Information on the mechanization of agriculture, gardening, components and multifunctionality.
Markets

Tractors, the market resumes in South Africa

The South African agricultural machinery market comes back to life, after the standstill caused by the drought of 2016, the worst of the last thirty years. In 2018, tractor sales increased by 3.9%, while those for combine harvesters remained stable. 80% of the machines absorbed by the internal market are imported

by Giovanni M. Losavio
January - February 2019 | Back

It is still too early to say whether the South African agricultural machinery market has left behind the turmoil of the past few months, but encouraging signs are coming from Pretoria. Compared to 2017, 2018 marked a slight increase in tractor sales (+3.9%, for a total of 6,714 units), while combine harvester sales (198 machines) held steady at the levels of the previous year (195 vehicles). Of course, the sector is still far from the big numbers of 2014, when the sales involved 7,466 tractors and 347 combine harvesters, but the crisis of 2015-2016 now seems to be behind us. Moreover, according to SAAMA (South African Agricultural Machinery Association), the association that brings together the South African manufacturers of agricultural machinery, the next twelve months should not see any significant deviations from the trends of the year that just ended. Hence a stable market, although much will depend on the weather conditions.

A fragile agricultural system

The heavy crisis experienced by the sector in 2015-2016, when the decline in sales (compared to 2015) involved a total of more than 1,600 tractors and 162 combine harvesters, was caused by the worst drought in the last thirty years. In an already fragile country - 90% of the territory is arid or semi-arid - the prolonged lack of precipitation set off a production crisis (the surface area dedicated to corn crops fell by a quarter) and caused a fall in agricultural income, with a consequent contraction in spending capacity. “In South Africa - the ICE Agency writes in this regard - agricultural production is subject to high volatility due to the sector’s dependence on foreign markets and weather conditions that may prove inclement”. The climate emergency is so serious that it gave Nick Sloane, an expert in marine salvage who participated in the Costa Concordia recovery, a decidedly unconventional idea: towing an Iceberg down to the South African coastlines and using it to replenish Cape Town’s water reserves. It is hard to say if the feat can succeed. What is certain, as the ICE Agency puts it, is that the water problem represents a structural limit to the growth of production in a sector where currently about two thirds of the land is exploited for pasture. In fact, on an overall agricultural area estimated by FAO at about 100 million hectares, arable land occupies only 12.5 million hectares and only 1.5 million of these are irrigated. In short, South Africa’s primary sector is fragile, particularly exposed to the changing and uncertain weather trends of recent years. Yet it plays a major role in the country’s economy. Not so much as a share of agricultural GDP (2.6%) - explains the ICE Agency - but as the reservoir of a lively processing industry, which alone accounts for 25% of manufacturing GDP. South African agriculture stands out for a high level of competitiveness on international markets, where viticulture, citrus and fruit make an important contribution to Pretoria’s exports (the share of agricultural exports increased from 4.6% in 2013 to 5.4% of 2016). However, animal husbandry and grain production (mainly corn and wheat) are mainly intended for the internal market.

Agricultural machinery, a market that depends on foreign countries

The competitiveness of the South African primary sector is also explained by a strong concentration of agricultural property, which benefited production efficiency, economies of scale, investments in machinery and technologies for agriculture. The overwhelming majority of production - 95%, according to the ICE Agency - comes from a “core” of 40 thousand farms with an average surface area of 2 thousand hectares (in Italy in 2013 the average area was 8.4 hectares) characterized by high productivity. These are coupled with 200 thousand small businesses operating in marginal areas, situated in complex situations with scarce access to water resources. Finally, there is subsistence agriculture, practiced by three million families, a significant number, especially if compared to the total population (56 million). In this scenario, mechanization is the prerogative especially of the block of larger farms, i.e. those whose size and income can sustain and amortize the cost of mechanization over time. According to the assessments of the website Opendataforafrica, the tractor fleet is composed of approximately 70 thousand vehicles (in use). This is a significant number for Africa, since South Africa, together with Nigeria, represents 70% of the entire continent’s tractors. The estimate of Opendataforafrica refers to 2008, but in the last 10 years, as also indicated by the average density of machines per square kilometre of arable land (0.43 vehicles), it does not seem to have diverged much from these values. For example, for 2010, local press sources speak of just under 69 thousand tractors with an average power just under 100 horsepower. As the ICE Agency explains in the report entitled “Agriculture and mechanization in South Africa”, it is mainly imported machines: 80% of the tractors and applications, especially the most technologically advanced ones, is produced abroad. The local manufacturers still have a residual market share, mainly referring to segments with low technology content or to machines designed according to the specific conditions and production needs of the country. Pretoria’s imports mainly concern tractors, spare parts, combine harvesters, cleaners, soil tillage applications, harvesters and sprayers. “The origin of the machinery - the ICE Agency writes on the matter - reflects the prevailing agricultural vocation: Made in USA is more widespread where extensive grain crops dominate, while the use of Italian and European machines is denser where there is more extensive agriculture.” Europe and the US alone account for 70% of the agricultural machinery imported into South Africa.

Tractors, spare parts, irrigation: Italian brands dominate. After the sharp decline in 2016 caused by the drought, imports of agricultural machinery returned to full steam in 2017, reaching a value of approximately 606 million dollars. The US manufacturers won first place as the main suppliers of technologies for agriculture, immediately ahead of Germany. Italian exports reached a very respectable position, as third supplier to Pretoria, with a total value just over 61 million dollars, higher than 2015 and the “terrible” 2016. The Made in Italy is driven above all by tractors which, with a market share of 14%, represent more than half of the value of our exports of agricultural technologies to South Africa. The figure, observes the ICE Agency, is still far from the record of 2012 (69.2 million), but it is recovering compared to the decline recorded in the two-year period of 2015 and 2016. Right behind the tractors, we find spare parts (7.8% of total exports to South Africa), irrigation technologies (4.1%) and sprayers (4%). Combine harvesters also performed well, and even though they have a residual weight on our interchange, they still grew compared to 2016. Soil processing equipment saw a slight setback, while in the case of machines for processing feeds and harvesters the decline was more substantial. However, the latter is a sector with little impact on the dynamics of our exports to South Africa.  

THE MOST READ of the latest edition