Low-price commodity markets and minimal investments are to blame for a decline in agricultural machinery sales in Europe, China and Brazil, according to information released at the EIMA FederUnacoma press conference in Bologna, Italy. The announcement was made prior to the kickoff of EIMA International 2016.
In the first nine months of this year, tractor sales were down by 6% in Europe, 29% in China, 17% in Brazil, 19% in Russia and 24% in Japan.
The United States was one of three countries reporting an increase in tractor sales. Sales in the U.S. grew by 3%. India and Turkey grew by 17% and 7%, respectively. However, the report noted a 22% decline in 100-horsepower tractors in the U.S.
WELCOME MESSAGE: Massimo Goldoni, president of FederUnacoma (Italian Agricultural Machinery Manufacturers Federation), addresses the media before the opening of EIMA International 2016.
Massimo Goldoni, president of FederUnacoma (Italian Agricultural Machinery Manufacturers Federation), noted the importance of emerging export markets. Italy exports 75% of its machinery production, according to the Italian manufacturers federation. In the past six years, countries at the cusp of agricultural mechanization, such as Vietnam, Ethiopia and Kenya, increased tractor imports by 400%, 250% and 240%, respectively. In 2015 alone, Cuba’s tractor imports increased by 800%.
In addition to tractors, other ag machinery and equipment exports to the Philippines and Cambodia increased by 190% and 210%, respectively, over the last six years.
The growth markets weren’t able to make up for the reduction in imports from Italy’s major markets: France, the U.S. and Germany. Overall, Italian ag machinery exports declined by 5.4%.
Although exports to emerging markets provide some opportunity, Italian machinery industry leaders keep their eye on major markets and crop prices. Similar to in the U.S., the focus is on harvest production reports.
Impact of record crop production and prices
Wheat production is projected to hit an all-time high this year, according to Goldoni. Increased wheat harvests in Australia, Canada, China and Kazakhstan will counterbalance the European Union’s reduced production. Rain impacted production in Germany, Denmark, Poland and Benelux, which includes Belgium, the Netherlands and Luxembourg.
Although cereal consumption is projected to be up, forecasts still indicate the highest ending wheat stocks in seven years.
Numbers stated in FederUnacoma’s report echo stats reported in the U.S. World corn production is expected to reach a new high: more than 1 million tons, despite crop reductions in drought-stricken areas in China and the EU.
Goldoni says low commodity prices and the “negative phase for agricultural equipment purchases” are expected to continue next year.
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