The late rains of December 2004
initiated the late plantings of maize in the producing areas; these
late rains stimulated both the sales of tractors and implements.
The 322 tractors sold in December 2004 were 30.7% up on the 254
tractors sold in December 2003. Balers had the same results with 40
balers sold in December 2004; 29% up on the 31 units sold in
December 2003.
During the year, tractor sales reached a total of 5280 units sold in
2004; 22% up on the 4327 units the previous year. Combine harvester
sales were up by 48% - from 187 units in 2003 to 227 units in 2004.
Baler sales were up by a substantial 67.3%; from 251 units in 2003
to 420 units in 2004.
This positive trend was mainly due to four reasons:
1. The strengthening of the Rand against the major trading
currencies.
|
Currency |
2002
– 2003 |
2003
– 2004 |
2004
– June 2005 |
|
US
Dollar |
+30.1 % |
+18.1 % |
-15.5 % |
|
Euro |
+8 % |
+9.2 % |
-4.6 % |
The above resulted in the drop of
imported machinery prices (see AGFACTS Newsletter, July 2005) versus
the Rand value change.
2. The prime overdraft rates of the commercial banks dropped
as follows:
|
Date |
Prime
Interest Rate, % |
|
2003-12-15 |
11.5 % |
|
2004-08-16 |
11.0 % |
|
2005-07-15 |
10.5 % |
3. Farmers realised the
importance of replacing their ageing machines and investing in new
machinery, new technology, more fuel-efficient and more
operator-friendly equipment in order to stay ahead.
4. The favourable weather conditions.
Six months later, June 2005, is a complete different scenario and
will undoubtedly be the most challenging time for agriculture in
South Africa and in particular, the input suppliers and agricultural
business’s like our agricultural machinery industry. Despite the
late plantings in the maize-producing areas, South African maize
farmers will harvest ± 12 million metric tons of maize as a result
of perfect weather conditions, availability of different seed
cultivars and improved soil preparation methods. This means an
estimated over-supply of ~5.9 million tons, which is 72% of local
consumption.
The price of white maize, used to make maize meal and being the
staple food for the African population, declined to a record low of
R460-00 per ton during February 2005. This resulted in the request
by the wheat and maize farmers (Grain SA) to ask the Government to
step up import tariffs to equalize the playing fields to oppose with
the huge subsidies given to foreign farmers. In terms of World Trade
Organisations (WTO) South Africa can impose a 72% import tariff on
wheat and 50% on maize. Current South African tariffs are 2% and 13%
respectively.
June 2005, the maize price stands at ~R600-00 a ton. The low prices
do not cover the average production costs of R820-00 to produce 1
ton of maize. Maize and wheat farmers are making no money under
these circumstances and farm profit margins have come under severe
pressure. The Department of Agriculture Statistics has already shown
that farm profit is 146% lower from R698 million in the first
quarter of 2004 to minus (-) R321 million for the same period in
2005.
Farm debts have increased to R33.3 billion in 2004 from R28.2
billion in 2002; 18.08% up according to figures released by Standard
Bank. As a result of the foregoing synopsis it is therefore no
proposition for maize farmers to plant as it would be cheaper to
purchase from the maize in over-supply at the current price than to
produce with the current increase of fuel, agrochemicals,
fertilizer, shipping costs, minimum wages, etc. Farmers have been
urged by Grain SA and commercial banks to reduce their plantings by
at least 50% or not to plant at all. The effects of the commodity
prices offered to farmers is having serious effect on the demand of
agricultural equipment. The signs at June ending are already showing
the impact of the situation.
Tractor Sales:
June 2005, 399 units against 448 units June 2004. Sales till June
2005, 2 260 units were sold as apposed to 2 565 last year, which
represents an 11.9% downturn.
Combine Harvester Sales:
Despite the bumper crops on the lands, combine harvester sales are
surprisingly low at present however an upswing is expected when
harvesting really starts in earnest. Sales till June 2005, 102 were
sold compared with 147 units last year, which represents a 30.6%
downturn.
Baler Sales:
Sales over the last 3 months till June baler sales dropped
substantially by 31.1%. Over the last 6 months to June, 200 units
were sold compared with 211 units last year.
(The source of the above figures supplied by Response Group, SAAMA
and AGFACTS.)
With the downturn of the agricultural machinery sales the function
of SAAMA and its members is of paramount importance to promote the
manufacture and distribution of agricultural machinery in the best
interest of the farming community in South Africa. Also to promote
and protect the interest of its members and to assist and encourage
co-operation. A major concern is the huge influx of imported
machinery, which competes with the local manufacturers. This aspect
could create a serious conflict with the local manufacturers
demanding protection by legislation.
The companies importing tractors have increase from 17 to 21 over
the last year, with a model range of ±361 units. Sensible though,
the choice of models has been reduced from ± 400 to the 361 models
despite the increase in importers.
The consumer must be made aware of the sustainability of these new
importers, as history has shown that these companies come and go.
The importation of “grey tractors” and used equipment is of great
concern to SAAMA and should again be addressed by SAAMA, the SABS
and ITAC as a matter of urgency.
Diesel and BioDiesel Standards
The Secretary continues to sit on the SABS Diesel and Bio Diesel
Standards Technical Committees. Both these Standards are currently
under revision with regard to the upcoming changes, which will come
in to effect on the 1st January 2006. The current 3 000 ppm sulphur
diesel fuel will fall away and will be replaced by the current 500
ppm sulphur standard fuel. A new “niche” diesel fuel with 50 ppm
sulphur will be introduced. A lubricity standard is now included in
both these fuels.
The Diesel quality standards should become mandatory soon.
BioDiesel:
The Secretary continues to sit on the Bio Diesel Joint
Implementation Committee. It is likely that legislation will soon be
introduced to allow for the introduction of 1% Bio Diesel and 1% Bio
Ethanol into Petrol.
Haulage Tractor Legislation:
Proposed legislation has been submitted to the National Department
of Transport on a new vehicle category termed “Haulage Tractors”.
SAAMA Matters
This past year SAAMA has made progress with its objective to make
the association more visible to all the relevant interested parties
through it’s website (www.saama.co.za), various informative
editorial in the printed media and Agri TV with 2 minute slots on
equipment for members companies.
Its membership database consists of 20 companies, which supply at
least 85% of agricultural equipment to South African agriculture.
During the last year we had some interesting discussions with guest
speakers on precision farming by Direct Products, safety aspects by
NOSA and the Agri BEE by the CEO of Grain SA.
I’m rather disappointed with the attendance and support of certain
members who could participate in such a positive way as important
players in the agricultural industry. We need your participation at
our meetings!
The SAAMA/NAMPO working group, headed by Charles van Niekerk held
discussions with the Grain SA/NAMPO working group the aspects of the
NAMPO show as well as demonstration formats and are pleased to say
that it is an absolute pleasure to work in a positive atmosphere to
make NAMPO show an even bigger success.
Golf Day:
The 2004 golf day made a net income of R15 810.00, this the result
of the enthusiastic participation by member companies and their
guests as well as all supporting companies who participated. The
golf day was as usual a great success and thank you in particular to
the organizing team, Mr. Mike Terblanche and Mr. Pieter le Grange,
who organised this event on such short notice!
Response Group Trendline (RGT):
The reporting members agreed to be more transparent with the
disclosure of certain KW groupings of tractors was adopted. The
reporting of retail sales in the correct geographic areas is of
vital importance to the correctness of the analyses. Our sincere
thanks to RGT for the valuable contribution they make on behalf of
SAAMA member companies and the industry. The continued support and
participation during our AGM and the golf day is as we all know,
highly appreciated!
AGFACTS:
To the SAAMA Secretary, Dr. Jim Rankin, who plays such an important
and crucial role for the association and the agricultural industry
as a whole, our sincere thanks for your willingness to find the
extra time to provide us with the demands SAAMA is making on you.
Conclusion:
In the past year we saw the retirement of 2 of our longstanding
executive members, namely, Mr. Pieter le Grange and Mr. Guy Johnson,
we thank them for their support as well as their valuable views and
opinions that they were willing to share with us over the past
years.
It is said in every Chairman’s report, “the year ahead will be a
real challenge” and yes, I must agree, the coming years are indeed
challenging! SAAMA members have a vital role to play in this defying
time, careful planning with vision is required. Entrepreneurial
thinking is of the essence to take the opportunities, which are
there in the transition of agriculture in South Africa!
I would like to take this opportunity to thank all members and the
Executive Committee for all the support I received during this past
year and would like to wish the incoming Chairman and Executive
Committee my best wishes for the year ahead!
Kind regards,
Nick Sanders
Chairman
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