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South Africa's agricultural machinery sales are likely to moderate in 2023 compared to the robust levels of 2022

Published: 08/02/2023

After solid activity in 20221, South Africa's agricultural machinery sales will likely soften this year. We outlined several reasons for this view in our previous update. For example, we think the possible replacement rate of older machinery will likely be lower this year as the past three years saw increased new machinery sales. The rising interest rates will also continue to pressure farmers' finances. Moreover, while the agricultural sector, specifically rain-fed areas, will likely perform well, the harvest could still be less than the 2021/22 season due to prospects of lower yields and reduced planted area. This lowers the farmers' financial muscle to spend on agricultural equipment.

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After solid activity in 20221, South Africa's agricultural machinery sales will likely soften this year. We outlined several reasons for this view in our previous update. For example, we think the possible replacement rate of older machinery will likely be lower this year as the past three years saw increased new machinery sales. The rising interest rates will also continue to pressure farmers' finances. Moreover, while the agricultural sector, specifically rain-fed areas, will likely perform well, the harvest could still be less than the 2021/22 season due to prospects of lower yields and reduced planted area. This lowers the farmers' financial muscle to spend on agricultural equipment.


The first month of this year's tractor sales already signals what we think will be a central theme for the year. January 2023 tractor sales amounted to 475 units, down by 16% from the corresponding month a year ago. Admittedly, one shouldn't conclude on one month's data point. Still, given the broad factors we note above, which will underpin the market conditions this year, we continue to see softening in the momentum of tractor sales in 2023.

Surprisingly, the combine harvester sales were firm, with 16 units sold in January 2023, from four in the same month a year ago. Broadly, our view of combine harvester sales is not different from tractors. The solid sales of January may be an exception, with much of the year likely to show muted sales, reflecting the challenging current operational conditions.


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