Whether it’s an 8-wheeled tractor, a loader wagon with self-sharpening knife grinders or an electronically-controlled diesel engine, Agritechnica 2010 lived up to its billing as the world’s largest showcase of agricultural equipment and technology.
Held November 8-14 in Hanover, Germany, the show filled 27 exhibit halls counted more than 2,300 exhibitors and 350,000 visitors from 81 countries. The international contingent of 77,000 was even bigger than 2007, the last time the show was held.
The mood at many exhibitor booths, while not as good as 2007, remained positive. A survey of several hundred exhibitors by show organizers confirmed the hopeful mood. Agritechnica’s organizers say 70% of farmers and contractors surveyed showed an “actual readiness” to invest in equipment during the next 2 years.
In the survey of 642 exhibitors near the show’s end, 88% assessed the prospects for the post-exhibition business positively. Nearly 55% expected very good or good prospects, while 33% expected satisfactory prospects.
But concern remains about the global recession, tightening credit conditions and precipitous drops in grain, beef and milk prices — all making it difficult for farmers to invest in new equipment. Exceptional harvests and global stockpiling of grain isn’t helping prices either.
Commodity Prices, Exchange Rate Dominate
Dr. Josef Schmidhuber, senior economist at the Food and Agricultural Organization of the United Nations, noted the drop in food price indexes in 2008, with stock-to-use ratios for cereal grains at historic lows. He expects the price dynamics for wheat to remain low in the near future, with a better outlook for corn that could see higher growth rates in 2010, along with an upward shift in oil prices that could loosen demand for ethanol production.
Alexander Korbut’s predictions are not very promising for the future development of grain prices. The vice president of the Russian Grain Union told show organizers that his home country will boost grain production by one third in the next 5 years. The jump would be made possible by the use of modern varieties and agricultural machinery, with weather influences taking a back seat. Korbut expects Russia’s export surplus to rise as high as 40-45 million tons by the year 2030, but storage capacities and transport logistics would first have to be expanded.
Russia continues to show promise as a new frontier for farm equipment makers, but the market in much of Eastern Europe has softened dramatically since 2008.
For European ag equipment manufacturers doing business in North America — or thinking about taking the plunge — the exchange rate between the euro and U.S. dollar remains a formidable obstacle. It was a constant topic of conversation among exhibitors throughout the show. Some companies, like Agrisem, are looking for a partner in North America to help with marketing, distributing or manufacturing in hopes of lowering the cost of doing business here.
Growth in Developing Countries
Hubertus Mühlhäuser, AGCO’s senior vice president for strategy and integration and general manager for Eastern Europe and Asia, noted that the financial crisis has further underscored the importance of the Chinese market. Unlike many parts of the West where demand for agri-machinery is stagnant or only slightly increasing, China has posted double-digit growth. As the pressure to improve farm yields and productivity increases, mechanization will no doubt point the way forward for the agricultural sector.
Mühlhäuser points out that although the current mechanization rate in China is hardly a fraction of that in Germany, the U.S. and Canada, there has been a dramatic increase in agri-machinery subsidies. The $2 billion doled out this year, triple the amount given last year, signals a positive development for all in the agri-machinery business, Mühlhäuser says of the machinery market. “We firmly believe the entire bar is going to rise even further and will significantly increase over the next year.”
A major story in agricultural equipment over the next two decades, Schmidhuber said, is the dynamic growth projected in developing countries. The transition from manual labor to machines is just starting in many of those countries, and he sees the most growth in farms in the African sub-Sahara.
By 2030, countries lagging behind in mechanization could benefit far more than developed countries from agricultural growth if energy prices are low.
“The developing countries will be calling the shots, not the fully developed ones,” he said. “The demand for mechanization is big. The big insecurity factor is gas prices.”
AGRITECHNICA 2010 — By the Numbers
Visitors: Over 350,000, up 3% over 2007, with 81 different countries represented. There were 273,000 German visitors, and 77,000 international visitors.
Who attended: The largest contingents of international visitors came from the Netherlands, Switzerland, Austria, the United Kingdom, Denmark, Ireland, France and Italy. The numbers from Central
and Eastern Europe remained consistent at 13,000. Most of the visitors from this region hailed from Poland, the Czech Republic, Russia and the Ukraine. Some 3,600 were from North America, and there was a noticeable rise in visitors from Spain, Brazil and India.
About 55% of visitors to Agritechnica are business farmers. Almost 30,000 machinery dealers and distributors and their staff came to Hanover, as well as 26,000 from the machinery manufacturing and supply industries. Some 23,000 farm contractors from home and abroad attended the event.
Exhibitors: More than 2,300 from 46 countries — up 7% from 2007.