectors actually remained stronger than others over the year, particularly lifestyle tractors (20-30HP) for which sales volumes were very similar to 2019. Tractors sold in the viticulture and horticulture segments (80-100HP) also bolstered annual sales volumes with a reduction of only about 5% compared to 2019’s record breaking year. Harder hit was the higher horsepower tractor segment traditionally sold into the arable / cropping and dry stock farming sector (140 -375 HP), with about a 20% reduction in sales volume from 2019.
“This HP segment accounts for a lot of the tractors sold into contractors and hire fleets, which were affected by the general uncertainties around the pandemic. They also experienced further uncertainty in obtaining sufficient workers through the spring and summer season to operate these machines, with a consequential reduction in the yearly sales volumes of larger tractors.”
TAMA members are now reporting that demand for tractors and equipment is steadily building across the country, as customers are beginning to secure their machines for spring / summer 2021.
“However, the pandemic is continuing to disrupt the overseas supply chain across Europe, America and Asia. While New Zealand TAMA members are doing everything they can to ensure machines arrive on time for the season ahead, there will be potential delays in global manufacturing and international shipping routes that could be felt during the first half of the year.”
Mr Baxter has advised TAMA members to stay well informed of any shipping delays via their overseas manufacturers and shipping companies, and to liaise with their customers who may be affected by these delays.
“On a positive note for 2021, our members who manufacturer within New Zealand are reporting strong order banks for their equipment from customers. This is very good news and another sign that our primary industry is still feeling buoyant amongst the global turmoil.”
For more information contact:
Kyle Baxter, President TAMA
027 670 7585
About the Tractor and Machinery Association of NZ
The Tractor and Machinery Association of NZ (TAMA) is the industry representative for New Zealand’s commercial tractor and machinery industry, including importers, manufacturers and retailers. TAMA obtains retail delivery statistics for around 97% of the tractor market and about 80% of the machinery sector from its co-operating members. Visit www.tama.org.nz.