December 12, 2012 — Overall, the global agricultural machinery industry remains positive; worldwide production volume is expected to increase to $110 billion (€ 86 billion) by year-end 2012 and could grow by another 5% in 2013, according to reports from the Agrievolution Economic Committee, a gathering of the world’s largest agricultural machinery associations.

The North American-based Association of Equipment Manufacturers (AEM) participates in the committee, which promotes the international exchange of agricultural machinery market information for greater market transparency of agricultural modernization requirements on an economic basis.

The German VDMA Agricultural Machinery Association is secretariat of the committee, which held its 2012 annual meeting at the trade fair Agrosalon in Moscow, Russia, in late fall. AEM is secretariat of the parent Agrievolution Alliance.  

During the meeting, Charlie O’Brien, AEM vice president and agriculture sector leader, noted that in the United States, the Midwestern drought was a major challenge for farmers this year. However, with insurance payments substantially covering harvest losses, only a slight negative influence on machinery demand was expected. AEM produces a monthly tractor and combine retail sales report.  By October 2012, total tractor sales were 10% above a year earlier. The combine sector has recorded a deficit in the 8% range after three years that have been characterized by very high sales figures (2009 - 2011).

Here’s a look at non-U.S. markets, from the report. Reasons for overall positive global expectations included increased purchasing power of farmers worldwide due to strong commodity prices, and a trend in both developed and emerging nations to increase yield with newer equipment technologies and innovations.

For the European Union overall, 2012 market volume for agricultural machinery is expected to be comparable with the last record year 2008. The level is expected to remain high in 2013; however, there is the possibility of a small sales reduction. Italy reports sales declines of 17% by end of September 2012 compared to 2011 with higher exports offsetting a slower domestic market. Germany and France, the two largest agricultural machinery markets in Europe, have been in a remarkable boom phase, with higher producer prices pushing new machinery investments to a record level. In France, the tractor market is expected to grow by nearly 10% for 2012. For Germany, planned investments overall for the coming six months remain at the level of the year before. In individual market segments, however, the demand might decrease.

Japan: The overall market for 2012 is expected to grow by 9% for machines and 2% for tractors, followed by additional growth of 2% in 2013.

Brazil: Significant growth is expected in the medium run, with Brazil’s 5 million farms representing a large part of global agricultural production. By September 2012, the domestic market was stable for tractors and grew considerably for combines. Market volume growth of 10% is expected for 2013.

China: The agricultural machinery sector has grown very significantly in recent years, helped by government subsidies to induce greater mechanization. Sales growth reached 17% for the first seven months of 2012. For tractors, however, growth was limited to the above-100HP segment. For 2013, growth is expected of slightly below 10%.

India : After 25% growth in market volume for agricultural machines in 2011, a 10% increase is expected for 2012. Government subsidy programs are cited as a stimulus factor.

Russia: While deliveries to dealers during the first eight months of 2012 decreased by an average of approximately 10%, the entire market has remained stable or even grew in some segments as compared with 2011. For 2013, market growth up to 8% is expected for the Russian Federation.

Turkey: After a strong 2011, business growth by August was 2% less than the year before, with higher exports compensating for declines in the domestic market. Ag machinery exports rank sixth among all Turkish exports. A poorer 2012 harvest and reduced government subsidies could slow domestic development.