Growth of machinery sales comes off the gas

The enthusiasm for ordering new farm machinery would appear to be levelling off after a surge last spring, according to the latest market barometer published by CEMA – the European Agricultural Machinery Association.

After peaking in May and June at its highest level since 2008, the General Business Climate index declined by four points in July to 68 (on a scale of -100 to +100).

A strong market continues

Current business continues to proceed on a very positive note, it was even evaluated slightly better than in the past two months, but less companies are expecting to enjoy further turnover growth during the next six months.

One indicator which does not feed into the General Business Climate Index is the expectation of new orders, i.e. how much companies hope to sell rather than what is already in the order book.

Machinery sales even off
The market remains positive despite supply chain shortages

Here, the shift was even more pronounced – the share of survey respondents expecting an increase in orders dropped to less than a third, the lowest level this year.

Component shortage

Another uncertainty which is of growing concern to manufacturers is whether they can actually fulfil the incoming orders.

The industry is still suffering shortages of both components and raw materials.

More than 90% of the companies participating in the survey complained about supply bottlenecks affecting production.

36% of the tractor factories which responded to the survey are expecting production to grind to a halt due to a lack of certain parts in the coming month.

Price hikes affecting all machinery

One problem that appears to be getting worse is the extreme price increases being experienced in all stages of the supply chain.

One importer recently revealed to Agriland that container shipping prices from China had multiplied by a factor of at least five over the past year or so.

The latest set of challenges facing the European industry do not appear to have affected overall morale as most remain confident of closing the year with strong results.

A 12% increase in turnover is the average forecast for 2021.