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Market analysis
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More than 15,700 tractors have been sold in Australia in the past 12 months as the Instant Asset Write-Off Scheme comes to an end
Gary Northover is executive director of the Tractor & Machinery Association of Australia (TMA). He can be contacted on (03) 9813 8011 or at gary@tma.asn.au Sales of agricultural tractors continued their strong run in May, with an 18 per cent rise on the same month last year. The last 12 months have now seen in excess of 15,700 tractors sold in this country, which is 37 per cent ahead of the previous 12-month period. The strength of the market continues to surprise many as the challenges being experienced with supply combined with the continuation of the extraordinary demand would suggest that these numbers remain beyond expectations. Many in the industry see the upcoming June/July period as likely to see a testing time as the federal government’s Instant Asset Write-Off Scheme comes to an end, even though it is to be continued for a further two years in the form of the Temporary Full Expensing program. A major contributor to the supply challenges being experienced has been the creation of bottlenecks in Australian ports. We have been in discussion with the federal minister David Littleproud on this matter and have been advised that a range of pilot projects is to be established in conjunction with importers, with the aim of reducing red tape and improving productivity whilst maintaining biosecurity standards. We will monitor these projects with interest as they unfold. All states reported strong activity with Victoria reporting an increase of six per cent on May last year, now sitting 32 per cent ahead for the year to date (YTD); Queensland was up 19 per cent to be 35 per cent up YTD and NSW was again up, 30 per cent on the same time last year and now 78 per cent for the YTD. Western Australian sales picked up another 13 per cent to be 48 per cent ahead for the year, sales in South Australia reported a 34 per cent increase for the month and, finally, Tasmania finished the month five per cent behind. All performance reporting categories enjoyed rises again this month with the under-40 horsepower (30kW) range up 22 per cent for the month to be 47 per cent ahead YTD. The 40 to 100hp (30–75kW) range was again up strongly 28 per cent in the month (50 per cent YTD), the 100 to 200hp (75–150kW) category was up 5 per cent (29 per cent YTD). The large 200hp (150kW) plus range had another strong rise up 21 per cent and is now 60 per cent ahead for the year. Sales of combine harvesters are yet to get going, however dealers continue to report a healthy level of enquiry. Baler sales dipped again for the month but are still up 33 per cent on an annualised basis and sales of out-front mowers were steady and remained 33 per cent ahead of the same time last year. The Australian Competition and Consumer Commission (ACCC) released its report on the agricultural machinery market this month, which contained a number of key recommendations concerning warranties, right to repair and use of data. The TMA is yet to formally respond to these recommendations but will continue to work with all stakeholders to ensure that appropriate outcomes are achieved for the industry. We are fortunate to have Mick Keogh, deputy chairman of the ACCC, scheduled to speak at the upcoming TMA Conference to be held once again this year in Melbourne at the Hyatt Essendon Fields on Tuesday July 20, which will be a great opportunity to further explore the findings.
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Farmers wanting to hire third-party machinery repairers are facing major challenges, two government-commissioned reports have found, with one calling for legislative change
Above: The Australian government’s Productivity Commission has issued draft recommendations to protect consumers’ right to repair their own machinery
Australian consumers’ right to repair their own farm machinery, among other technologies, is under fire, according to a new report from the Australian government’s Productivity Commission (PC). A preliminary draft report released last month outlines the growing number of barriers facing consumers and their right to repair products and equipment. The commission also issued several draft recommendations, including calling on the Australian Competition and Consumer Commission (ACCC) to establish benchmarks for the durability of products, among other proposals and amendments to current legislation. It must be noted, the PC won’t formalise those recommendations until the submission of the final report to parliament in October 2021, following further consultations and public hearings. PC Commissioner Julie Abramson says farm equipment and machinery accounted for a significant portion of right to repair claims the Commission has so far considered. “There appears to be particular problems in markets for agricultural machinery… and we are seeking further information on this,” says Abramson.
FARMERS BEAR THE BRUNT
In relation to agricultural machinery, the commission outlined a growing number of barriers facing consumers, including limited competition in repair markets for farm equipment and issues with warranties, including them becoming void should consumers use an unauthorised repairer. In Australia, the right to repair refers to the consumer’s ability to have their products repaired at a competitive price and using a repairer of their choice. The term is governed under several policies, including consumer and competition law, intellectual property protections, production design and labelling standards and environmental and resource management. Several inquiry participants highlighted concerns relating to original equipment manufacturers (OEM), who are using their position in the repairs market to impede independent repairers from accessing parts, information and equipment. The commission’s analysis determined that current restrictions on third-party repairers by OEMs could be the largest cause of harm to farmers given the ‘reasonably large’ repair and maintenance market – the estimated value was $720 million in 2018 – and the incentives by OEMs in the market to increase repair prices without consistent market competitiveness. Impediments in the agricultural machinery space were especially common in regard to tools and equipment, where access to diagnostic software tools was outlined as a primary barrier. It was confirmed by the National Farmers Federation (NFF) that most agricultural machinery OEMs do not make diagnostic software available to anyone apart from their authorised technicians. As a result, the commission recommended the Australian government re-evaluate the Repair Information Sharing Scheme, which is designed to improved access to repair information following three years of operation. The draft report, however, did call for further evidence on thirdparty repair supplies and information given the current barriers for independent repairers were “patchy and largely anecdotal”; and referenced the infrequently-used Part IV of the Competition and Consumer Act 2010, which addresses anti-competitive behaviour in repair markets. Canegrowers Herbert River manager Frank Scardamaglia, who was one of many to produce an initial submission for the PC’s draft report, says farmers are becoming concerned about their limited access to repair agents outside of dealerships. “Manufacturers have only provided dealerships with the appropriate software to diagnose faults or perform software upgrades on the machine,” he says. “This creates a lack of competition as independent repairers are unable to access software and drives up the cost of repairs and call outs. The hourly rate charged at dealerships for repairs can range from $130 to $160 per hour, including travel time. “Farmers are operating businesses with high operational costs and machinery costs are in the top three expenses. We would like to see a more even playing field to allow farmers to have a broader range of repair agents available and create competition.”
LEGISLATIVE CHANGE
The draft report also recommended that the government amend the Competition and Consumer Regulations Act 2010 to require manufacturers to update their warranties with further information. Specifically, the proposed change would include text, placed “in a prominent position”, stating that entitlements to consumer guarantees do not require consumers to use authorised repair services or spare parts. In some instances, OEMs’ state warranties will become void should consumers not use an authorised repairer; a ploy
to discourage them from using independent or third-party repairers. Again, participants of the review indicated concerns of voiding warranty on farm machinery further restricted market competitiveness within the repair market, restricting consumers from seeking independent repairs. Under the amendment to the law, warranties would be made clearer, ensuring that even if consumers use independent repairers, the legal rights of the warranty will not be voided. A ban on voiding warranties for consumers who don’t use OEM repairers is also being considered by the commission. The findings of the PC’s draft report follow similar findings made by the ACCC earlier in the year in the competition regulator’s agricultural machinery market study, which called for more independent competition in repair markets and changes to warranties in the agricultural machinery space. The ACCC’s review recommended that agricultural machinery should be considered for future inclusion in the motor vehicle service and repair information sharing scheme, notably in relation to how the scheme grants access to software and technical information. It also recommends that agricultural machinery be included in any broader ‘right to repair’ scheme introduced in Australia, given future legislation could include requirements for OEMs to grant access to software, have a sufficient supply of parts available in Australia and provide consumers with information about how the duration of software is supported. “Competition in after-sales markets would be improved if independent repairers had access to software, tools and parts on fair and reasonable commercial terms. This is an important issue that runs across a number of industries, both in Australia and overseas,” says ACCC deputy chair, Mick Keogh. However, the ACCC’s review and recommendation does not specifically call upon the government to act or make any legislative changes in order to compel OEMs into facilitating consumers’ right to repair. The Productivity Commission is set to hand down its final report to the federal government by October 29.
Above: The ACCC says farm machinery should be included in ‘right to repair’ schemes
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