As the debate around the impact of government’s expropriation without compensation (EWC) policy on farming investment gains momentum, recent statistics indicate that it’s not all bad news. “Since we began to engage as a country on the topic of EWC, there has been a lot of speculation about whether farmers are investing in SA agriculture – or whether we’re beginning to see disinvestment,” said Wandile Sihlobo, head of agribusiness research at the Agricultural Business Chamber of South Africa (Agbiz). “When you look at the level of investment in agriculture, one of the key things is the fixed investment side,” he said. Tractor and harvester sales provide clues about medium-term outlook. “Last year tractor sales were up 4% compared to the previous year while harvester sales were up 2% on 2017. “This tells us that even though there was
some nervousness, the actual numbers are showing that activity was continuing.” When January sales of tractors and harvesters dropped significantly, it raised the question: “Is this an indication of area plantings or does it just mean that farmers have all the equipment they need?” New figures released in February showed that tractor sales had recovered compared to January, even though the levels were below those of 2018. “And it was the same story for combine harvester sales which recovered in February. “Tractor sales numbers tell us that farmers are continuing to invest in movable assets and confirm that the area planted for summer crops did increase. “In terms of
combine harvester sales – what will be the key determinant will be yields and those numbers will become clear as the crop estimate committee continues to put out updates.” Policy uncertainty however continues to weigh on the industry. “If you look at the Agbiz/ IDC Agribusiness Confidence Index, which has a good correlation with what happens on fixed investment, towards the end of last year the index reached its lowest level since the first quarter of 2009.” This meant, he added, that there was a lot of despondency last year. “And apart from the weather, this was largely related to policy uncertainty.”
CAPTION:
Tractor sales numbers tell us that farmers are continuing to invest in movable assets. – Wandile Sihlobo
