Agriculture tractor. Picture: THINKSTOCK
Agriculture tractor. Picture: THINKSTOCK

Tractor sales in February dropped by 11.9% year on year to 595 units, after rising by 10.3% in January to 527 units, according to the South African Agricultural Machinery Association (Saama).

The 2017 annual total was boossted by a late surge with December sales increasing by 19.8% following a 24.9% jump in November.

"After encouraging tractor sales in January, February sales were quite disappointing. Market sentiment is currently being affected by various factors. The summer crops currently in the field are patchy in terms of their yield potential and in terms of the time of planting, both caused by the patchy rainfall pattern across these areas," Saama said.

"The current strong rand means that tractor prices are likely to come down, so farmers can delay their buying decisions. Crop prices remain low and a lot of last year’s crops are currently being stored, with many farmers holding out for higher prices. This is having an effect on their cash flow and their ability to finance the purchase of capital equipment."

The Agricultural Business Chamber (Agbiz) Agribusiness confidence index rose to 58 in the first quarter of 2018 from 49 in the fourth quarter of 2017. The improvement was broad-based with eight of the 10 sub-indices improving. From an economic point of view, the most important sub-index is that of capital investment, and that soared by 23 points to 67.

Tractor sales rose by 8.7% to 6,362 units in 2017 after an 11.3% fall in 2016, with Saama expecting sales this year to be similar to those of last year.