Hanover, Germany – There's no worldwide recession going on here at Agritechnica 2009. One look around the massive exhibit halls loaded with gleaming new farm equipment and you would swear European farmers were on a roll.

Germany's Agritechnica, held here every other year, is the world's largest ag machinery show. It's bigger than the National Farm Machinery Show in Louisville, although to tell the truth, the two are apples and oranges when it comes to shows. With a focus on German and Italian engineering, this is definitely the thoroughbred of equipment shows. Years ago when I attended European farm shows, the focus was on small equipment. Today you'll see large-scale as well as small with sophisticated systems that make the euro-farmer want to reach for his wallet.

This year there are more than 2,300 exhibitors from 46 countries crammed into the exhibit halls here. More striking is the upbeat attitude among exhibitors and farmers I met.

"If you look at projections, next year will look a little more like 2007," says Jorg Huthmann, public relations director for Claas (exhibit shown left), the German-based equipment company and leading machinery maker for European farmers. "In 2008, with record prices, we all thought it would be skies-the-limit. Even though 2009 was down from that level, and 2010 will be a further downturn, European farmers say there is light at the end of the tunnel."

Recession crippled Eastern European and Russian equipment sales, causing a freefall of 70% in sales. He expects those figures to rise dramatically in the next two years, simply because farmers there are highly mechanized, using old machines that need to be replaced.

Farmer outlook: Upbeat Hans Gerhard Pfander (photo below), who grows sugar beet and wheat in Bavaria, Germany with his father, told me crop farmers are cautiously optimistic about 2010. His outlook proves how interconnected farmers in the U.S. and Europe are these days. To listen to him talk you'd think he was preparing a crop budget for the U.S. corn belt.

"Prices for wheat are still low, but we are expecting them to come up by February," he says. "We're watching oil prices now. Higher oil prices mean higher crop prices but also higher fuel and fertilizer prices.

"Fortunately we have prepaid for fertilizer in the summer, so we don't have that risk in our crop budget," he says. "Usually we buy 30 to 70% of our inputs like animal feed or fertilizer ahead of time."

 Recession has been a problem, but it hasn't caused a credit crunch for German farmers. "As long as we have a good relationship with our banker, and a good balance sheet, we'll be okay," he says. "If you can get a loan, money is very cheap right now. Interest rates in European banks are at record lows, but you have to have a good credit rating."

 "The main challenge for us is production costs, particularly those tied to fossil fuels, and land costs," he adds.

 European farmers who are doing well are those who provide bioenergy, through digesters using manure or crop silage to create gas that runs a generator. They get government subsidies for delivering energy to an energy grid or delivering heat to private housing and industry.

 More from Agritechnica next week.

(Be sure to join us for the Farm Futures Management Summit. Go to www.farmfutures.com/summit for details.)