Declining investments in agricultural machinery but positivity in India

Massey Ferguson 3660 Jesster79 commonsThe data on sales of tractors in the world indicate a general downturn with declines in Europe, China, and Brazil, while India resumes its growth

The Ethiopian market is bucking the trend as the import rate from last year is up 117 per cent. However, the crisis in farm incomes, due to excess production and therefore the decline in the prices of major commodities, is at the root of the decline in machinery purchases. In the geography of the markets, new protagonists emerge, such as Vietnam, the Philippines and Cambodia.    

The tractors market will close 2016 with a decline in almost all major countries. The data prepared by Agrievolution, circulated in Bologna during the FederUnacoma press conference that anticipates the opening tomorrow morning of EIMA International, indicates during the first nine months of the year a decline in sales in Europe (-six per cent), in China (-29 per cent), Brazil (-17 per cent), Russia (-19 per cent) and Japan (-24 per cent). Few countries maintain positive indices; among them, India (+17 per cent, which offsets the substantial decline of 2015), and Turkey (+seven per cent). Slight increase in the US (+three per cent), although tractors with power exceeding 100 hp recorded a slump in sales (-22 per cent). At year end, India is expected to reach 600,000 tractors, China 400,000, the United States 200,000, and Europe 160,000. The drop in sales is due to the reduction in farm incomes caused by excess production of  key commodities and the subsequent collapse of their prices on the market, which leaves farmers with a smaller margin for investments.

The negative phase for agricultural equipment purchases is likely to continue also in 2017, and a recovery is only expected from 2018. The setback involves many of the major countries, but does not affect the positive trends seen in some emerging markets that represent, after the emergence of India, China, Brazil, and Turkey, the new frontier of agricultural mechanization. A survey sponsored by FederUancoma and carried out by Nomisma on the trend of tractor import highlights how, regardless of the economic situation of agriculture globally, the demand for mechanization proceeds apace in some new markets.

In the six years from 2010 to 2015, as shown at the conference by the Chairman of FederUnacoma Massimo Goldoni, the imports of tractors grew in 400 per cent in Vietnam (for a value of US$124 mn), 250 per cent in Ethiopia, and 240 per cent in Kenya. The most striking case is Cuba, which in 2015 alone saw an increase of imports by more than 800 per cent. As for other agricultural machinery and equipment, the Philippines and Cambodia are the countries with the highest growth rates of imports (respectively +190 per cent and +210 per cent in six years), followed by Vietnam and Ethiopia (+128per cent, and +117 per cent).

What we see is a new geography of the markets, said Chairman Goldoni, where the protagonists are no longer just the leading countries, but many new realities, a scenario that is also reflected in the EIMA exhibition, which has never before hosted operators from all over the world and includes "business-to-business" sessions dedicated to the Far East, Africa, and the new agricultures that develop in different areas of the world.

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