While one trigger for adopting a re-investment strategy almost certainly will be the Federal Government’s recently announced Business Investment Allowance, there’s also worrying news about machinery prices being ramped up during the course of the year.

International machinery manufacturers are always reluctant to pass on the price of their raw materials, fearing they will lose market share to the opposition.

But the truth of the matter is the downward spiral of the Australian dollar.

While good for farming’s key commodity exports, the A$ is forcing importers of farm machinery industry to re-write their price tags – upwards.

Some idea of the pressures they are under, was recently detailed by PFG Australia’s chief executive, Geoff Maber who has first-hand knowledge of the situation based on importing products like McCormick and Landini tractors from Europe and Buhler from Russia.

“During 2008 every manufacturer in Europe, also the world, will have had a minimum 10 percent rise in tractor manufacturing costs,” he said.

“Late last year tyres were up between 30 to 50 percent, also batteries, radiators, glass and steel went up too.

“These cost increases have not yet been passed on to the market place,” Mr Maber said.

PFG Australia says farmers probably have experienced price hikes in the order of between three and five percent on equipment already purchased during the early part of 2009.

Part of the reason for the new round of cost increases in the pipeline also relate to freight bills which have more than doubled in recent times, according to Mr Maber.

But the focus on Europe looks to be as nothing compared to the likely cost increases of equipment from North America (likely to be in the order of 20 percent) and, more specifically, Japan where exchange rate fluctuations could see more than 40 percent added to the price of product sourced from that country.