Global Agricultural Machinery Sales are Strong

The Association of Equipment Manufacturers is reporting strong agricultural machinery equipment sales for 2012 as well as strong sales prospects for the coming year. This is due to current high commodity prices and increased production trends in both developed and developing countries. There were especially strong sales globally in tractors larger than 100 horsepower.

Global tractor sales were running ten percent higher than a year earlier through October of this year. Combine sales had fallen by eight percent, however, presumably due to higher sales of combines during the past three years. The volume of agricultural machinery production this year is expected to total $110 billion, with expected growth of five percent next year.

A press release earlier this year reported that global demand for agricultural equipment is expected to increase 6.7 percent per year through 2016 when it will reach $173.5 billion, and that the growth will be driven primarily through sales gains in China, Brazil, and India. Other markets in Thailand, Indonesia, and Argentina will also do well.

Thirty percent of all agricultural machinery sales were for farm tractors in 2011. It is expected that plowing and cultivating machinery will be the fastest growing product division from 2011 to 2016, expanding 9.1 percent per year as farmers in developing nations purchase larger and more complex tilling equipment.

In 2011, the Asia/Pacific area showed twice as much agricultural machinery demand compared to any other region.

It is also expected that efficiency gains provided by newer and more technologically sophisticated equipment will drive new sales.

Last year, the United States produced more farm machinery than China, with $23.1 billion in shipments. It is predicted that in 2016, however, China will overtake this U.S. market with industry shipments more than 70 percent larger than the U.S. The manufacturing of equipment is also expected to grow rapidly in Brazil and India.

Germany and France have experienced records levels of machinery sales this year. The previous record sales year for the European Union was 2008, and 2012 is ending up comparable.

One region that did have strong growth in combine sales this year was Brazil.

In China and India, government subsidies to encourage mechanization of agriculture have boosted sales. In China, the sales growth of agricultural machinery was up 17 percent for the first seven months of 2012. India saw a 25 percent growth in sales in 2011, and this year a growth rate of 10 percent is anticipated.

According to Rosagromash, Russia saw the largest tractor sales growth in its 2-wheel-drive tractors greater than 100 horsepower, a sector which grew 62 percent through October this year.

Canada saw 15 percent growth in 2-wheel-drive tractors greater than 100 horsepower year-to-date through November, and 18 percent growth in its 4-wheel-drive models. In the U.S., these two segments of the market also saw the strongest sales growth momentum at 15 percent and 13 percent, respectively.

Claas of Germany, the fifth largest agricultural machinery maker, reported strong sales numbers earlier this week — up four percent from the previous year. They invested in production facilities in France, Russia, India and Hungary this past year as they see enormous growth potential in Asia and eastern Europe.

In November, the world’s largest equipment maker, Deere, issued a quarterly report showing that its world-wide sales had increased 14 percent. Deere also announced that it is proceeding with building new factories in China, India, and Brazil. Their sales for the year were up 13 percent. They have recently laid off some workers, however, due to a reduced demand in combines.

Photo credit: Claas

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