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SOUTH AFRICAN AGRICULTURAL MACHINERY
ASSOCIATION (SAAMA)
2008 AGM
CHAIRMAN’S REPORT
Agricultural environment
The agricultural industry experienced an exceptionally good year notwithstanding a downturn in the general economy, sharp increases in the interest rates and drops in companies’ share prices. The positive environment was mainly caused by the high international and local grain prices and in particular the high summer grain prices which consists mainly of maize. It does not often happen that a bumper crop and high yields are combined with high grain prices. Climatic conditions, that have a great effect on the crop, were also favourable. The positive result of this was that the agricultural mechanisation industry enjoyed the best year in more than 26 years.
The area planted under grain continues to decline due to unutilised farmland but fortunately the average yield consistently increases due to improved production practices. The average yield for maize increased from about 1,8 tons per ha in 1987 to the current 4,3 tons per ha. The corresponding figures for wheat are 0,8 tons per ha to 3,0 tones per ha.
As summer grain is the biggest crop planted in South Africa it has the biggest influence on agricultural machinery sales.
Grain prices are currently at high levels with December 08 futures trading at the following levels:
- Wheat – R 3 300/ton
- White Maize – R 1 903/ton
- Yellow Maize – R 1 921/ton
Agricultural machinery
The agricultural industry is enjoying a boom time internationally which increased the demand for agricultural equipment. There is a huge demand for high kW and high technology equipment in the fast developing Eastern European countries. This together with the increase in demand in the rest of the world has put a lot of strain on equipment factories world wide.
The average annual price increase of equipment in South Africa to Sep 08 was 20,9%. This was mainly due to the sharp devaluation of the Rand during the first quarter of the year. The prices also increased due to the increased prices on components to the factories driven partly by the high demand and steel prices increasing by over 80 %. The shortage of tyres forced manufacturers to fit unknown brands. To comply with European emission standards, machinery was equipped with new Tier III compliant engines that also increased prices.
Tractor, Combine and Balers Sales
The projected sales for 2008 of tractors, combines and balers show a steady growth. The high grain prices and the large maize crop have put farmers into a position to replace aged equipment that was long overdue for replacement. The demand for higher kW tractors was particularly high.
New technology
All the latest technology is available to the South African farmers to help them to improve their competitiveness in the international market. As there are no subsidies to South African farmers they need everything they can get to make them more efficient.
New technology included sophisticated new self propelled sprayers, high kW tracked tractors, more efficient diesel engines, increased use of satellite technology for yield monitoring, precision farming, auto steer systems and minimum till equipment.
There has been interesting developments with new diesel engine technology. We imported equipment with tier III compliant common rail engines. These engines are more expensive but have higher kW and torque outputs. Their characteristic flat torque curves make them ideal for agricultural application.
Moving to tier IV compliant engines forced manufactures to de-rate engines to comply. A concept called AdBlue, does after treatment of emission gasses and allows manufactures to optimise engine output and fuel consumption and still comply with tier IV emission standards. We should see these engines in South Africa in the near future.
SAAMA golf day
Last year’s golf day was held at ERPM Golf Club and was a huge success with the maximum funds ever raised. This golf day has become a highlight on the agricultural machinery calendar and is supported and enjoyed by SAAMA members, suppliers and customers alike.
Nampo
Although most SAAMA members see little value in the demonstrations at Nampo they all stuck to their commitment to participate in the demonstrations during 2008. The combine demonstrations were particularly disappointing due to the high cost of participation to the suppliers and the low yield of the maize.
The format in which SAAMA members might participate in future will be discussed with Grain SA. The focus would be to make the show interesting and add the most possible value for the farmers and the suppliers.
Members
SAAMA once again had a growth in membership during 2008 to a total of 23 members. This followed the canvassing of new players in the industry that qualifies to become members.
SABS
The meetings between SAAMA and the SABS continued during 2008 regarding issues like homologation, e-Natis and compliancy. Following the 3 year phase out period, no tractors not complying with tier II emission standard may be imported or manufactured in South Africa after 20 February 2009. SABS and SAAMA will work closer together to ensure that all tractors sold in South Africa are compliant.
Marketing
SAAMA was once again marketed well during the course of the year. Various articles were published in Grain SA and our monthly press releases were widely published in the media. Interviews regarding a variety of subjects relating to the industry were broadcast on radio and TV.
Information
SAAMA continued to collate and distribute information to its members. The Agristats system was extended to include forage harvesters and sprayers.
Agfacts continues to provide the industry with valuable information. The gathering of the implement sales information is cumbersome and needs to be revised.
SAAMA Finances – 2007/2008
The Association had a net excess of income over expenditure for the year and the finances are in a good state. The very successful golf day contributed towards the healthy financial state.
Prospects
Following an exceptionally good year where a lot of old and overdue equipment was replaced, sales have already started to slow down. The substantial increases in grain production costs will have a negative influence on farmers’ profitability and the future sales of agricultural equipment.
General
The last 2 years was an exciting time in the agricultural machinery industry which ended with an exceptionally good year. There were a lot of new entrants into the market, as normally happens with growth phases in an industry. A lot of new applicable technology became available to the South African farmers to improve their competitive edge in a very competitive international market.
Thank you to the executive committee, Secretary Dr Jim Rankin and all the SAAMA members for your support and cooperation over the last 2 years. Although we compete fiercely in a very competitive market we were once again able to work together on matters of common interest for our industry.
As I will be stepping down as Chairman after serving for 2 years I would like to wish the new Chairman good luck with his important role.
I thank the Lord for all his blessings during a very good year.
P CHARLES VAN NIEKERK
CHAIRMAN
September 2008
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