Farm machinery production costs have risen by between 15% and 20% over the past year within a very frenetic marketplace.
As a consequence, some manufacturers have actually been ‘afraid’ to pass the full impact of these increases back down the line to farmer customers. But is the worst is yet to come? Probably.
Gregor Dietachmayr, a spokesperson for the Austrian machinery manufacturer Pottinger, told Agriland that he could not predict how production costs will be impacted over the coming months.
“All our costs are coming under increased pressure. Raw material and energy prices continue to strengthen,” he said.
“But in many ways, the costs of securing raw materials is not the issue; the real challenge is that of getting the actual component parts we need to meet our manufacturing needs.”
Rising farm machinery costs
The issue of rising machinery costs is putting more pressure on farm incomes in Northern Ireland.
Dietachmayr spoke at the recent launch of Pottinger’s new grassland machinery range in Austria.
“Waiting times are also an issue. For some products the time incurred between the placement of an order and its actual delivery on farm could be six months,” he explained.
“But in some cases the time lag could be up to a year.”
This sentiment has also been expressed by many machinery manufacturers in Ireland.
Dietachmayr confirmed that the last three years have thrown up unheard of challenges for farm machinery manufacturers.
“In started with Covid-19,” he said.
“In the post pandemic period raw material and energy costs started to increase, a trend that has gained much more momentum with the war in Ukraine.
“The upside for Pottinger is that we have a full order book at the present time,” he added.
Pottinger
The Austrian manufacturer is expected to confirm a 20% year-on-year increase in turnover at the end of its current accounting period ie., July 31.
“We have also secured significant growth across all our individual markets,” Dietachmayr further explained.
The last eight years have seen Pottinger developing new business opportunities in Russia. This was achieved on the back of the company establishing a strong presence on the ground in that country.
“It’s logistically impossible to service customers in Russia at the present time. We continue to pay the salaries of our staff in the country,” Dietachmayr commented.
“We also believe there are significant opportunities to develop strong business relationships in Ukraine.
“Not all of the country is affected by the war; we actually trialled some new equipment lines there back in the spring. Obviously, we want the war in Ukraine to come to an end as quickly as possible.”
Pottinger celebrated its 150th anniversary in 2021. It remains a family-owned business, with significant investment plans in place to facilitate its future growth.
Approximately 60% of the company’s output is grassland focused, making the Irish market particularly attractive for the business.
Pottinger recorded a turnover of €405 million for 2020/2021, an 11% increase on the previous year.
Just less than 90% of the company’s throughput is destined for export markets. It employs approximately 2,000 people.
