The past two years has been the most peculiar in my lifetime. It began with the Covid-19 pandemic in February 2020 and now, just when we are about to put the pandemic behind us, we find ourselves caught up with the Russian/Ukraine conflict. Unlike other world events, what makes these two events peculiar is that they have affected every individual on the planet. Covid-19 had a more social impact on our lives. It forced us to isolate, prevented us from travelling, we had to wear masks, all social events were cancelled and many of us ended up working from home. Never did I think that so many changes would happen so fast. Strange as it may seem, Covid-19 allowed many people to save like never before as there weren’t many outlets for them to spend their money.
The war in Ukraine has had the opposite effect. It abruptly ended the saving spree. The conflict has forced oil prices to go through the roof, which has increased the cost of deliveries and keeping sales reps on the road. The rate of inflation is at its highest in over twenty years, forcing central banks to increase interest rates. When you add to this the increased cost of commodities such as wheat, copper and aluminium, you have the perfect recipe for an economic u-turn. The cost of living has become very expensive forcing people to dip into their savings just to keep their heads above water.
With so little disposable income available I wonder how this will affect the domestic dealers around the country? There is already a supply shortage of machines, leading to lots of frustration among dealers (and customers). I am interested to see what the end of year sales figures for lawnmowers and garden equipment will be. The commercial sector that sells to the agricultural, horticultural and sportsturf industry may have a completely different set of figures for the same period.
As bad as it is, the Ukrainian conflict has brought out a lot of good in people. I was delighted to watch on YouTube the owner of Service Dealer Ireland, Duncan Murray-Clarke reveal how £4000 was raised to help the Red Cross and other charities involved with helping Ukrainian refugees. People and businesses can be very generous in times of difficulties.
Most of the tractor manufacturers have already released their Q1 results. Many have shown positive results along with company directors forecasting a similar trend to continue for the rest of the year. With healthy wheat prices in Europe, tractor manufacturing directors believe there is confidence in the tillage segment, leading, they believe, to strong levels of investment. However, recent figures from the Department of Agriculture, Food and the Marine (DAFM) showed that fertiliser sales were down by as much as 50% in February. The cost of fertiliser has sky rocketed since the Ukrainian conflict, putting pressure on farmers’ margins. It will be interesting to see how all this will pan out over the year. Will there be a sharp decline in machinery investment?
There might be a few false smiles on some company directors when the second quarter results will be published.
