AS wheat farmers are becoming independent grain traders following the demise of the single desk, the machinery industry is seeing the effects of these changes reflected in purchasing patterns.
Tractor and Machinery Association (TMA) of Australia executive director Richard Lewis said the end of the single desk has led to big changes in the way wheat farmers sell their product.
"As they become proficient grain traders and marketers in their own right, their investment in on-farm storage over recent years has put them in the driver’s seat when it comes to deciding when to sell," he said.
"This year, reports say, there is a real reluctance to sell while prices remain low. A large percentage of the harvest is still being held on-farm or in grain handler storage."
Mr Lewis said this changing scene is having a big influence on the purchase patterns of big ticket items, especially combine harvesters - and the emerging new order is posing something of a challenge for both manufacturers and dealers.
"There used to be a rhythm to the year. The first payment for each pool was a large lump of the forecast price and it was made them pretty well straight after harvest," he said.
"There was a dump of cash into farmers’ pockets early in the year.
"That's when they thought about ordering a new header for the following harvest. The machinery industry knew the ordering season would be on and had their programs in place.
"This encouraged forward ordering and helped with production planning.
"Nowadays cash flow is more evenly spread. The row of silos out the back is almost like an on-farm ATM - they just sell off a few loads whenever they need some cash," he said.
"Apart from changing cash flow patterns, there’s also less certainty about the final value of a harvest and that's also leading to a delay in big purchase decisions.
"It's becoming a balancing act for dealers and importers. How much stock do you hold in the expectation of orders later in the year?
"This gear has a long lead time. If you don't have some inventory on hand, it's very likely that you’ll miss out on sales - and farmers will miss out on new equipment for harvest.
"But bringing in a lot of units without forward orders also has its dangers," he said.
"Holding costs soon mount up if predicted sales don't occur."
Alan Kirsten of Agriview, who has been analysing TMA sales figures for many years, said the buying patterns are definitely becoming more spread out.
"The wheat marketing changes have had an effect. It's still shaking out and the next couple of years will give us a clearer picture. However, I think the industry will have to adjust to more second-half ordering activity.
"The trend is showing up with combine harvesters but I expect to see deferred ordering also for other big ticket items, including tillage gear. The second half could be good for these categories.
"We never used to think of tillage gear as a big ticket item, but a wide planter and large capacity air seeder can now run to half a million dollars.
"It's with these expensive purchases that farmers are adopting a wait-and-see attitude," Mr Kirsten said.
Another outcome of the death of the single desk had been a change in the way machinery is financed Mr Lewis said.
"A header was usually financed on annual after harvest payments but that's no longer the norm.
"Repayments now tend to be more frequent to match cash flows from grain."
Mr Kirsten said tractor sales had continued to hold up well in May following a very positive start to the year. The high horsepower category was still the standout with especially strong sales in Western Australia.