With the optimism we see in the sector, and anecdotally at NAMPO engagements, one can only assume that associated industries such as the farming machinery will see a further uptick in the coming months. After all, we often hear that big deals are sometimes made at NAMPO, and farmers get to see the excellent and new equipment from the various suppliers.
We will now be watching the monthly data closely in the coming months. For the first quarter of the year, the figures have been encouraging. For example, tractor sales increased for the fourth consecutive month, up 5% year-on-year in April 2025, with 527 units sold. The combine harvesters’ sales were even more encouraging, up 77% year-on-year in April, with 46 units sold.
As we stated in these pages recently, the substantial increase in sales primarily reflects the sector’s positive sentiment about the 2024-25 crop and horticulture harvest due to favourable weather conditions and the base effects, given the weak sales in 2024.
Indeed, the heavy rains in April have caused concerns about the crop quality. Still, there remains optimism about the yields, which supports the robust sales. The Crop Estimates Committee forecasts South Africa’s 2024-25 summer grain and oilseeds production at 18.01 million tonnes, 16% higher than the 2023-24 production season, representing a decent recovery from drought.
If we reflect briefly on the past few years’ performance, it is fair to say that the poor agricultural machinery sales performance in 2024 resulted from three major factors. First, South Africa’s agricultural sector had higher machinery sales between 2020 and 2023. Improved farmers’ incomes supported higher sales due to an ample harvest and higher commodity prices. Thus, there was bound to be some correction, leading to a moderation in sales in 2024. Second, we struggled with a mid-summer drought in the 2023-24 season, weighing on farmers’ fortunes and worsening sales performance. Lastly, the relatively higher interest rates for much of 2024 added to the economic pressures on the sector, leading to poor sales.
This year, however, things are different, as sales in the first quarter have already shown. The interest rates have eased somewhat from last year’s levels, although there remains uncertainty about the path ahead given the renewed risks to the global economy.
Also, agricultural production conditions are favourable across most commodities. Also worth noting is that some farmers may start with machinery replacement in the coming months. All this will support the sales of tractors and combine harvesters. Of course, we also lean on the generally improved sentiment in the sector, as illustrated by the Agbiz/IDC Agribusiness Confidence Index (ACI), which increased in the first quarter of 2025 compared to the end of last year.
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