Machinery industry in a state of flux

Machinery industry in a state of flux

Machinery
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There's worry of a widening gap in trade prices as dealers become reluctant to pay top dollar for used equipment they might not sell in an uncertain market.

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THE farm mechanisation industry, world-wide, is firmly in a state of flux as the COVID-19 pandemic tightens the screws.

While our city cousins are seeing a light at the end of the tunnel - following Prime Minister Scott Morrison's three-stage 'road to recovery' statement last week - the tunnel for availability of tools to make the food for those cousins, remains dark.

Major global manufacturers have all withdrawn their market outlooks for 2020 because of the uncertainty caused by COVID-19 and this has further consolidated the view of market analysts that there will be a major supply problem of new equipment in 2021.

It is based on a glass half-full approach that manufacturing may be up and running by July.

But it does not include any predictions of when supply chains will be in working order.

So for a country like Australia, which is a low priority market for the majors, nobody is prepared to pull the proverbial crystal ball out of the desk drawer.

What Torque discovered this week, in conversations with machinery dealers, is a worry of a widening gap in trade prices as dealers become reluctant to pay top dollar for used equipment they might not sell in an uncertain market.

Some dealers also have said supply of new hay gear for this year may not happen and farmers who already have ordered may not see equipment arrive in time.

The exception is tractors, which for some reason have become hot items throughout Australia.

A glance through Farm Weekly's classified section tells the story for Western Australia with most major dealers holding more new and used self-propelled boomsprayers and used headers than four-wheel drive and front wheel-assist tractors.

For WA farmers, rain will be the decisive factor to stimulate them into buying.

If 20 millimetres of rain fell over the next two to three weeks, dealers are expecting a buying frenzy by June 30.

"The only problem is we probably won't have what farmers want to physically be on their property by June 30," one dealer said, referencing Federal government taxation incentives.

As is often the case in this industry, when new equipment is in scarce supply, there inevitably is a surplus of used inventory and this is the case now.

But a lot of the good low hour equipment already has been snapped up.

And used hay gear is in short supply.

Torque has said it before, if you're uncertain about what you want to do in this environment, talk with your local machinery dealer.

You'll probably be surprised at what that can achieve.

And if it doesn't rain?

The supply problem for 2021 will be a moot point.

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