Tired of the City Pace, New Zealanders Are in a Tractor-Buying Frenzy
(Bloomberg) -- City folk opting for a change of lifestyle in rural New Zealand are contributing to unprecedented demand for tractors in the South Pacific nation.
Tractor sales surged 17 percent to 3,355 in the nine months through September and are on track to hit a record 4,500 by year-end, according to the New Zealand Tractor and Machinery Association. Its data show demand for the smaller engines favored by lifestyle block owners and small orchard operators is stronger than for more powerful machines.
Tractor dealers are welcoming the pick up after some lean years when weak commodity prices and a high New Zealand dollar curbed incomes and made farmers reluctant to replace or upgrade their equipment. An added bonus has been falling mortgage interest rates and a buoyant economy that has fanned demand for so-called lifestyle blocks -- small holdings where people tiring of the city rat-race can indulge their passion for growing crops or raising animals.
“If you don’t buy the right toys for it, it can turn into a hardship block,” said Kyle Baxter, a brand manager at tractor and machinery dealer CB Norwood Distributors. “So some people like spending that $15,000 or $20,000. It makes it quite enjoyable at the weekend when you’ve got a little tractor.”
New registrations for tractors using public roads are also surging, adding to signs that 2018 may be the best-ever for tractor dealers. They climbed to 1,121 in the third quarter, according to Statistics New Zealand, the highest for a three-month period since 1975.
The Tractor Association figures show a 14 percent increase in sales of tractors with less than 100 horsepower in the first nine months of the year. Sales in the 100-200 horsepower range jumped 21 percent but purchases of the most powerful tractors rose just 5.7 percent.
Better harvests and rising global prices have lifted earnings at kiwifruit and apple orchards, fanning demand for mid-sized tractors, said Baxter. The increased use of pesticide spraying has also seen owners and contractors upgrading to machines with an enclosed cab to meet health and safety concerns.
Tractor sales to pastoral dairy, sheep and beef farmers have been steady, he said. While meat returns have been rising, payments for milk have declined amid falling global dairy prices.
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