With Brexit, weak currency and increasing mechanisation, it is an important time for machinery dealers in Scotland. “After two difficult years we have seen an improvement in 2017. The biggest growth area has been cereal farmers as there has been a slight confidence in the grain market. Interestingly, we have a real split, with far higher sales south of Aberdeen in our Angus, Perth and Fife sites compared with sales further north. I have never seen a split like this so stark before,” managing director of Sellars, Neil Wattie, told Farmers Journal Scotland.

The weak pound is increasing the cost of importing farm machinery from the continent but also opening up opportunities for Scottish machinery dealers to export equipment into Europe.

“Since Brexit and the fall in currency we have seen a real growth in exports of secondhand tractors and combines out of the UK, mainly to Eastern Europe. These have been machines over four years old. Arguably dealers were keeping too much secondhand stock.”

Margins are tight on farms as the payment fiasco and increased costs put pressure on farmers’ cashflow. This in turn is challenging businesses which rely on profitable farms buying their goods.

Credit control

“We have had to put more effort into credit control. It is not a problem but you can’t let it get out of control,” Wattie said.

Machinery dealers employ significant numbers of people across Scotland. Managing staff and recruiting top talent is vital to the business.

“My biggest challenge is recruitment and retention of staff. It is particularly hard to get agricultural engineers. The pressure has come off with falling competition from the oil industry since the downturn but not massively.”

Buying new machinery

James Henderson, sales manager at Sheriff’s dealership in the Borders, believes spreading the cost of machinery over more acres appears to be the best way to finance new equipment. “The key seems to be scale when it comes to buying equipment, with farmers buying machines to cover a lot of ground. The man with 80 cows and 500 sheep is finding it difficult to justify significant amounts of equipment,” Henderson, said.

With the price of tractors rising, the ways farmers are buying machines is changing too.

“It is very unusual for us to get a cheque for machinery worth over £25,000, with the vast majority using hire purchase options. Ten years ago that amount almost bought a tractor.

“Farmers who bought a £50,000 150hp tractor a few years ago are finding they need to find the same cash again and trade their old one in to get a new machine.

“Last November many manufacturers put their prices up, with the highest rise around 11-12%. I don’t believe this is all down to exchange rate.”

Dairy optimism

The positive milk prices at the moment are increasing optimism in the southwest of Scotland. David Lamond, sales manager at Gordons Dumfries, said: “There is a little bit of optimism in the sector here. Dairy farms have come back to life with the improved prices. Some are buying tractors right now. If you suggested this 12 months ago they would have laughed at you. There are even some beef units switching to dairy.”