Farm Machinery Sales Point To Growing Confidence In Dairy Sector

(The Southland Times) – Farmers’ confidence in the dairy sector looks to be on the rise, with southern farm machinery suppliers reporting an increase in sales compared to this time in 2016.

After two difficult years for dairy farmers brought on by low milk prices, some are starting to re-invest in machinery. 

JJ Limited general manager Paul Jones said there “had certainly been a lift” compared to previous seasons. 

“This season there’s been more sales of farm machinery, and the tractor market has held up a bit better than what we thought.”

Agricentre South dealer principal Grant Price said while the first six or seven months of 2016 were “pretty quiet”, there had been a noticeable increase during the past four months. 

“Dairy farmers have been very cautious over the last year or two – a lot of them have been fixing their old tractors rather than buying new.

“While at this stage they’re still cautious, we’ve had a lot of inquiries about equipment and seen a lift in sales.

While many farmers had been holding off replacing their tractors and other machinery, the more positive forecast was helping, Price said.

“These things are the tools of the trade – it’s a need not a want.

“Eventually they’ve got to be fixed or replaced.”

There had been a drop-off in sales after 2014, when milk prices dropped following the Fonterra payout of $8.50 for the 2013/14 season. 

From 2014 to 2016, tractor sales throughout Southland had dropped from 430 to 254.

For 2017 though, Price said was confident of getting back over 300 sales by the end of the year. 

Federated Farmers Southland provincial dairy chairperson Graeme McKenzie said while it was good rural suppliers and retailers were doing better, a full recovery would still take some time. 

“Farmers are still recovering from two seasons of losses, so first and foremost they will be looking at debt capitalisation and sorting out their debt structures. 

“An increase in payout equals an increase in confidence, but you do need a few years before you make a profit and can increase your spending.”

McKenzie said while there wasn’t a lot of point in “crystal-ball gazing” the forecast milk price, it was looking like a good year for dairy production.

“It was definitely an exceptional spring, we got a really good head start.

While the inconsistent summer weather had some impact on production, it would not have a major effect.

“Over December and January there was a lot of moisture and also a lot of wind, and the grass growth will suffer from a lack of sun. 

“We definitely won’t see the growth levels we saw in spring, but we won’t lose the gains that we made there.”