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June 20, 12:53 Source: APK-Inform Views: 1156

Asia Increases Its Share in the World Volume of Agricultural Machinery Manufacture

The article presents data from annual report of the VDMA Agricultural Machinery (Frankfurt am Main).

The German Manufacturers Association of Agricultural Machinery (Engineering Union of Germany) VDMA Agricultural Machinery is a leading branch-wise association of agricultural machinery manufacturers that includes more than 160 German companies and also companies of the world famous brands – the leaders of the branch, who produce innovative and Hi-Tech products in Germany. Only in Germany the Association unites companies with total annual trade turnover of € 10 billion with more than 30,000 employees.

Firm “Runo” LTD is a marketing events partner of the VDMA Agricultural Machinery in the CIS countries. Especially for APK-Inform readers in June-July 2014 there will be published extracts from the Association annual report with data on volumes of manufacture, export, import of Asia, Europe, North and South America countries by results of the year 2013.

According to the VDMA Association estimation of the year 2013 there were produced agricultural machinery at amount equivalent of € 96 billion in the whole world.

During last four years the manufacture volume of the world agricultural engineering has dramatically increased. Notable that concerning to a level of “the crisis year 2009” the growth was more than 50% that conforms to an average annual grows rate at a level of 11%.

The Agricultural Machinery Manufacture in the World

Amounts in billion euro

 

2006

2007

2008

2009

2010

2011

2012

2013

European Union

21,4

23,5

27,2

21,6

22

26,6

28,6

29,9

North America

14,6

14,3

16,8

16,5

17,3

20,1

23,3

24,5

China

4,8

6,7

8

9,5

11

13,8

16

18,5

Latin America

3,3

4,4

5,2

3,7

4,8

5

5,2

5,8

India

3,2

3,2

3,1

3,8

4,5

5,1

4,9

5,6

Other European countries

2,3

2,5

3,2

2,2

2,6

3,1

3,6

3,3

Turkie

2,6

2,3

1,7

1

2

3,1

2,9

2,9

Japan

2,9

2,6

2,9

2,7

2,7

2,7

3

2,8

Rest of the World

1,7

1,8

2

2

2,3

2,5

2,7

2,9

World total

56,8

61,4

70

62,9

69,2

82

90,2

96,2

Source: VDMA Agricultural Machinery Association

 

One of the main trends of this period can be considered the increasing of Asian share in the world volume of agricultural machinery manufacture. European Union is the largest manufacturer of agricultural machinery in the world, its lead from other representatives of the world agricultural engineering is more than impressive, but if to consider carefully the last years’ data, we could become sure that lead is slowly but steadily shortening.

The Agricultural Machinery Manufacture in the World

Distribution by continents, share of the cost in recalculation on euro, %

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Source: VDMA Agricultural Machinery Association

 

It is determined by the fact that world famous “Western” brands are organizing assembly and manufacturing line in Asia. Besides that, the national manufacturers could take advantages at growing market and increase output volume of agricultural machinery.

China

According to Chinese agricultural engineers data, in the year 2013 their companies produced more than 500,000 tractors with engine capacity from 18 kw at total amount that is equivalent of 7.7 billion U.S. dollars. According to the VDMA estimation, despite tractors, there were produced other agricultural machinery for total amount of 16.8 billion U.S. dollars. Altogether, during last year Chinese agricultural manufacturers produced machines for amount of 24.5 billion U.S. dollars that is equivalent of 16.8 billion euro. Production volume increase in comparison with previous year was approximately 15% and it exceeded the economic growth rate of the state.

Export share of agricultural machinery produced in China continues to remain rather small. According to official statistics during year 2013 export volume was 3.43 billion U.S. dollars that corresponds to 14% of total production volume (the similar rate of previous year was 16%). Tractors share in export volume was 15%, remaining part went to other agricultural machinery and equipment and, first of all, to implements for gardening and planting for greenery. One of the major buyers of Chinese agricultural machinery of this segment traditionally is the USA. In 2013 export volume to this state was more than 507 million U.S. dollars. Total amount of import to China during last year was little more than one third of the export cost.

In opinion of the VDMA and of Chinese representatives of agricultural engineering there is expected damped of growth rate in 2014, but China as usual remains one of the leading and the most perspective places in the world for agricultural engineering development.

India

According to the VDMA estimations, India accounts for 6% of the world agricultural machinery production. In 2013 Indian agricultural engineers produced more than 680,000 tractors. Agricultural machinery for sowing and for plant protection are also produced in India and are used for growing in the fields of about 50 million enterprises. India still remains the largest manufacturer of tractors in the world. At that, it should be noted that internal market has big potential, because most local farms are mechanized not enough. Besides that, Indian tractor industry provides with machinery building companies, airports and also private persons, who use tractor as vehicle. Approximately 10-15% of total production volume goes to these clients. At about 10% of tractors produced in India are exported.

Volume of tractors production in 2013 increased for 16% in comparison with previous year. High demand is determined by good yield. Growth is ensured mainly at the expense of little and middle-sized enterprises, which invested in low-powered tractors by capacity less than 50 hp.

The leader of Indian agricultural manufacturing, company “Mahindra & Mahindra”, last year was practically fully concentrated at internal market of agricultural machinery. These requirements were satisfied at the expense of local manufacture. The company “Mahindra & Mahindra” not only controls 40% of local market, but also has its own manufacturing capacity on agricultural machinery production in China and the USA.

Second, third and fourth places at the market take – “TAFE” (Tractors and Farm Equipment), «Sonalika/International Tractors Limited» (ITL) and «EscortsTAFE» (tractors and agricultural machinery). Export volume of these companies did not change significantly, but all they are active within international collaboration. A striking example of such cooperation is a project of corporations “TAFE” (Italy) and “AGCO” (USA), which works successfully from 2010 in Manis, Turkey. TAFE also founded a subsidiary company in China for production of cast part. In turn, the company “Escorts TAFE” has joint project with Polish manufacturer Pol-Mot. Also deserves special attention a manufacturer of agricultural machinery «Sonalika/International Tractors Limited» (ITL) concentrated at African markets. This Indian agricultural machinery manufacturer now has its assembly lines in Nigeria, Cameroon and Algeria. The company «Sonalika/International Tractors Limited» (ITL) become a leader of African markets due to the fact that it could create a product of average price segment, which is situated between expansive Western Hi-Tech agricultural machinery and the production of cheap segment produced in China.

Fifth and sixth places at Indian market take leaders of the world agricultural engineering “John Deere” and “New Holland”, which have manufacturing facilities in India for necessities satisfaction of local agricultural machinery market. At that it should be noted that market share of “John Deere” has reduced in India, while turnover at the local market has increased. This American producer of agricultural machinery, as many other manufacturers, focuses on production of models by capacity less than 50 hp, because in their opinion the future of the Indian agriculture is after small farm enterprises.

Japan

During many last decades Japanese small-sized tractors played important role enough at Western markets. In 2013 in Japan tractors production volume by capacity 30 hp and more grew for 37% in comparison with previous year. Leader of the market, the company “Kubota” regular develop and expand its tractor line for agricultural sector. The next most popular tractors manufacturers are “Yanmar”, “Iseki” and “Shibaura”. All these brands have very good positions in the sphere of landscaping and gardening not only in Asia, but also in the all world. At about one-third of total production volume and also 80% of Japanese agricultural machinery export go to tractors.

Nevertheless, export business suffered from Jena rate change during last years. On results of year 2013 export volume reduced for 11% in comparison with previous year, now it is 1.85 billion dollars U.S. As determining factors in this connection became reduction of support level in the USA for 10%, which purchase more than 40% of the Japanese export, and also demand reduction in Europe and in China. According to estimations of the Japanese Amusement Machinery Manufacturers Association (JAMMA) in 2014 there is expected reduction of manufacture and of export. At the internal market there is also expected slump after growth during last three years.

Korea

Koreans tractors, from the point of view of technology, are compare with Japanese ones, at that, approximately one-third of exported tractors are complete with Japanese engines. Tractors, produced by Korean agricultural engineers, proved themselves well during agricultural work in not large farm enterprises of America and Europe. It allowed significantly increase export volumes during last three years, which, as well as in Japan, is provided, in a greater extent, at the expense of mini-tractors supports.

The Korean Amusement Machinery Industry Cooperative “KAMICO” informs, that in 2013 there were produced production for amount $ 1.2 billion, at that export was USD 835 million. The greatest part of agricultural machinery export, approximately 60%, went to such countries, as Canada and the USA. These volumes of export deliveries are provided, in many ways, because of short terms of orders implementations. The average terms of delivery are three weeks. The Korean Amusement Machinery Industry Cooperative “KAMICO” forecasts stable volume of production in the year 2014. There are expectations, that volume of tractors production by capacity 30 hp and more will increase for 4%, up to 44 000 units.

Today for states of the EU and the USA goes more than 50% of the world agricultural machinery manufacture, besides just “Western” companies are the world leaders of Hi-Tech machinery and equipment production. Having required resources and advanced technologies the “Western” brands will increase their presence in Asia at the expense of assembly and production lines organization. National manufacturers of China, India, Korea and Japan in turn will make all efforts to take advantage at growing market in competitive conditions with Hi-Tech companies, developing their manufactures and widening geography of presence in other regions of the world. It gives a possibility to suppose that Asian share in the world agricultural machinery manufacture will slow but steadily increase at the expense of reduction of manufactures shares in the EU and the USA.

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Vitalii Mietolkin

Web-portal about agricultural machinery market : runo-agro.com

http://www.linkedin.com/profile/view?id=301624300&trk=nav_responsive_tab_profile

Translated by Natalia Dragnieva https://www.facebook.com/natalia.dragnyeva

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