Inflation, erratic rains dampen farmers’ spending

08 Dec, 2019 - 00:12 0 Views
Inflation, erratic rains dampen farmers’ spending

The Sunday Mail

Business Reporter

Increasing prices and erratic rains experienced in the last and probably this coming season, continue to impact spending by farmers, according to a trading update released by Zimplow last week.

The ZSE-listed group, which sells and services agricultural implements and machinery, released its trading update for the three months to September 30, 2019.

Experts point out that farmers are prudent about spending capital until there is more certainty about the coming of the rains.

Initially, weather forecasters said the country was expected to receive normal to above normal rains, but that is contrary to what is happening now with the country experiencing poor rainfall.

This, coupled with the high cost of farming inputs and implements, has left farmers in quandary.

All that feeds through to impact the performance of agro-based companies like Zimplow.

At Mealie Brand, a Zimplow subsidiary, which manufactures and distributes animal-drawn agricultural implements, hoes and other related steel products, demand was 63 percent down to the 2018 comparative period.

Given general inflation pressures, farmers have less disposable income, resulting in them spending less on capital equipment.

Volumes were also down at the other subsidiary — Farmec, which distributes tractors, combine harvesters and other farming equipment.

Farmec’s performance adjusted to the general economic climate as tractor sales volumes declined 45 percent for the nine months compared to the same period last year, said Zimplow.

“The 2018/19 drought and the poor tobacco price yield impacted Farmec’s after-sales support as parts pieces sold dropped by 31 percent whilst service hours were 24 percent down for the nine-month year to date.”

As part of growing its income streams the company is looking to regional markets with export implement sales growing by 307 percent “helping to ameliorate the drop in local demand of implements”.

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