British farmers are estimated to have spent of the order of £0.9 billion on farm equipment in the first 6 months of the year, a drop of more than 10% on a year earlier, says Chris Evans, economist of the AEA

Tractors are generally the best indicator of activity and 6,677 units of over 50 hp were registered between January and June, a decrease of 19.7% on the previous year. The average power has continued to move up, to 147.6 hp this year.

The next major sub-sector of the market is the combine harvester; sales have been at a much lower level in this seasonal year (September to August) and are projected to reach 760 units, down almost a third. This drop must be placed in the context of the preceding season being artificially high, driven by elevated grain prices plus tax incentives for major investments.

Another major sector in terms of machine value is the self-propelled forage harvester, sales of which are expected to reach 160 units; the poor early grass season has recovered a little with recent rains relieving a hot, dry stretch whilst cattle and sheep prices have been supportive, if volatile.

Many other machine types saw a, smaller, decline in deliveries as the first half progressed although a few categories such as ploughs, tined seeders, pasture toppers and bale wrappers were still showing a slight year-on-year increase by the end of June. Deliveries of small drills have also remained on a par with last year, although numbers of trailed units are well down, and round balers are only showing a marginal fall.

The first half year has been challenging both for farmers and their suppliers, with cash flows being critical. In contrast to some previous seasons, grain prices, whilst remaining high, have been insufficient to offset a lower output. The planted area, particularly of wheat, was badly affected by last autumn’s adverse conditions. The dairy and livestock side of farming suffered a large increase in their cost base over the difficult winter which generated caution but there has been some reporting from recent trade shows of an improving mood.

At first sight the performance of the agricultural machinery market looks disappointing but this is in relation to several very strong preceding years and some would argue that the current volumes are now at a more normal level. In 2012 the real strength of the market was in the early months with a more subdued second period and so the trade is not expecting to see a significant percentage decrease in the second half of this year compared to the same period last year, although 2013 as a whole will probably display a double digit percentage drop on 2012.