Farm Tractor and Machinery Trade Association (FTMTA) executive director Michael Farrelly says that the price of machinery may soon increase due to the effect of the energy crisis. Sales within the machinery industry are currently performing well largely because many dealers had put in orders in advance. The timing of the effects of increasing input costs are unknown at this stage, however Farrelly says that resulting price rises are unavoidable in an energy and fuel-heavy industry.
“When it comes to machinery, energy is used in everything. There’s rubber on the wheels, the process of vulcanisation for tyres uses huge amounts of it,” the FTMTA executive director states. “In a factory, you’re transporting in your raw materials and you’re transporting out your finished product and that’s all fuel costs. Then, if you want to brand any machinery, you’re turning on ovens to bake paint,” he claims.
Addressing concerns around the long-term effects of the input cost increases, Farrelly says that it is difficult to predict what is going to happen despite sales in the industry remaining stable for now. He adds that manufacturers are trying to deal with increasing costs in raw materials and speculates that the drop in demand will not fall too dramatically due to the increase in commodities such as the current price being paid for milk.
Agricultural contractors make up a significant portion of the market for the machinery industry and within the contractor’s business, a large number of their customers are in the dairy sector, he explained.