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Italian Agricultural Equipment Showing Strength

Despite the unprecedented difficulties posed by the Covid-19 pandemic which have curtailed global markets signicantly, 2020 has seen a very positive annual turnover for Italian-American agriculture equipment maker New Holland Agriculture, a brand of CNH Industrial group, selling close to one thousand units of equipment in South Africa during the last year.

“Over the last few years, we have seen one of the lowest ever points for the agricultural equipment market in South Africa” says Business Director of New Holland South Africa, Federico Bellotto, “but partly owing to a really good rainy season and an exemption from lockdown regulations for the agricultural sector, there has been a healthy demand for new equipment from the sector.”

One of the main subsectors showing vitality is that of citrus farming, resulting in an increased demand for New Holland’s speciality tractors designed specifically to navigate narrow orchards.  Bellotto explains that over the last decade, several farmers have converted their major production from potato farms into orchards -particularly for citrus- to better respond to the global demand from Europe, North America, and Russia for South African fruits.

Meanwhile, the two main reason’s for the depressed market for agricultural machinery since 2017 were the severe drought in South Africa and the uncertainty about land reform which has caused a certain level of reticence about investing in the sector. However other factors have acted in favour of the sector including the weakness of the rand which has boosted the appetite for South African exports. “Despite currency fluctuations, New Holland has tried very hard to keep prices stable for the local market” Bellotto notes.

The excellent rainy season boosted crop yields of both maize and soya beans and increased the demand especially for high-horsepower tractors from the cohort of about 15-thousand big commercial farmers around the country. “In general, 80 to 85% of the machinery traded in South Africa consists of rotation machinery for big commercial farms” says Bellotto.

However, over the last years, emerging farmers have been increasing their importance within the sector. This group of emerging farmers, who embrace mechanization to improve and speed up their business, represent a major opportunity to New Holland, Bellotto states.

Emerging farmers are interested in low or medium-horsepower tractors suited to medium-sized holdings, and they usually approach New Holland not only to buy innovative machinery but also for consultancy about mechanization in the agricultural sector.

Despite the uncertainty of land reform which affects the sector, the emerging segment of farmers has major potential for growth and evolution as a result of it and well orchestrated land reform may assist with the emergence of this level of farming.

It is unlikely that land reform would target commercially viable farms, given that much of South Africa’s land is underutilized, notes Bellotto.The arable land covers 16.7 million hectares with ony few million hectares highly fertile. Moreover, only 1.5 million hectares are irrigated since water availability represents the biggest challenge for South African farmers.

In spite of the pandemic, the modest improvements in the sector represent positive news not only for agricultural stakeholders but for the entire country which depends on Agri-food. Agricultural mechanization and innovation are key points for economic development and the future of food security.

This year New Holland Agriculture celebrates 125 years of operation! From its beginnings in a small town in Pennsylvania (1895), New Holland has grown to become a global brand, with a rich history marked by important innovations that have changed the face of agriculture. It was founded by agricultural pioneers whose vision lives on today in the values that drive our brand. These same values proved to be fundamental during the Coronavirus emergency, which have further highlighted the vital role of agriculture and farmers.

“New Holland has shown its commitment to South Africa and the continent as a whole. “Even though it is no walk in the park, Africa is the place to be” concludes Bellotto.

This Article was initially published in the Italian South African Chamber of Trade and Industries’ Annual Directory. Click here to see the full version of the publication.