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Agricultural Machinery Demand Continues To Be Buoyant

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 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.”

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