Economic Report 2010

Agricultural Machinery

Economic Report

2010

VDMA AGRICULTURAL MACHINERY REPORT 2010

Contents

Table of

2

Foreword

4

General Conditions for European Agriculture

4

Agricultural Policy

4

Income and Employment

5

Agricultural Markets

7

Production and Trade of Agricultural Machinery

7

World

8

European Union

8

Germany

10 Market and Technological Trends by Segments 14 Market Developments by Regions 14 European Union 15 Germany 16 France 17 United Kingdom 17 Romania and Bulgaria 19 Central Europe 19 Ukraine 20 Russia 21 Kazakhstan 21 India 22 China 23 Brazil 24 USA 25 Canada

Condensed Version for the Public

26 Charts and Tables 26 Agricultural Machinery in the European Union 27 Ex- and Imports Worldwide 28 Imports of Selected Countries 29 Exports of Selected Countries 30 Production of Agricultural Machinery Worldwide 30 German Market by Segments 31 Key Facts of the Agricultural Sector in the European Union 32 Agricultural Key Figures of the Biggest Agrarian Nations 33 Members of VDMA Agricultural Machinery Association

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Foreword The agricultural machinery industry in Germany exports 70% of all agricultural machines produced in this country. For this reason they are world champions in exporting goods — a position which has been continuously strengthened due to innovative and reliable technology as well as a wide range of products oriented towards different customer requirements worldwide. Fairs have significantly contributed to this development and will also continue to do so in the foreseeable future. Even though communication habits between producers and customers have changed considerably, the former swan song on the disappearing necessity of fairs in the internet age has subsided. Personal communication, which obviously has more features than merely providing product information, can be exposed in a unique way at a fair. Provided it is organised professionally. The world’s leading agricultural machinery fair, Agritechnica, is held in Germany. The close co-operation between the German Agricultural Society (DLG) and VDMA has boosted the Agritechnica into this position. Our cooperation has ensured a quick implementation of a large number of suggestions and ideas from the industry for Agritechnica’s advancement. We have a similar close collaboration solely with the Central Agricultural Festival (ZLF) in Munich. As soon as the industry enhanced the principal importance of the Agritechnica, the German and European fair scene started to reorganise itself. Fairs of local or regional importance are usually attended by trade partners. European fairs, such as SIMA, EIMA and Agromek, switched to a two-year frequency, with consideration of Agritechnica’s timing, or disappeared entirely, like the Royal Smithfield Show. The strategy to give strong support to one fair, in this case Agritechnica, in order to rearrange the scene, was a complete success from the industry’s and VDMA’s perspective. In the past years, new markets around the globe started gaining focus. It became apparent to benefit from the experiences made in Germany and Western Europe to create a good fair structure in these countries, too. The Ukraine, where three fairs are carried out per year with agricultural machinery participation, provided the best opportunity for this purpose. They soon took the “pole-position” due to the close co-operation between VDMA and the Interagro fair. And if another adequately sized exhibition site is created in Kiev, then there will be excellent conditions for an efficient presentation of the industry in future.

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In the Russian market, our objective turned out to be far more challenging. Considerable mistakes made at the “Golden Autumn” trade fair led to the establishment of a fair supported by the industry (represented by the associations Rosagromash and VDMA), called Agrosalon: two-year frequency, respecting Agritechnica’s timing, a specialised exhibition on an attractive fairground, industry-oriented. Even though the developing process is in full progress, there are a lot of indications that Agrosalon will come off victorious. The reason is: successful fairs can only be launched into business with support from the industry, which is usually represented by its associations. The wide range of VDMA’s exhibition capabilities is highlighted by the demopark. This fair for municipal and golf course equipment is organised by VDMA upon request of the industry. Hence it was possible to orientate the demopark to the demands of the industry, consequently including the interests of the visitors, which were just as important. The choice of the location, concept as an open-air exhibition and exemplary price leadership are substantial elements, which quickly turned demopark into the leading event in Europe. The most recent market declines in many agricultural machinery markets cause companies to boost their marketing strategies in exports as well as in less penetrated markets. Fairs play an important role in this context, especially for medium-sized companies, which face quite a challenge in dealing with numerous markets. Therefore it is of special interest to the agricultural machinery industry that fair participations maintain a high level, as offered in the foreign exhibition programme by the Federal Republic of Germany, or even expand subject to an increasing number of potential sales markets. With regard to the forthcoming austerity budgets, this is certainly not a simple job and poses a challenge, not only for the VDMA. The future will be exciting with reference to the global fair scene. Companies with global strategies, which are nowadays not only internationally operating groups of companies, but also medium-sized enterprises, will revaluate the fair scene with their strategies — in order to take market shifts into account on the one hand and also to consider cost factors on the other. Whenever the industry comes to agreement terms, the focus can be changed quickly.

Dr. Bernd Scherer Managing Director of the VDMA Agricultural Machinery Association Frankfurt, June 2010

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1. General Conditions for European Agriculture Agricultural policy The political support in the agricultural sector continues to play an important role. Agriculture in the European Union and the United States is strongly supported by public funds. This extent is only exceeded by smaller countries, such as Switzerland, Norway and even Japan. In other words, one out of seven Euros earned by a German full-time farmer comes from support funds. However, this amount often determines if a farmer will receive adequate wages for his labour after deduction of all expenses and also if he can make some profit on top. Since 1992, the development of the Common Agricultural Policy (CAP) in the European Union (EU) not only aims to grant subsidies with regard to the production quantity, but also to support the actual agricultural activity in itself. The keyword is decoupling (payments from the agricultural production). As a consequence, a farmer is entitled to a socalled payment claim relative to his farmed arable areas or grassland. By 2013, these funds will be spread equally in defined regions. In Germany, the payment claims will then be uniform in each Land — a range from €300 to €360 is assumed per hectare throughout Germany. The next reform of European agricultural policy will come into effect as of 2014 and shall define the framework up to 2020. As there have already been heated debates prior to the new concept, especially between politicians and society as well as farmers and their lobby groups, many organisations have already written and published their position papers. The European Union is still refraining from presenting proposals and ideas and asks for the general public’s opinion on an internet platform. First specific proposals are supposed to be presented in early November 2010. So far it is rather clear that the new funding amount available for the Western European countries will be reduced in favour of the new Member States. The present 40% share of the overall budget of the European Community is

also expected to decline further. In the next few months, the national Ministries of Agriculture will oppose these cuts. The present German opinion rejects a further redistribution from the first pillar (direct payments) to the second pillar (rural development) — especially by means of the socalled modulation, i.e. retention of direct payments and national re-distribution of funds.

Income and employment The income indices, which were updated in March 2010 for the past year by the European statistical office Eurostat, show an average decrease of 12% per labourer. In 2009, the income dropped in 21 out of 27 Member States, in some cases by more than 20%. Among them are the two most important agricultural nations, France (-19%) and Germany (-21%). Around 80% of agricultural value creation is generated by the region of the former EU 15. After the new Member States in Central Europe had experienced an immense increase in income due to the inclusion in the support scheme of European Agricultural Policy, their agricultural incomes have now also finally fallen. In 2009, the production of agricultural products amounted to approximately the same quantity as in the previous year, however the sharp decline in prices, especially for wheat, oilseeds and milk, but also for potatoes and fruit, induced the stated income losses. Last year’s income level in the EU agricultural sector was therefore about 5% below the average of the past ten years. In 2010, a slight increase in income is expected due to the recovery of the milk prices and lower farm input costs. Structural change, i.e. the decrease in the number of farms and labour force, is a steady trait in European agriculture. Between 2000 and 2009, the number of employees dropped by a quarter, which corresponds to about 3.7 million full time jobs. However, it is important to mention the significant differentiation between the region of the former EU 15 (-17%) and the new Member States (-31%), which were still involved in old communist structures in agriculture at the time of their accession. The fact that European agriculture generates a rather consistent output

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on the other hand, emphasises the sector’s high spike in productivity.

Agricultural markets

consumption of approximately four months. Despite the high quality of wheat, which is in stock from last year’s harvest, it can presently only be sold at low prices. Since autumn 2009, the prices for quality wheat have been decreasing steadily. A surcharge of only €0.30 per 100 kg

In the years 2007 and 2008 there were tremendous fluctuations in prices for agricultural products including foodstuffs. The main reason for this was the worldwide reduction of stocks which lead to serious shortages. In terms of figures, the world’s wheat stock decreased to only two months of supply left for the world population. Impressed by announcements of bad harvests in some regions such as e.g. Australia, the speculators additionally pushed the stock market prices up. This shortage was transferred to other products such as milk or vegetable oil, which experienced a high demand during the worldwide boom. The decisive factor for the price developments for grain and oilseeds was their new intended use for producing biofuel.

(following €1.30 in September 2009) is being paid for A and B type wheat. There is an even lower demand for feed barley, which has turned out to be very difficult to sell and is stocked in large quantities in the European Union’s storage system. Considering the generally low prices for agricultural products, the positive effect is revealed in lower expenditures on the cost side, whether it is for feedstuff or mineral fertiliser. The weaker Euro also has a stimulating effect presently on the market. The price advantage for European goods is presently €10 per ton against the US$. Consequently supplies, especially of common wheat, have strongly increased to markets like South Africa or the Near East in the past months. German and Western European farmers can confidently demonstrate their high quality on the world market, whereas they continue to have difficulties in standing up against wheat in feed quality from the Eastern European suppliers.

Stable harvest perspectives 2010

Agriculture was intensified because of the high prices in the years 2007 and 2008. Due to the good weather conditions in nearly all regions of the earth — which is quite a rare phenomenon —, global harvest yields increased immensely and brought in two exceptionally good harvests in 2008 and 2009, which were both above the consumption mark and thus enabled stock development.

Good stock supply on grain market In the meantime, large wheat stocks are again available worldwide. This is equivalent to a

Following the large harvest amounts worldwide in the past two years, this year ought to yield good harvests, too. However, regional harvest losses must be taken into account. There has been a severe drought in China during spring, France reported of winterkill and in the flooded areas in Central Europe, most of the harvest will be damaged for this year. In 2010, the cultivation area for wheat in the EU was expanded by around 2%, whereas the barley areas decreased by 9% due to low prices. Also rye, which is however only significant to Poland and Germany, is grown distinctly less. The forecasts for the harvests in the European Union presently predict an only minor stock reduction of lodged grain in the season 2010/2011, at an increasing export rate. Worldwide expectations believe that the harvest amount will exceed consumption the third year running — even if only slightly — and thus the price will not be likely to rise. Certain types of wheat

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and oilseed, which are still in quite short supply, are the exceptions — either because these are being used as biofuel, such as maize in the United States, or for feeding purposes, such as soy beans in China.

Justified confidence for milk? Up to 2006 the European prices for milk showed only little volatility. The political quantity restrictions in the EU roughly stabilised the milk price that dairies paid to the farmers — apart from seasonal fluctuations within the year. However, there was a slight, continuous downward trend along the lines of the gradually lowered intervention price level. In 2007, the milk price soared within a few months by 150% because of the higher demand and low stocks — and dropped back again just as quickly to less than half of this record rate. In July 2009, the average milk price paid by dairies hit rock bottom with €0.25 per kg within the European Union. In some countries the price even dropped below €0.20 per kg.

Distribution of the milk quota within the EU 2008/2009

Others 20%

Germany 20%

Denmark 3% Ireland 146 Mill. Fläche für Grafik 4% France Tons Spain 17% 4% Poland 7% United Italy Kingdom 7% Netherlands 10% 8%

Source: German Milk Industry Association, EU Commission

Since then, the prices are rising again at a moderate pace. In April 2010, the milk price paid by dairies in Germany averaged at €0.27 per kg, which was 17% higher than in the previous year. According to the investment trend survey launched by VDMA, the dairy farmers consider their economic situation to be more relaxed again. This recovery is supported by a shortage of supply in the world market. Argentina and Australia, which are important exporting countries for milk powder, had produced 6% less milk since the middle of 2009. The USA and New Zealand also did not increase production as expected. In addition, many countries in the European Union, which accommodate about 19% of the worldwide dairy herds, reduced their milk production during the past years. The quota is still of relevance for just a few countries, among them Germany as the largest dairy region in Europe. With respect to the scarce supply situation, the European Union can therefore soon start to put the stored butter and milk powder stocks on the market. Europe’s power to compete on the world market has improved again due to the weaker Euro. In the medium and long term, price volatilities will now also play a role for milk. Let us hope that the peaks will not be as distinct as between the years 2007 and 2009.

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2. Production and Trade of Agricultural Machinery In line with the global economic and financial crisis, sales volumes for the international agricultural machinery industry started to decline as of the fourth quarter of 2008. This ended a very strong boom phase that generated 40% growth in production between 2005 and 2008. VDMA estimates global production volume to have decreased by 16% to €57.5 billion. Above-average sales declines were experienced by Western European locations, which are strongly dependent on the Eastern European market, mainly Germany and Italy, as well as in South America. On the other hand, Chinese and Indian production figures did not decline due to their strong home markets.

Europe, were 39% under previous year values and reached 2006 levels. Italy, the third largest exporter of agricultural machinery, also registered a decline of 27%, although deliveries to Asia increased. Chinese exports experienced smaller declines at 18%. Losses by the Chinese manufacturers on the North American market were compensated somewhat by stronger deliveries to Africa, although these only make up 7% of their total exports.

Worldwide Ag. Machinery Production in Bn. Euro

European Union North America Latin America China

2009

India

2008

Eastern Europe

2007

Japan Others 0

5

10

15

20

25

30

The weak market situation created or emphasised the disadvantageous conditions for imported machinery on some markets. The prime example in this regard is Russia, with high import duties on harvest equipment and the exclusion of import machinery from state financing programmes.

Source: VDMA, own estimations

Global trading volume drops by 24% The economic downturn of the last year is reflected in the exports of countries which produce agricultural machinery. Global trade decreased from the record levels of 2008 to €29 billion (-24%) in 2009. German exports to Russia declined by 60%, with the result that Russia was no longer Germany’s second-largest export market, but rather its sixth-largest. Overall, German exports decreased by 31%. Exports by the United States also declined significantly, to $6.3 billion (-27%). US Tractor exports alone, which are also strongly dependent on Eastern

In the meantime, the global business climate has recovered somewhat. VDMA has coordinated a first global survey of agricultural machinery companies1 with regard to their assessment of the economic situation. A negative outlook still prevails in Western Europe and Japan, while the mood is more optimistic in Brazil, the United States and even Russia. At the same time, global order backlogs were not very high in April of 2010 — given a range of 1.6 months in Russia and 3.2 months in Brazil, figures averaged at 2.2 months, expressed in production capacity utilisation.

1

The “Agritech Business Barometer” survey, which was conducted for the first time in April 2010 and will initially be repeated at semi-annual intervals, takes place at the new international agricultural machinery platform “Agrievolution”.

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However, the survey also revealed that manufacturers kept their dealer inventories very low during the downturn. Markets that have experienced a quick recovery in economic fortunes are already experiencing delivery bottlenecks, especially in Brazil.

generate sales that will be above the level of the previous year. However, it is also certain that Europe will again see a more pronounced regional divide in economic growth.

Capacity utilisation of German plants still low European production as mirror image of home market German Agricultural Machinery Industry Monthly %-change compared to previous year´s month

Source: VDMA

In 2009, sales volumes for the German agriculCEMA Business Climate Index 100

60

201004

201002

200912

200910

200908

200906

200904

200902

200812

200810

200808

-20

200806

20

-60

-100 Source: CEMA Business Barometer; Index = sum of evaluation of the current business situation and turnover expectation

At the same time, we are also seeing signs of an imminent upturn. The CEMA Business Barometer of the European industry umbrella association produces a monthly picture of opinions and attitudes which has shown increasing optimism in recent months. 53% of managers surveyed are already satisfied with their business situation. While average order volumes still stand at a production capacity of two months, some markets experienced noticeable upswings in orders by the beginning of the spring, so these countries will also

tural machinery industry totalled €5.6 billion, a 25% drop from the previous record year. The decline in sales was therefore somewhat above the European average, and is connected to the strong dependence on Eastern European sales markets that only acquired low volumes of equipment. Tractor production decreased by 29% to 46,500 units. In accordance with the trend towards the production of high-performance models in German plants, sales figures declined by only 26% there. For German manufacturers, the recession started in November 2008 when orders fell for the first time. Sales started to drop only two months later, albeit not as much at first. There was also a considerable order overhang in the large and special equipment segment, which extended well into 2009. Since then, the industry has been in a recession and has been adapting to lower demand by adjusting production — initially by reducing the high amount of temporary workers, followed by working-time reduction programmes which were utilised on a widely varying basis, e.g. by reducing

201004

201003

201002

201001

200912

200911

200910

200909

200908

200907

Turnover

200905

200904

200903

200902

200901

200812

200811

200810

New Orders

200906

70 60 50 40 30 20 10 0 -10 -20 -30 -40 -50 -60 200809

At €21.7 billion, production in the European Union was 22% lower last year than in the record year of 2008. The tractor production share was 36%. 2010 will see growth in markets in which Europeans have not profited directly to any great degree: South America and Asia. More than 60% of EU production remains in the region. Since EU markets have seen strong declines during the first six months of the year, and are expected to stagnate during the second half of the year, production volumes for 2010 will not increase. Only demand coming from North America is likely to give some comfort to European factories over the next little while.

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the working week from Tuesday to Thursday or extending temporary plant closures prior and following statutory holidays. In November 2009, 50% of companies indicated that they had implemented reduced working hours. This figure is likely to be lower now. A positive side effect of this practice was that very few regular employees had to be let go, so that it is not necessary to recruit new technical staff during the next upturn. 2 The average capacity utilisation of German agriculture machine manufacturers in April 2010 was 76% and therefore still two percentage points under the already low value of the previous year. This is also the peak season for agricultural machinery production. As a comparison: capacity utilisation in April 2008, the middle of the boom phase, was 94%. However, orders shall be increasing again soon. A majority of managers is already expecting that they will not experience any further sales declines within the next six months. 39% are expecting increases until the autumn.

2

At 27,000 employees, the number of regular employees in 2009 remained constant at the level of the previous year (based on agricultural machinery companies in Germany with more than 50 employees).

Production of Selected Machines in Germany in units

2007

2008

2009

Combine harvesters Forage harvesters Mowers Tedders and rakes Balers Ploughs Seed drills¹ Field sprayers

6.994 2.098 17.671 18.837 6.363 4.297 9.572 3.042

10.692 2.489 20.198 21.312 6.770 5.374 13.386 4.490

6.608 1.876 14.349 16.600 4.807 4.934 8.183 2.993

Change -38% -25% -29% -22% -29% -8% -39% -33%

Source: Turnover statistics VDMA Agricultural Machinery Association, ¹ without precision seed drills

Sales are expected to decline by approximately 20% in the first six months of 2010. Business during the second half of the year may then level off at the already low levels of the previous year, resulting in a drop of 10% for the entire 2010 calendar year. If some markets recover more quickly, that result may even improve. Despite the more optimistic climate, there are still no fundamental indicators (i.e. affecting income) that would point to farmers investing more heavily in machinery in the short term.

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3. Market and Technological Trends by Segments Focus topics in development

Improvement of electronic interfaces

The three overall mid- and long-term topics for the technological development of agricultural machines are sustainability, traceability and energy efficiency. Currently, four important areas can be deduced as concrete tasks for the development departments of the manufacturers.

At the end of 2008, manufacturers and the two associations VDMA and AEM joined to form the so-called Agricultural Electronics Foundation (AEF). Based on this platform, intensive efforts are being made in several projects in order to optimize the current ISOBUS standard as an interface definition between the tractor and the mounted implement. In this organization, it is possible for the first time to bundle the development on this project in North America and Europe. For the farmer, this will bring improvements with regard to data collection and documentation, which are required for so-called precision farming.

Greater machinery output In all areas from the harvest to field cultivation, the average power in agricultural machinery has been constantly increased during the past years. In the year 1990, for example, the average engine power of new tractors in Germany was 81 hp. By 2009, it increased by 58%, reaching as much as 128 hp. The working widths of agricultural machinery have meanwhile practically reached the upper limit of profitability. Nevertheless, the capacity of the machines will continue to increase. Structural change, which is progressing due to the price pressure on the agricultural markets, requires the use of larger, more efficient, and more “intelligent” machines in order to reduce the unit costs in agricultural production.

Compliance with exhaust emission directives Until the end of this year, the preparation for the new exhaust emission regulations according to EU stage IIIB have to be concluded. However, the manufacturers are already targeting stage IV, which will become effective in 2013. At the previous exhaust emission stages, the demanded exhaust emission reduction was able to be reached by the engine alone. The two new exhaust emission stages, however, will require additional exhaust gas aftertreatment systems, such as particle filters. Therefore, future exhaust emission legislation is a common challenge for the manufacturers of the engine, machine, and tractor.

Implementation of the European machinery directive The machinery directive provides a uniform level of accident protection for machines in the European Union. At the end of the year 2009, a revised version of this directive came into effect, which contains both technical and formal modifications of the CE certification process. Market developments in the industry’s major product segments will be outlined below. The tractor is of prime importance to the agricultural machinery industry. After three years of growth, the Western European tractor market shrank by 14% in 2009 to 156,000 units. The trend for 2010 shows a continued decline. In the first quarter of 2010, registrations fell by 22% in total. The development in the big markets of Germany, France, the United Kingdom and Spain was similar with a decrease by 24%. In the rest of the year, the decline is predicted to slow down. However, overall sales in Western Europe will definitely be about 10% to 15% lower than the previous year. The past few years have seen a marked trend towards higher engine power. In Germany for example, the average power of a new tractor in the over 37 kW segment has already reached 107 kW. Every third tractor has an engine power of more than 110 kW.

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After excellent results in the previous season, the Western European combine harvester market contracted in 2009 by 10%, or 8,000 units3. Therefore it still remained at a comparatively high level. At 2,455 combine harvesters, France was still the region’s premier market, followed by Germany with virtually constant sales figures (2,324 units). Due to poor opportunities in Eastern Europe and South America, sales dropped more significantly by 17% to approx. 31,500 units. 2010 is a challenging year. As regards European manufacturers, domestic markets are significantly underperforming. By the end of the season in August, even less than 1,600 combines are expected to be sold in Germany. This would be the lowest number to date. The drop in France is likely to be of a similar magnitude. Only a few markets have better news, like for example South America and the United States. There, however, mainly combines from domestic production are sold.

Sales of Combine Harvesters* 2007

in units Western Europe World

2008

2009

Change

6.770

8.890

7.980

-10%

26.500

37.860

31.450

-17%

In addition to the production of silage feed, bioenergy has become a decisive factor for the development of the forage harvester market. In the USA, chopped maize is used for the production of bioethanol. In Germany, however, the chopped crops are mainly fermented in a biogas plant. In 2009, the global market for selfpropelled forage harvesters amounted to approx. 2,200 units — of which around 40% were made up by Germany and the US. This year, manufacturers’ order books are full to bursting. In Germany alone, sales of far more than 500 units are expected. The increasing generation of biogas with the associated maize fields will again lead to a surprisingly high demand for forage harvesters. One fifth of the approx. 2.1 million hectares of maize fields in Germany is used to supply biogas plants. The proportion of grain maize is waning. As regards balers, there are smaller presses for making round bales on the one hand and square bale presses for current bale volumes of 4.7 cubic metres on the other. In terms of square or big square balers, market development over the past few years has been more volatile. In the 2008/2009 season, about 3,500 units were sold worldwide - a drop from 4,700 the previous year. In 2010, the market will stay subdued. The round baler market was recently just over 27,000 units.

Source: VDMA members, * "west brand" machines

Technologically, the combine will undergo many changes in the near future. Capacity increase is already very far advanced. The largest machines allow 8 or 9 hectares per hour to be harvested, which corresponds to a grain throughput of approximately 60 tonnes. In addition, current developments are aiming at the increased integration of electronic control systems. The goal is that the machine controls itself automatically during operation and maintains optimal settings (e.g. of the drum or the sieve). The driver´s workload is reduced, and his tasks are limited to monitoring. With regard to the combine, optimization potential focuses on transport logistics. It is not sufficient to increase threshing capacity without a tight organization of the following transport chain.

3

The subsequently mentioned market volumes for harvesting machines refer to so called „west brand machines“.

The regular replacement demand for these machines is probably not far behind this figure. There will definitely be no surge in demand for round balers, but if at all sales will only slightly fall short of the already low figures the previous year. In the past years, the development of the machines aimed at the optimization of the material flow, i.e. straw or grass, for faster throughput and greater baling density in order to produce fewer bales per hectare.

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Over the years the market for grassland equipment (mowers, tedders, rakes) has tended to be stable and in 2007/2008 sales jumped a remarkable 11% to 88,000 units4. As a result, the decrease in sales to 72,000 machines a year later was all the more keenly felt. Investments in hay machines depend directly on milk prices and also reflect their equal volatility from 2007 to 2009. Once again, the 2010 season will be very poor. Afterwards, the now higher milk price and the rise in the replacement demand should make demand more buoyant. Market development was similar for forage loading waggons which are primarily used in western and central European locations. In the 2010 season, manufacturers will see gloomy results again. Worldwide by the end of 2009, manufacturers received around 40% fewer orders than the previous year. The last few months saw a slight recovery again. While the focus in forage harvesting technology was on greater area capacity achieved by larger machines in the past years, current product development is concentrating on technical detail improvements (such as better soil contour adaptation for the protection of the grass sward, greater operating comfort, as well as higher transport speeds on the road). The market for plant protection equipment is showing a distinct trend to self-propelled machinery. In Europe in 2009, sales of trailed and mounted sprayers dropped by about a quarter to 8,500 units, but self-propelled sprayers only saw a decrease of 16% to 600 units. At the same time, the key markets of Russia and the Ukraine virtually came to a standstill, while Germany saw healthy market growth for self-propelled machinery. Manufacturers observed that orders for all types of machinery were late this year. Nevertheless, it is predicted that the market as a whole will at least remain stable at the low level it was the previous year. The introduction of compulsory machinery checks that will be launched out successively in the EU states will have a

4

The amount is based on the results of VDMA statistics: This is representative for the market, but does not include all western manufacturers’ sales figures.

positive medium-term effect on new investments. In 2008, the European market for mineral fertiliser spreaders rose to a record 31,000 units. Therefore, the slump to 16,000 machines in the following year was heavy. 2010, the market will still remain sluggish. Given the high fertilizer prices in the past years, farmers began to distribute very different fertilizers and qualities on their fields, such as larger quantities of urea. The challenge for the manufacturers is to provide an optimal distribution behaviour for a larger range of mineral fertilizer qualities. In addition, the adjustment of the machine is becoming more and more comfortable. For soil cultivation and sowing, a very wide range of implements is available. The decisive question is how intensively the soil is cultivated. If the goal is continuously high yield and reduced consumption of plant protection products, plough use is rather preferable. In many regions of the world, however, soil cultivation has been dispensed with or reduced to a minimum in order to save costs and not to disturb the equilibrium of soil characteristics and water balance wherever possible. In Western Europe, ploughs are still widely used. As a result, the highest hectare yields are reached here. Soil cultivation and sowing techniques are merging more and more. Especially for small and medium-sized farms, machine combinations consisting of a rotary cultivator and a mounted sowing machine are an economic solution for field cultivation. The larger the area to be cultivated per farm, the more preparing soil cultivation and sowing tend to be separated so that higher working speeds can be reached and optimal sowing times can be kept. The market boom in soil tillage equipment in 2008 is also history now. In 2009, sales figures dropped to the level between 2006 and 2007. European sales decreased by 16% to €1.32 billion. However, the plough market stayed more or less stable. A downward trend is expected for 2010. However, some European markets have already recovered. For example, in Germany orders received are already substantially higher than the previous year’s level. Over the past few years, the demand for precision seed drills has been continuously more buoyant compared with the

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grain seed drills. This is due to the increase of areas for cultivating sugar beet and maize. In the industry, the machinery used on farms and in barns is referred to as livestock equipment. Feed mixing waggons for dairy farms play a central role here. Depending on the number of livestock units, the farmer will either choose a self-propelled or a trailed waggon. There are machines with vertical and horizontal mixing augers. In Germany the share of vertical mixers is now 90%. Similarly to the hay machines, the market environment has been difficult since 2008, but could recover over the next few months again. At any rate, feed mixing waggons have taken a firm hold on the fodder cultivation sector, with about 2,000 units sold annually in Germany. With an increasing number of livestock on farms, the self-propelled waggon will become more and more established. In addition to feed mixing waggons, transportation machinery should be mentioned. Over the past few years, manufacturers of telescopic loaders have sold more units to agriculture than to the construction industry. A large number of suppliers share the relatively small market. Unit sales numbers are relatively high for front loaders which can be tractor-mounted and demand for them is developing at approximately the same rate as the tractor market. Milking and cooling equipment is another decisive factor in the livestock segment. In 2009, sales in Germany amounted to approx. €150 million — a decline of 19%. This weakness of the market left its mark in the first quarter of 2010. Since then, manufacturers are reporting a noticeable increase in their German business. The significance of robotic milking will continue to gain pace in 2010. Conventional milking systems are equipped with a growing number of integrated automatic functions (such as the attachment and removal of the milking cluster), which facilitates the milker´s work even though he cannot be replaced. The market for gardening and landscaping equipment has to be looked at separately from the agricultural machinery market in general. There is a clear distinction between end user machinery, mostly of Asian origin and where the price plays a key role, and

machinery for professional usage which the VDMA and its members concentrate on. Professional horticultural and landscaping management is carried out by local authorities as well as private greenkeepers. More than half of these service companies’ turnover comes from the private sector, i.e. individuals who want to create their garden or have it looked after. About 15,000 greenkeepers offer their services to this end in Germany.

Local authorities look after public green spaces and public paths and roads. They place orders with the service providers, or have the work carried out by their own staff. While orders to private service providers from the public authorities constantly have dropped over the past few years, municipalities significantly enlarged and replaced their own vehicle fleets in 2009. Some of the money comes from two business stimulus programmes that the German government launched to boost domestic demand. Weather conditions have the biggest impact on summer and winter maintenance machinery. The long, snowy winter of 2009 enhanced the business with new machinery. There was twodigit growth in sales of mounted implements, such as snow dozers, but for implement carriers, too. Due to long periods of usage, the demand for spare parts also turned out to be huge. The majority of manufacturers are also looking optimistically at 2010. On the one hand, the demand for winter maintenance equipment was still influencing the first quarter. On the other hand, manufacturers are hoping for more orders from public customers, reflected in the jump in

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orders received compared with the previous year. Local authorities still have budgets for

municipal equipment. Forecasts for 2011, however, are somewhat more cautious.

4. Market Developments by Regions European Union: New upward trend following a deep recession In 2009, the EU agricultural machinery market declined by 19% to €20.9 million. Apart from the insignificant Maltese market, only Romania registered an increase in sales over previous year’s levels. The four large markets of Germany, France, Italy and the United Kingdom developed somewhat better than the average, declining between 12% and 16%.

Market Volume in the European Union

The industry is on its way of leaving the recession behind. The CEMA Business Barometer, a monthly representative survey of European agricultural machinery companies, has again noted a broad level of optimism. Meantime only a minority is unhappy with the current business environment, whereas a slightly better order situation is reported for European markets overall. In this context, while an upswing for manufacturers of machinery for tillage, sowing, fertilisation and plant protection appears still unlikely, the remaining segments of the industry are expecting stable to increasing sales for the most important markets. This does not include France and Spain, where willingness to invest still remains weak.

in Bn. Euro 25,7 22,3 17,7

18,4

2004

2005

20,9

19,9

2006

2007

2008

2009

Source: Eurostat, VDMA, own calculations

The decline in the agricultural machinery market is not surprising considering that agricultural income also declined in 2008 and 2009. Possibilities for investing in new machinery have deteriorated. In 2009, earnings by French farmers dropped by approximately one fifth as compared to the average of the previous decade. Earnings by Danish farmers even dropped by 40%. Nonetheless, the structural changes taking place in agriculture, i.e. the decline in the number of active holdings and increasing acreages for the remaining active holdings do provide support for investments in larger and more efficient agricultural machinery.

One positive side effect of the past downturn in the economic climate was the fact that dealers have been very reluctant to order new equipment for fear of tying up too much capital, meaning that dealer inventories of new machinery are not overly full. The usual levels were either never surpassed, or only briefly. As a consequence, manufacturers are faced with requirements for ever shorter delivery times, leading to new bottlenecks considering the fact that production processes are also restricted (e.g. reduced working hours at manufacturers and suppliers). However, general delivery times have become very short over the last year, and are likely to be between six to eight weeks for standard machinery. One challenge over the next few months will likely be the reduction of used machinery inventories, which are above the average levels of the previous years particularly in Germany and France. At the same time, central European countries may open some opportunities for reducing inventories in Western Europe. There is sufficient demand in Poland and other countries for “good used equipment”.

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Germany’s farmers are again hopeful Investment in the German agricultural industry has remained at comparatively high levels during the last two years. However, since the majority of investments was centred on biogas and photovoltaic facilities, the benefit for agricultural machinery was not as significant in this regard. As a matter of fact, these investments tended to restrict budgets for machinery purchases. Currently, 40% of the volume for planned investment relate to these two facilities for generating renewable energy5. In 2009, Germany had 4,400 biogas plants, of which 1,500 are located in Bavaria, and most of which are smaller facilities with capacities of up to 300 kW. The greatest amount of electricity is generated in Lower Saxony with 700 mainly larger facilities. The biogas industry association expects that another 1,000 facilities will be constructed this year, although acreages for maize have not increased this year. Only the ratio between silage and grain maize will shift at the expense of the latter. At the same time, there has also been an increase in the volume of sugar beets, whole plant grain or grass being fermented in biogas plants, in addition to maize.

Market Volumes in Germany in units, referring to the calendar or seasonal year

Tractors Combine harvesters Balers Forage harvesters Mowers Tedders and rakes

2006 29.015 2.206 1.957 504 10.982 9.614

2007 28.451 1.937 2.012 499 11.261 9.514

2008 31.250 2.365 2.592 524 11.895 10.366

2009 29.464 2.324 2.077 456 9.279 8.307

Source: VDMA

With respect to the agricultural machinery industry (not including builders of biogas facilities), this trend would lead to increased sales of machinery that is used for this purpose, such as forage harvesters, mixers, manure equipment as well as vehicles and equipment for transport and logistics, e.g. telescopic loaders. On the other hand, the effect on other machinery will probably be rather neutral, apart from the aforemen5

Investment volume without purchase of land and milk quota; farm buildings currently make up 39% and machinery 9%.

tioned competing budgetary items. The proportion of cultivated area that is no longer harvested with combines but with forage harvesters is still very small. One important development in the German agricultural sector is the general improvement in attitude over the last months. In view of improving milk prices, farmers are again viewing their business in a positive light. After a period of record prices, costs for mineral fertilisers and fuel have declined in the last few months, which has resulted in an overall healthier business situation. Assuming that grain prices will increase at least somewhat, we will likely be hearing about higher incomes in German agriculture over the next year. At €3.96 billion, the 2009 market volume for new agricultural machinery and tractors was only 13% below the 2008 record year. In the first quarter of 2010, the market declined by 23%, which is not surprising in lights of the very high comparative figures from the previous year. Orders still declined up to April 2010. Based on sales figures, the decline in the market over the entire year stood at 10%. After some very quiet months at the beginning of the year, business has noticeably picked up since the spring, so that a large majority of companies is now expecting sales to increase in the coming months. The current 2009/2010 season for harvesting equipment will lead to very low overall sales figures however. Until the end of the season in June, sales of forage equipment are expected to decline between 10% and 15%. The combine market will be particularly weak. Following a market that maintained unexpectedly high levels in recent years, this year will see the strongest decline to a new record low of perhaps 1,600 units. On the other hand, manufacturers can look forward to the coming season with much more confidence, as we will likely see higher demand for investments, particularly for grassland/hay machines. Insights gained by VDMA on the basis of the Agrarian Investment Barometer point to a recovery, albeit not a strong one. Sales of soil working equipment, seed drills, fertiliser spreaders and sprayers have remained well under the levels of the previous year, by a high double-digit percentage. Not much will change in the case of the overall weak annual

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results for fertiliser spreaders due to the seasonal significance of the first quarter. With respect to tillage and crop protection equipment, the strong order situation of the past three months indicates that the current decline in sales will be reduced over the course of the year. The tractor market declined by 21% over the first five months of the year. While compact tractors up to 37 kW experienced a market growth of 17% thanks to government support programmes for municipalities, registrations for tractors above 37 kW declined by 25%. This trend also includes tractors in the very high power range which gained additional market shares in recent years.

Market Volumes in France in units, referring to the calendar or seasonal year

Tractors¹ Combine harvesters Balers Forage harvesters Mowers (with cond.) Trailers

2006 35.073 1.850 5.323 277 2.677 20.900

2007 35.083 1.960 5.396 303 2.567 20.700

2008 40.716 2.671 6.411 377 2.437 21.300

Source: Axema, ¹ as of 2007 without telescopic handlers

sales only started to decrease in the late spring of 2009, reaching a low point in the fourth quarter. However, while investments by German farmers increased again following the Agritechnica fair, i.e. at the end of 2009, and since March 2010, the French market continues to be very quiet. Orders from France do not indicate any increases to date. Therefore the outlook for the 2010 sales year is already worse than for Germany, and the gap between French and German market volumes will be larger than the eight percentage points experienced in the previous two years. The reluctance to invest can be explained by comparatively lower earnings in the agricultural sector, among others. While earnings by German farmers in 2009 are still 3% higher than the average earnings over the last decade, earnings in France fell 19% below those levels (calculated per employed person). In 2009, market volumes in France decreased by

The spring survey conducted by the Agrarian Investment Barometer indicates slightly higher planned investments. 15% of farmers and 23% of contractors - one percentage point more than in the previous year for both groups - intend to invest in new or used agricultural machinery by the autumn. Particularly Eastern Germany will likely provide additional impulses in this area. This would also create additional sales potential for large tractors again.

French market gives cause for worry In the past year, developments in the French agricultural machinery market were virtually the same as those in Germany. In the two largest European markets, manufacturers’

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13% to €3.7 billion. The share of imported machinery rose slightly to 76%. Sales figures for machinery missed the high levels of the previous year by sometimes 25%, including round balers and trailers. The fertiliser spreader market declined by 40% based on an assessment by the French industry association. While sales of combines and tractors stayed at relatively high levels in 2009, it is expected that the market will experience a significant correction during this year. For combines, forecasts are similar to those for the German market — only approximately 1,600 to 1,700 units. Disappointing grain prices following the 2009 harvest have had an unexpectedly strong effect. 15% to 20% lower registration figures are expected for the 2010 tractor market, with declines of 25% during the first four months of the year. Hope for new impulses in the market currently rests with cattle breeders and wine growers, which however would not do away with the

2009 36.800 2.455 4.673 310 1.899 16.400


considerable difficulties faced by the agricultural machinery industry as a whole. An obstacle for new machinery sales in general are the high used machinery stocks at the dealers. In CEMA country rankings, France now occupies one of the lower ranks.

No great setbacks forecast for the United Kingdom Following the severe events of previous years (as a result of animal diseases), the British market has remained relatively stable over the last two years. Expressed in Euros, the market declined by 16% in 2009. The proportion of imports currently stands at 75%. Despite the departure of tractor production for the brands Massey Ferguson and Mc Cormick, the United Kingdom still ranks in fourth place in agricultural machinery production in the EU. Earnings by farmers saw better growth than in other countries. The devaluation of the British pound last year resulted in a 15% increase in subsidy payments out of Brussels, which are denominated in Euros, increasing farmers’ cash flows. Nonetheless, low agricultural producer prices also tended to put a damper on investment patterns in the agricultural sector.

Market Volumes in United Kingdom in units, referring to the calendar or seasonal year

Tractors (> 50 hp) Combine harvesters Balers Forage harvesters

2006 13.874 555 1.510 117

2007 15.540 730 1.650 110

2008 17.104 1.065 1.870 140

2009 15.013 945 1.690 150

Losses are forecast for the average arable farmer, while dairy farmers will still be unable to generate considerable earnings even with higher milk prices. Another special effect related to subsidy payments will not come into play either, as the British pound has gained 8% against the Euro since October 2009. The British industry association views the write-off options as well as the introduction of the exhaust emission levels of Tier IIIB as additional exogenous stimulators, although their effects are expected to be marginal.

2010 EU market still in decline overall While agricultural machinery markets within the EU registered virtually uniform declines during the past year, strongly differing trends are again indicated for this year. As described above, the two large German and French markets will miss the levels of the previous year. Despite the lower levels, Spain and Italy still have not registered any new impulses. In some markets, such as Poland, the Czech Republic and Scandinavia, sales are increasing again. Overall, EU market volumes are expected to decline by 5% to 10% in 2010. The outlook for 2011 is optimistic, but in a rather cautious way. The macroeconomic consequences from the fiscal and monetary problems in the Euro zone are putting a shadow on the general economic development. The discussion regarding the new CAP after 2013 and the expected direct payment cuts could on the other hand give shortterm impulses for the machinery demand, given that uncertainty among farmers is not dominant like at the beginning of the past decade.

Stagnation in Romania and Bulgaria

Source: AEA

The tractor market declined by 12% in 2009. A further drop of 17% was registered in the first four months of 2010. Sales of combines are still below the levels of the previous year, while forage harvesters have experienced noticeable growth. Order books in the United Kingdom filled significantly during the first months of 2010, which will have the effect of supporting sales growth until the autumn. This year, the main problem consists of the rather negative economic conditions for the two important pillars of British agriculture.

The government subsidies for investments in agricultural machinery, as a result of joining the EU, have boosted sales over the past two years. After a wave of investments, stagnation in Romania and a slight decline in Bulgaria are to be expected for this year. There are various reasons for the lack of enthusiasm.

No efficient support for Romanian agriculture Measure 121 of the support programme for the sustainable development of rural regions is to be

17


used primarily for the modernisation of outdated machinery. The funds are also available for setting up new agricultural holdings, with the primary aim of keeping young people from migrating to the cities. With a volume of €992 million, experts believe that this measure is well budgeted for Romania. The EU pays 80% and 20% have to be co-financed from national sources. Applications for funding were to take place in several rounds, according to a specified points system. The first rounds in 2008 had a budget of €58 million. The demand was so high that the budget was finally oversubscribed with applications. The long processing time for the applications was criticised. The distinctive feature of the procedure in Romania is that investment prior to approval of the application (at the applicant’s own risk, as it were) is not permitted. Farmers must first wait for the decision of the Agricultural Fund. If investment is undertaken prior to the approval, farmers lose any claim to funding. This restriction is particularly critical in relation to harvesting machinery, which must be delivered in time before the harvesting season. The outlook for this year thus remains very subdued. The few farms established in the region along the Danube, near Timisoara and Cluj, will probably continue to invest. Their investments depend more on yields from a good harvest and market prices for grain and oil seeds than on subsidies. The small and medium-sized farms that are essentially dependent on the funding will hardly be able to raise funds of their own for investing in agricultural machinery. If these farms invest, it will presumably be in inexpensive machinery manufactured in Belarus, Turkey, and probably soon also in China. The mood in the agricultural sector is progressively worsening. This is reflected in a survey of Romanian farmers carried out on behalf of VDMA. The expectations of the rural population in this country, which remains predominantly agricultural, are frequently unfulfilled, and hope is fading.

Bulgaria: Support funds exhausted for the time being The subsidies greatly influenced the development of agricultural machinery sales in Bulgaria. In contrast to the situation in Romania, Bulgarian farmers were permitted to invest at their own risk, before the Bulgarian Agricultural Fund reached a decision concerning their applications. In the event of a positive decision, the farmers could immediately repay a large part of the loan. At approximately €330 million, the measure 121 amount was one-third of that for Romania. Several rounds of applications took place in 2008, during which over half of the entire budget was distributed. There was a high demand for the funding, and the rejection rate was relatively low. Following the last two rounds in September and October 2009, for which many of the applications have not yet been processed, the Bulgarian Paying Agency is proceeding on the assumption that funding within measure 121 will be exhausted by the year 2013. There is considerably less demand for funding within the other measures, with the exception of measure 123 (for processing facilities). VDMA supports reallocating the funds to measure 121, but this requires the approval of the European Commission. After several scandals in which the Bulgarian Agricultural Fund was implicated in connection with the use of SAPARD funds (Special Accession Programme for Agriculture and Rural Development), Bulgaria is now meticulously adhering to the EU directives. It is also extremely cautious towards the EU about suggestions for enhancing the allocation of subsidies to benefit local recipients. At best, a stagnant market is to be expected for 2010. The as yet unprocessed funding applica-

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tions from the previous year play an important role here. The demand in this country is significantly smaller than in Romania. The dominant large agricultural holdings have invested extensively in recent years. Even if there continues to be a sufficient need for new machinery, the demand can be expected to nosedive once subsidies come to an end. At the same time, local dealers anticipate increased imports of used machinery from Germany, France and Scandinavia.

Due to their geographical location, the Czech Republic and Slovakia have hot summers and decreasing rainfalls as a rule. Careful usage of water is becoming a dominant issue. Both markets play a key role in cultivating canola and benefit from the obligation to add biofuel to conventional diesel. The long-term rising price for mineral diesel is also making cultivating canola more lucrative again. However, the intensity of increased investments in agricultural machinery will depend on the development of prices that producers of agricultural products receive.

Different parameters in central Europe

This year, the Hungarian agricultural machinery market will not be spared a further decline. At 300 to 500 hectares, the farms are above average in size, but machines are used much less frequently than in the Czech Republic, Slovakia, Bulgaria or Romania. The market is also dominated by a few, but extremely large dealers. The tractor and agricultural machinery business is in the hands of less than ten major importers who sometimes have different competing brands in their offerings. In terms of economics, the oligopoly tends to have a negative effect on development as a whole because suppliers are not flexible enough and do not pursue lowvolume business with a sufficient degree of intensity. Future demand will primarily stem from the replacement business.

Poland is the biggest agricultural machinery market in the central European region with a volume of €912 million in 2009. Next in the regional ranking come the Czech Republic, Hungary and Slovakia. In the last few years, these latter markets have chiefly invested in modern tractors and agricultural machinery produced in Western Europe. With the exception of the Czech Republic, domestic production only plays a negligible role. Subsidies can have a huge impact. During the economic and financial crisis, the agricultural machinery market in all three countries declined sharply in 2009. At 40%, the decreases on the Czech and Slovakian markets were the highest in the EU. Particularly in Hungary, the slump in the market was prevented by a subsidy programme which however came to an end in November 2009. With an average size per farm of 900 to 1,100 hectares, the agricultural holdings in the Czech Republic and Slovakia are the largest in the EU. The agricultural sector is considered to be robust and efficient. Utilisation of machinery is much higher than in the old EU states. As a result, there is a comparatively high level of wear and tear and shorter replacement cycles. The equipment purchased over the last few years, in some cases with the help of the SAPARD programme, is just about adequate to cope with the existing work load. At the same time, some of the machinery is no longer state of the art. Demand for agricultural machinery is expected to rise again this year and next. Above all, the biggest demand will be for highly motorised tractors, self-propelled harvesting equipment, as well as conservation tillage and sowing equipment.

Ukrainian agriculture creates jobs For investors, investing capital in Ukrainian agriculture is attractive because it is the only sector in the country's economy that offers good growth prospects during the recession. Substantial growth potential is thought to be in the agricultural sector. Experts say that the Ukraine and Russia are the only nations in Europe whose agriculture offers significant dormant potential. Current wheat yields per hectare in Western Europe are at about 4.3 t/ha, in the Ukraine the figure is just 3.3 t/ha. However, agricultural companies in the Ukraine traditionally struggle to procure bank loans. Despite the healthy development opportunities for agricultural companies, commercial banks are reluctant in granting loans. The reason is that the farms’ key asset — agricultural land — is not allowed to be sold or mortgaged. To date, all initiatives in the Ukrainian parliament to revoke the moratorium on selling agricultural land have

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failed. Furthermore, agricultural machinery and equipment can be treated as fungible assets usually only to a limited extent. Therefore, agricultural businesses frequently cannot provide the security that banks require. As a result, major Ukrainian agricultural companies selling shares to investors is still the most common way of raising capital for modernisation and expansion projects.

Ukrainian Agricultural Machinery Market in Million USD 1386

501

2005

570

632 412

2006

2007

2008

2009

Source: VDMA

The agricultural machinery market in the Ukraine now consists of 80% imports. In the recession year 2009, at 67% these plummeted further than anywhere else in Europe. In 2010, the situation looks a great deal better. The mood at the leading agricultural machinery fair Interagro gives more cause for optimism for the next two years. The big agricultural holdings and farms are planning further investments in their agricultural operations. The money is to come from their own sources, but also from third parties. National subsidies of agriculture only play a more minor role. Even the tricky political situation did not dampen the spirits of companies in the industry.

Slight recovery in Russia During the period of exceptional growth from 2004 to 2008, the Russian agricultural machinery market reached the historic alltime high of USD 4.3 billion6. Thus in 2008, 6

as estimated by the Russian Union of Agricultural Machinery Producers, Rosagromash

Russia was one of the three most important markets in Europe, with a turnover slightly below that of France and Germany. The market share of imported machinery was approximately twothirds of the total. As its economy is heavily dependent on exports of oil, gas and other mineral resources, Russia has been severely affected by the global financial and economic crisis. The agricultural machinery market declined by more than 45% in 2009. The drop was even more pronounced for imported machinery due to increased market protectionism. Since November 2009, the Russian market has exhibited a slight recovery. The situation in the agricultural sector has clearly improved in comparison with the previous year. Commodity prices have risen. Although the price increase for cereals and oil seeds was only 10% to 20%, prices for sugar beets, potatoes and milk have risen significantly. Loans for imported machinery (excluding subsidised loans) have once again become available. The Russian leading bank for the agricultural sector, Rosselkhozbank, has even expanded its asset portfolio. The standard market interest rate of 17% to 19% for loans in roubles can be regarded as quite high. However, taking into account that the rate of inflation remains at a level of 9% to 11%, the loans offered are reasonable. In the first months of 2010, companies experienced differing performance depending upon the financing offered to farmers. Some companies with flexible financing options gained market share from the others. The rouble has risen by over 20% since the beginning of the year, which also has a positive effect on the import business, allowing international manufacturers to compensate for the loss of market share to Russian manufacturers that benefited from the national support programme in the past year. In general the investment climate has become much more positive except in the case of the grain sector, which still dominates agriculture in Russia. According to experts, the trend toward greater agricultural diversification should help Russia to become less dependent on exporting grain and importing meat, milk and sugar.

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Industry supports Agrosalon as leading trade show Launched in 2008, the new Agrosalon trade show has a clear goal to become the leading bi-annual fair for agricultural machinery in Russia. It is owned by the Russian Union of Agricultural Machinery Producers, Rosagromash, which has established a professional team to prepare and conduct the fair. Agrosalon is supported by the associations VDMA (Germany), Unacoma (Italy), AEM (USA) and JFMMA (Japan). The leading international and Russian agricultural machinery manufacturers (including John Deere, AGCO, Claas and Rostselmash) are members of the fair committee and have recently agreed to support Agrosalon as the leading trade show for agricultural machinery in Russia.

Kazakhstan’s saturated market Until 2008, Kazakhstan was one of the CIS markets with the highest growth rates. From 2004 to 2007, sales shot up each year by 20 to 50%. Apart from the production of a few spare parts for old equipment, the market was primarily served by imports. In contrast to Russia, the Ukraine and Belarus, where German machinery leads imports, Kazakhstan is equally supplied by tractors and agricultural machinery from the CIS (Russia and Belarus), North America (the US and Canada) and the EU. The CIS suppliers lead on smaller tractors (e.g. the MTZ brand in classes between 59 and 74 kW) and more affordable combine harvesters (e.g. Rostselmash and Agromashholding).

In 2009, sales slumped by more than a half. Due to the liberal banking system, many of the foreign investors were able to move their money outside the country quickly. This almost led to the collapse of the entire domestic financial services industry. The government was only able to react and stop the system from collapsing by providing credit lines that it generously granted to the banks loyal to the state. However, it was impossible to save some banks, but private savings by the local population were reimbursed by the state. Before the crisis, sales of agricultural machinery were driven by increasing grain prices, low leasing prices, a strong demand for modernisation, as well as state incentive programmes. In the future these factors will probably play a key role in sales of agricultural machinery again. We will look at each one separately. Over the last few years, machinery has been modernised. The average age of the machines used is approx. 11 years. Considering that there are still a lot of machines over 20 years old and virtually unusable, one can assume that the majority of the machinery used is not older than five years. Therefore, Kazakhstan has the most modern machinery of all the CIS countries by far. In the last survey carried out by the Agrarian Investment Barometer, more than half of those asked said that their machinery was adequate. This figure is much higher than in Russia at 23% and the Ukraine at almost 7%. On the other hand, the machinery is heavily used so it will soon have to be replaced. Agricultural subsidies from 2003 to 2008 concentrated very strongly on grain cultivation. Over the past few years, priorities have been shifted in favour of yard and barn machinery and the cultivation of potatoes, sugar beets and some special crops. The state leasing company “KazAgroLeasing” does however still offer machinery for the classical type of arable farming.

Increasing presence of multinationals in the Indian market With the exception of vegetable oilseeds and pulses, Indian agriculture is in a position to supply the country’s population with foodstuff. India’s export volume, which is much higher than that of other Asian nations, is also significant. Besides basmati rice, India exports coffee, different types

21


of fruit, nuts, poultry meat as well as flowers and horticultural plants. Its main markets are the United States and Canada, where demand declined significantly as a result of the economic crisis. In the ten-month period from the beginning of the crisis in mid-2008 to the spring of 2009, exports fell by 66% to $735 million. This slump could not be remedied by slightly higher sales figures for the domestic market. Agricultural production in total declined slightly. On the other hand, primary agricultural production, which includes the cultivation of wheat, rice, maize, pulses and milk, did not suffer any declines.

tion. To date, only Lemken, a company from the Lower Rhine region, has taken this step. Since 1999, it has maintained a cooperative relationship with its Indian license partner Deccan Farm Equipment, which builds two- and three-row reversible ploughs for the local market to replace ploughs which are pulled by oxen. Lemken benefits from additional sales volumes while its Indian partner benefits from the know-how transfer from the European technology standard. It is reasonable to assume that other European companies will follow suit. Most recently, the Italian manufacturer Maschio has also expressed an interest in Indian production.

Since the level of mechanisation in this agricultural sector is much more advanced than seen in other segments, the market for agricultural machinery again experienced slight growth. Based on assessments by the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian agricultural machinery market increased by 5% to $7.7 billion in 2009. This year, the figure is expected to grow to more than $8 billion. Easier access to loans and the expansion of subsidies have played a key role in this development. Subsidies include low-interest loans, with the Indian government taking on 3% of the loan debt, as well as favourable terms for fuel, electricity and fertilisers. The mechanisation process in the agricultural industry is continuing. Tractor manufacturer Escorts views the structure of Indian agriculture, which is dominated by small farms, as the main obstacle to further growth. Based on unit numbers, with approximately 300,000 units annually, the Indian tractor market is the largest market in the world. The 29 kW and above segment recorded the strongest growth in this regard. It is expected that more than 100,000 units in this power range will be sold in India by 2015. As a production location, India offers many advantages. Besides cheap and relatively welleducated labour, it also offers a functioning local supplier industry. One positive aspect as compared to other locations is the country’s relatively stable legal environment. European medium-sized companies do not have any noticeable presence in the Indian market. Opportunities exist only with local produc-

Mechanisation in Chinese agriculture takes a big step forward The goals set by the Chinese government to increase the application of machinery in the field of agriculture are successfully being reached. Just last year, the degree of mechanisation increased in the three most important arable farming areas of soil tillage, sowing and harvesting by a further 3% and is presently at a new high of almost 50%. However, at the same time this means that more than half of the farms still perform this work manually. Certain activities, such as planting rice or harvesting grain maize, have a mechanisation degree even below 20%. These figures highlight the challenge the country is facing. Chinese cities belong to the most modern in the whole world. Many European countries can only dream of the infrastructure established there. Then again, the development of a modern agriculture has only just begun. In order to foster the development of modern agriculture, the Chinese government is launching

22


new programmes. Following a higher mechanisation, the next goal is the assurance of food supply in the country to the greatest possible extent. The population is still growing slightly, consumption is increasing constantly and meanwhile the arable area is decreasing due to erosion, salinisation and natural disasters. 600 protective cultivation project areas, which will be developed within the next six years, are supposed to improve the situation. The latest cultivation techniques and leading technology is to be applied in these future high performance centres. For this purpose, a budget was drawn up for €553 million. The aim of this new system is to gain up to 11.3 million hectares of land, which are located predominantly in windy and sandy Northern and Northeastern regions of the country, for agricultural uses. The recent development in the Chinese agricultural industry was majorly influenced by two factors: A drop in exports on the one hand and an increasing domestic demand, driven by national subsidies, on the other. However up to 2008, Chinese agricultural machinery exports had risen consistently. So far, the established export markets are found in the developing and emerging countries of Asia, Africa and most recently South America. Chinese technology, which is usually very low priced, replaces manual labour in these markets. Exports of large and expensive machines, especially tractors with more than 37 kW, only played a role in a few countries such as Sudan, Pakistan, Uzbekistan and Kazakhstan. Altogether, the majority of sales of tractors and agricultural machinery for professional agriculture is effected in the domestic market. This way, the drop in exports caused by the economic and financial crisis was generously compensated for by the rush domestic demand. The importance of the Northeastern provinces of Heilongjiang, Jilin, Liaoning and Inner Mongolia has continued to increase as a potential sales market for modern agricultural machinery. In 2009, the province of Heilongjiang invested €242 million in modern agricultural machinery. €95 million of this amount came from direct subsidies. The acquisitions

comprised 11,000 tractors in the medium (19 to 37 kW) and the heavy segment (> 37 kW), 5,675 combine harvesters and more than 20,000 mounted implements. Another €150 million are to follow this year. A few foreign manufacturers also announced sales increase in this region last year. China’s demand for modern agricultural machinery still remains high. New “contractors” and agricultural machinery specialised cooperative organisations are moving forward and turn out to be an interesting group of customers for Western European products, too. The buyers are highly sensitive to prices and depend on subsidies. These will furthermore only be granted for machinery produced by the domestic market. According to statements by the politicians, there will be an increase in support for the growing of potatoes and sugar beet, indoor livestock production and associated cultivation of feed crops in future.

State support for Brazil’s agriculture Brazil has developed into one of the leading emerging economies and a very confident nation. A significant discovery of offshore crude oil reserves and the country’s upcoming role in hosting the 2014 Soccer World Cup have also played a part in this development. Based on good overall economic growth, including the past year, Brazil has managed to put even more distance between itself and other countries in the South American subcontinent. Even in 2009, the year of the global economic crisis, Brazil’s GDP only declined by 0.2%, placing the country in eighth place among national economies. Brazil’s overall economic prosperity is very dependent on the agricultural sector. Agricultural products make up more than a third of total exports. By volume, the most important products include sugar cane, which however is mainly used for conversion into ethanol for the domestic fuel market, as well as soybeans and maize. Meat production is also very significant. Here pork and poultry meat are gaining in importance in addition to traditional beef products. 2010 has been a very good harvest year. Current forecasts indicate about 68 million tonnes of harvested soybeans (+17%). Brazilians are not very dogmatic when it comes to the use of genetic engineering. With respect to maize, it is expected that genetically modified crops will for the first time

23


exceed conventional crops during the coming harvest. Brazil has a strong agricultural machinery sector that employs approximately 40,000 people. All large corporations maintain a presence in Brazil; tractors and self-propelled agricultural machines are produced at 13 locations. In 2009, 55,000 tractors (-17%) and 4,500 combines (-46%) were produced here. Manufacturers keenly felt the weakness of the global market, particularly that of neighbouring Argentina. The domestic market remained strong -— not least thanks to government subsidy programmes. In this context, during the past year the Brazilian tractor market increased by 5% to 45,400 units. The combine market was unable to maintain the levels of the previous year and declined by 14% to 3,800 units. The leading manufacturers are currently pinning their hopes on the subcontinent. AGCO reported a 68% increase in sales for South America in the first quarter of 2010. John Deere expects total annual sales to grow by 25%. More than 18,000 tractors have already been sold in Brazil between January and April — an increase of 53%. Sales of combines during the same time period increased even more (by 60%) with record sales in January and February, but also as early as December 2009, shortly before harvest.

machinery market is also supported by state agricultural subsidy programmes. They include the “Finame” programme, which offers farmers subsidized loans at interest rates ranging from 4.5% to 5.5%. Additionally, there are the old programmes “Moderfrota”, a programme designed to modernise agricultural equipment inventories and “Mais alimentos”, a programme designed to expand rural infrastructure with the aim of securing the food supply by increasing productivity in the agricultural sector.

Professional farms in the United States continue to invest The 2009 market for agricultural machinery in the United States was a divided market. While investments in very high-performance machinery stayed at high levels, the lower and middle segment, which makes up the majority of the market, experienced a strong decline in line with the general economic downturn. Agricultural machinery imports fell by 26% to $4.6 billion. Deliveries from Germany and Japan dropped by a third due to currency effects. Imports from other countries in the North American Free Trade Zone, i.e. from Mexico and Canada, remained virtually constant. Chinese agricultural machinery is playing an increasingly important role - its share in total imports rose from 3% to 8% during the last five years. On the other hand, Japanese tractors have lost significant market shares in the United States market in recent years. Machinery from Germany has maintained a consistent market share of 11% to 14% of total imports. The number of new tractors sold fell by 21% in 2009 (155,500 units), which was below the level of the previous year and 19% below the average of the last decade. The over 74 kW segment decreased by 13% as compared to the previous year. However, the 23,000 tractors in this power range still generated the second best result since 1999, following the 2008 record year. In contrast, the strong demand for tractors by hobby farmers, which lasted for an entire decade, completely disappeared.

In addition to good yields and marketing opportunities for important agricultural products (also due to the high demand for soybeans out of China), Brazil’s agricultural

Sales of combines reached the high level of 9,700 units in 2009. The 2010 market is robust, and many initially sceptical manufacturers have revised forecasts upward in recent months. Between January and April 2010, sales of tractors

24


with more than 74 kW went up by 10%, with growth also extending to the compact tractor segment. There are reports of long supply times for some large tractor models. By April, arable farmers had invested more in combines than in the previous year. A very good harvest is expected if weather conditions remain favourable. In view of the lower costs for farm inputs (e.g. fertiliser), there will be opportunities for good returns even if grain prices do not rise. In this sense, the United States market will be an important engine for the global agricultural machinery market in 2010. The drivers of this market are two million agricultural holdings that are undergoing structural changes, along with a medium-term market stimulus based on the production of ethanol made from renewable sources. A slight pre-buy effect is expected from the introduction of new exhaust emission legislation for tractors and self propelled machines in 2011.

New Tractor Sales in the USA according to hp-segments 100% 80% 60% 40%

more than 100 hp (incl. four wheel drive) up to 100 hp

20%

19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 0 20 2 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 *

0%

Source: AEM, * first four months

Canadian agriculture stands its own in global markets With approximately 46 million hectares, Canada has the world’s sixth-largest area of arable land. Last year, the country was the world’s thirdlargest exporter of wheat behind the EU and the United States, and the world’s largest exporter of canola. Compared to the significant role played by agriculture, the market volume for technology can be classified as small. 23,200 new tractors were sold in Canada in 2009, 19% less than in the previous year. Sales of combines grew by 17% to almost 2,600 units, which were used to bring in an unusually high harvest volume of 56 million tonnes. Overall, 2009 imports of agricultural implements and tractors into Canada remained high at $2.9 billion (-5%). More than 70% of imports originate from its neighbour, the United States. The second most important supplier is Germany, which held a market share of 7% last year. Canada’s largest manufacturer of agricultural machinery is Buhler Industries, which now also own four additional brands. In 2007, Russian manufacturer Rostselmash purchased 80% of shares in Buhler. Since then, the company has increased its sales of large tractors and to a lesser extent also of soil tillage and sowing equipment to the Russian market. The current mood in the Canadian market appears to be good. Exhibitors at the Canadian International Farm Show were mainly optimistic at the beginning of February, expecting some growth in the market, with above-average growth for large equipment. In this context, grain and vegetable farmers are in a better financial position than pig and dairy farmers. Between January and April 2010, sales of tractors and combines increased by 3% and 7%, respectively (as compared to the previous year’s period). Harvest forecasts for 2010 are currently between the record levels of 2009 and a good 2008 harvest year.

25


Agricultural Machinery in the European Union Values in Million Euro, including tractors

Production

Exports

Country

2007

2008

2009

%

2007

2008

2009

%

Germany France Italy United Kingdom Spain Netherlands Denmark Austria Finland Belgium-Luxembourg Sweden Ireland Portugal Greece EU 15* Poland Czech Republic Hungary Romania Bulgaria Rest of new EU members EU 12* (Entry 2004 and 2006) EU 27*

6061 3049 5026 2174 1091 761 636 1253 753 420 629 183 69 27 22131 623 489 360 54 18 153 1697 23828

7512 3668 5493 2072 1298 912 662 1424 826 524 808 207 66 36 25509 822 577 515 51 21 184 2168 27677

5635 2796 4290 1761 1155 839 574 997 702 397 707 150 56 25 20084 592 413 354 45 29 152 1584 21668

-25% -24% -22% -15% -11% -8% -13% -30% -15% -24% -13% -28% -15% -29% -21% -28% -28% -31% -12% 39% -17% -27% -22%

4493 2255 3234 1598 931 1322 412 764 653 560 1192 134 30 31 8785 478 410 353 29 13 325 1293 7090

5648 2610 3848 1490 1162 1510 416 736 698 604 1551 155 42 44 10640 656 496 488 35 31 415 1697 8321

3919 1931 2835 1229 983 1331 368 462 564 389 1281 131 43 36 7337 429 324 330 32 35 282 1099 5555

-31% -26% -26% -18% -15% -12% -12% -37% -19% -36% -17% -16% 3% -18% -31% -35% -35% -32% -9% 11% -32% -35% -33%

Imports Country Germany France Italy United Kingdom Spain Netherlands Denmark Austria Finland Belgium-Luxembourg Sweden Ireland Portugal Greece EU 15* Poland Czech Republic Hungary Romania Bulgaria Rest of new EU members EU 12* (Entry 2004 and 2006) EU 27*

Market Volume

2007

2008

2009

%

2007

2008

2009

%

2121 2692 704 1715 647 868 1146 324 971 599 1080 466 183 232 3103 789 505 382 219 137 863 2583 2616

2676 3155 793 1942 783 1038 1024 356 1053 713 1400 427 207 233 3790 1044 597 457 261 278 1090 3321 3145

2236 2812 697 1581 716 804 732 272 535 535 1100 195 157 137 3008 749 372 393 291 253 622 2298 2561

-16% -11% -12% -19% -9% -23% -29% -24% -49% -25% -21% -54% -24% -41% -21% -28% -38% -14% 11% -9% -43% -31% -19%

3689 3486 2496 2290 930 1020 1369 813 1071 550 554 539 222 242 19272 934 584 389 244 142 743 3035 22306

4539 4212 2438 2523 1064 1220 1270 1044 1181 722 700 510 231 245 21899 1210 678 484 277 267 920 3835 25734

3952 3677 2152 2113 1000 972 938 807 672 606 572 256 170 143 18030 912 461 416 303 246 533 2871 20902

-13% -13% -12% -16% -6% -20% -26% -23% -43% -16% -18% -50% -27% -41% -18% -25% -32% -14% 10% -8% -42% -25% -19%

* excluding EU intra trade Some countries including transfers (e.g. Netherlands, Belgium - reason for exports exceeding production) Sources: Eurostat, VDMA (incl. own calculations and estimation production 2009), CEMA

26


Exports of Agricultural Machines and Tractors Worldwide Share of total volume in % (2009)

Turkey

Ireland

Russia

India

South Korea

Czech Republic

Hungary

Tractors

Spain

Sweden

Poland

Finland

Denmark

Brazil

Canada

Japan

Austria

United Kingdom

Belgium

Netherlands

China

France

USA

Italy

Germany

Agricultural Machines

Mexico

24% 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

Imports of Agricultural Machines and Tractors Worldwide Share of total volume in % (2009) 20% 18% 16% Agricultural Machines

14%

Tractors

12% 10% 8% 6% 4% 2%

Sources: official national statistics, VDMA, total of the ex- or imports from 42 countries

Japan

Romania

Turkey

Norway

Switzerland

China

Czech Republic

Hungary

Mexico

Denmark

Sweden

Spain

Austria

Russia

Italy

Poland

Netherlands

Belgium

United Kingdom

Canada

Germany

France

USA

0%

27

Italy 7%

South Korea 5%

United Kingdom 3%

France 3%

Austria 8%

Germany 13%

Others 19%

Netherlands 6%

United Kingdom 5%

Others 31%

Source: National Statistics Agencies

China

Germany

Average of the years 2007-2009

Hungary 8%

France 14%

Japan 20%

USA 30%

USA 10%

Italy 18%

Totals in Mn. Euro: 2007: 218,7 2008: 264,9 2009: 361,9

Totals in Mn. Euro: 2007: 2121,3 2008: 2675,6 2009: 2235,7

USA

Russia

Others 26%

Italy 7%

France 6%

China 8%

Others 24%

Canada 5%

Belgium 5%

Netherlands 4%

Italy 4%

Origin of Agricultural Machinery Imports of Selected Countries

Mexico 8%

Ukraine 6%

Canada 17%

Germany 13%

Japan 17%

USA 19%

Germany 31%

Totals in Mn. Euro: 2007: 4020,7 2008: 4178,8 2009: 3282,5

Totals in Mn. Euro: 2007: 1701,5 2008: 2371,0 2009: 680,6


28

Others 53%

Others 47%

Source: National Statistics Agencies

China

Germany

Poland 4%

Average of the years 2007-2009

USA 7%

Thailand 4%

Germany 7%

Netherlands 5%

USA 20%

Totals in Mn. Euro: 2007: 4493,2 2008: 5648,3 2009: 3919,2

Totals in Mn. Euro: 2007: 1320,2 2008: 1746,3 2009: 1439,3

United Kingdom 8%

Russia 8%

Japan 4% United Kingdom Australia 4% Russia 4% 4%

Austria 5%

France 16%

USA

Russia

Turkey 8%

United Kingdom 4% France 5%

Others 40%

Ukraine 16%

2% Lithuania 2% Uzbekistan 3% Azerbaijan 3%

Others Moldova 12%

Destinations of Agricultural Machinery Exports of Selected Countries

Russia 5% Mexico Germany 5% 5%

Australia 8%

Canada 28%

Kazakhstan 54%

Totals in Mn. Euro: 2007: 4728,4 2008: 5824,8 2009: 4503,0

Totals in Mn. Euro: 2007: 164,9 2008: 191,9 2009: 143,4


29


Production of Agricultural Machinery Worldwide Worldwide Production of Agricultural Machinery Worldwide Production Volume

Distribution 2009

70 60 European Union 38%

50 Fläche für Grafik

40

Others Eastern 4% Japan Europe 3% 4% India 7%

58 Bn. Euro

30 20 Bn. Euro

2005

2006

2007

2008

2009

48,7

51,3

57,8

68,2

57,5

China 10%

Fläche für Grafik

Latin America 6%

North America 28%

Source: VDMA, Eurostat, own calculations

German Market Volume for Agricultural Machinery by Segments Value in 1,000 Euro

2007

2008

2009

Tractors Soil Working Equipment Machines for sowing, plant protection and fertilising Harvesting machinery Equipment for husbandry Conveyor equipment for agriculture Trailers for agricultural use Other machinery*

1.232.201 149.660 122.856 615.653 177.913 53.389 68.544 1.268.646

1.612.169 190.857 175.303 720.922 230.803 63.233 62.533 1.483.616

1.359.905 184.740 178.910 712.737 194.081 49.435 46.258 1.225.645

-15,6% -3,2% 2,1% -1,1% -15,9% -21,8% -26,0% -17,4%

Total

3.688.862

4.539.436

3.951.711

-12,9%

Kind of machinery

%-change

Sources: Turnover Statistics VDMA Agricultural Machinery, Federal German Statistic Agency, * incl. parts, lawn and garden maintenance, forest equipment, repair, others

30

172.522

2.729 152 3.518 907 4.229 1.774 2.649 10 15.477 13.907 1.879 489

124.802

56.381

107 0 909 273 504 640 819 3.271 4.530 530 288

44.508

1.788 511 201 38 8.131 4.929 824 3.130 3.347 68 821 1.769 8.653 487 9.809

1000 ha

1000 ha

3.266 1.374 2.590 2.264 27.591 17.035 3.984 4.219 12.708 129 1.958 3.680 24.855 3.193 15.957

Grassland

Total ag. area

104.760

2.523 110 2.571 627 3.553 1.111 1.809 8 11.756 8.867 1.319 173

70.334

1.405 842 2.452 2.248 18.339 11.903 2.058 1.008 7.040 61 1.059 1.241 11.937 2.627 6.114

1000 ha

Arable land

42 24 41 40

42 26 52 30 39 36 42

49 92 81 41 75 78 26 91 35 66 93 19 27 61 83

100 kg/ha

Wheat yields

24.176

336 24 407 103 266 180 405 8 2.677 1.573 180 117

17.900

525 524 551 296 3.759 4.087 150 1.088 1.839 40 1.490 306 903 366 1.977

in 1000

Milk cows

0,8

0,4 1,7 0,6 0,4 0,6 0,3 0,4 4,8 0,7 0,4 0,4 1,1

0,9

0,8 2,8 1,7 0,5 0,8 1,1 0,6 1,4 0,8 1,2 3,4 0,6 0,6 0,6 0,9

Index

Cattle stock

13.700,4

493,1 40,1 39,4 23,3 626,3 107,8 230,3 11,0 2.391,0 3.931,4 69,0 75,3

5.662,4

165,4 48,0 44,6 68,2 527,4 370,5 860,2 128,2 1.679,4 2,3 76,7 275,1 1.043,9 72,6 299,8

in 1000

Total

4.055,6

25,3 5,4 19,6 14,9 66,1 63,7 90,9 0,3 753,7 400,6 8,8 30,9

2.575,4

110,1 35,8 43,0 61,6 396,9 286,9 205,0 119,9 448,7 1,9 55,3 75,5 492,6 61,7 180,6

in 1000

> 5 ha

698,1

6,2 0,4 6,6 2,6 12,2 5,1 6,9 23,6 14,4 2,9 0,4

616,9

11,3 8,8 15,3 14,1 197,1 85,4 7,1 22,7 40,0 1,1 11,2 9,8 101,2 17,9 74,0

in 1000

> 50 ha

-

61

24 40 94 10

79 25 93 73 71 43 37

67

100

137 88 103 94 99 99 103 95 126 92 125 83

95

96 93 57 92 90 101 97 67 76 67 90 100 102 120 137

2005=100

Farms > 50 ha in %

39 52 77 49 81 73 16 46 39 84 45 63 70 71 85

2009

-12%

-10% 1% -17% -17% -32% -15% -16% 8% -1% -18% -13% -15%

-12%

-19% 1% 4% 3% -19% -21% 0% -24% -21% -26% -9% -4% -2% -7% -5%

Compared to previous year

Income index per worker (2005=100)

Share ag. land

Number of agricultural businesses

Source: Eurostat; definition of cattle stock density index: cattle units per hectare; status of the data: agricultural land, milk cows, cattle stock and number of farms: 2007, wheat yields: 2009 (except for UK, Ireland and Bulgaria: 2008)

EU 27

Bulgaria Cyprus Czech Republic Estonia Hungary Latvia Lithuania Malta Poland Romania Slovakia Slovenia

EU 15

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain Sweden United Kingdom

Country/Item

Agricultural land and farm structure

Key Facts for the Agricultural Sector in the European Union


31

13.004.202

World

1.397.656

27.800 50.304 8.084 57.640 45.810 137.124 2.801 18.440 11.804 4.602 160.555 20.500 14.324 8.479 21.535 24.800 9.909 28.200 21.302 5.650 13.993 9.381 124.374 14.753 13.400 15.865 23.826 32.564 5.876 176.018 6.200

Arable land

135.821

1.000 296 400 7.560 6.368 11.533 490 1.142 216 201 9.200 13.100 2.002 2.805 136 2.500 589 2.650 658 5.000 337 527 1.864 959 4.904 3.380 2.553 932 52 2.050 1.938

Permanent crop

3.442.078

99.867 404.900 600 196.206 15.435 400.001 10.124 5.048 1.051 11.040 11.177 44.000 4.353 185.098 80.000 314 39.200 5.000 1.500 4.083 4.949 90.924 83.928 11.462 800 12.378 7.910 11.036 234.000 642

Pastures

1.364.353

10.745 5.302 3.585 43.905 3.180 497.664 23.682 19.050 8.037 3.511 127.100 21.378 26.629 32.083 2.888 24.717 5.557 17.405 9.717 17.426 8.565 7.453 19.302 7.833 29.923 11.127 36.704 8.771 2.848 67.642 12.990

Fruits and vegetables

256.893

3.968 3.811 449 19.154 4.404 72.730 1.404 6.331 6.700 1.124 5.986 2.308 1.634 4.049 715 4.955 595 1.054 1.882 2.336 3.372 963 4.963 1.868 5.505 2.014 1.538 1.660 3.270 38.901 2.573

Meat

2.178.067

34.086 36.586 40.960 65.632 51.429 394.644 20.998 62.737 45.262 12.754 232.883 64.169 21.370 20.566 13.536 31.533 24.493 22.700 29.637 19.013 26.513 18.638 70.897 12.088 23.080 29.849 32.428 30.329 21.771 368.981 38.523

Cereals

Agricultural Production (Mn. tons)

A bold figure means: this country is among the TOP 10 countries worldwide for the corresponding item. Source: FAO, area figures refering to the year 2000, production figures: year 2003/2004

273.669 768.230 13.017 845.942 909.351 932.742 99.545 55.010 34.895 9.211 297.319 181.157 163.620 29.411 269.970 190.869 65.755 91.077 77.088 29.817 30.436 22.971 1.638.134 121.447 49.900 51.089 76.963 57.935 24.193 915.896 32.549

Argentina Australia Bangladesh Brazil Canada China Egypt France Germany Hungary India Indonesia Iran Italy Kazakhstan Mexico Myanmar / Birma Nigeria Pakistan Philippines Poland Romania Russian Federation South Africa Spain Thailand Turkey Ukraine United Kingdom United States of America Viet Nam

Total country area

Surface (in 1000 ha)

Agricultural Key Figures of the Biggest Agrarian Nations

414.279

10.873 15.271 107 14.215 15.878 16.648 575 33.844 23.836 2.276 4.942 4.815 1.031 15.737 577 7.385 380 415 1.093 1.447 2.558 433 935 2.151 14.179 7.285 3.975 1.810 15.256 55.293 2.260

1999-2001

523.885

13.867 15.173 103 20.914 17.598 20.460 938 42.127 32.847 3.231 6.504 6.992 1.600 20.645 733 8.725 419 612 1.234 1.953 4.160 603 2.339 2.937 21.442 10.284 4.831 2.722 17.192 62.305 2.488

2003

604.329

15.839 20.871 114 27.215 20.574 20.827 1.314 46.642 39.240 3.585 7.058 9.401 1.427 24.424 693 9.879 379 487 1.254 2.051 6.679 765 2.197 3.421 24.294 11.926 5.958 3.415 21.185 63.893 3.312

2004

Agricultural Exports (Mn. USD)


32


Others

Components

Lawn and Garden

Harvest

Plant Protection

Fertilizing

Sowing

Soil Working

Livestock

Homepage www.challenger-ag.com www.fendt.com www.masseyferguson.de www.agria.de www.ahlmann.com www.alo-deutschland.de www.altek-gmbh.de www.amazone.de www.landini-traktoren.de www.akg-gruppe.de www.bauer-at.com www.beinlich-beregnung.de www.belimpex.de www.l-bergmann.de www.bypy.de www.boschrexroth.de www.bpw.de www.bsk-ast.de www.bucherhydraulics.com www.buschhoff.de www.bvl-group.de www.carcoustics.com www.cat.com www.agrocom.com www.claas.com www.claas-cit.com www.cnh.com www.contiteves.de www.cramer-technik.de www.daimler.com www.dammann-technik.de www.danagri.de www.deere.com www.delaval.de www.deutz.de www.dickey-john.eu www.duecker.de www.eifelwerk.de www.eisele.de www.emitec.com www.esm-ept.de www.etscheid.de www.europumpen.de www.faresin.de www.fella-werke.de www.fliegl.com www.floetzinger-geraetetechnik.de www.frank-wst.de www.freudenberg-ds.de www.frielinghaus.de www.fritzmeier.de www.gea-farmtechnologies.com www.geringhoff.de www.walterscheid.com www.gloriagarten.de www.graepel.de www.grammer.com www.grasdorf-wennekamp.de www.grimme.de www.hako-werke.de www.system-happel.de www.hardi-international.com www.des-systems.com www.max-holder.com www.honda.de www.hufgard.de www.hydac.com www.ifa-gruppe.de www.ifm-electronic.com www.impulsa-ag.de www.inmach.de www.intercontrol.de www.interkat.com www.inuma-aschara.com www.iseki.de www.isri.de www.iwis.de www.jcb.com www.holzhackmaschinen.com www.jetter.de

Trailers / Transport

Company AGCO Netherlands BV AGCO GmbH AGCO Vertriebs GmbH Agria-Werke GmbH Ahlmann Baumaschinen GmbH ALÖ Deutschland Vertriebs-GmbH altek GmbH Gesellschaft für allgemeine Landtechnik Amazonen-Werke H. Dreyer GmbH & Co. KG ARGO GmbH Autokühler GmbH & Co. KG Röhren- und Pumpenwerk Bauer Gesellschaft m.b.H. Beinlich Agrarpumpen und —maschinen GmbH Belimpex-Handels GmbH Ludwig Bergmann GmbH Bondioli & Pavesi GmbH Bosch Rexroth AG BPW Bergische Achsen KG BSK Plast Pack & Agrarservice und Trade GmbH Bucher Hydraulics GmbH Th. Buschhoff GmbH & Co. Bernard van Lengerich Maschinenfabrik GmbH & Co. KG Carcoustics International Caterpillar Motoren GmbH & Co. KG Claas Agrosystems Claas KGaA mbH Claas Industrietechnik GmbH CNH Deutschland GmbH Continental Teves AG & Co. oHG Cramer GmbH Daimler AG - Mercedes-Benz Werk Gaggenau Herbert Dammann GmbH Danagri Deutschland GmbH & Co. KG John Deere Vertrieb DeLaval GmbH Deutz AG Dickey-john Europe S.A. Gerhard Dücker KG Eifelwerk Fahrzeugtechnik GmbH Franz Eisele & Söhne GmbH & Co. KG Emitec Gesellschaft für Emissionstechnologie mbH ESM Ennepetaler Schneid- und Mähtechnik GmbH & Co. KG Etscheid Anlagen GmbH EURO-P Kleindienst GmbH Faresin Deutschland GmbH Fella-Werke GmbH Fliegl Agrartechnik GmbH Flötzinger Gerätetechnik GmbH Frank Walz- und Schmiedetechnik GmbH Freudenberg Dichtungs- und Schwingungstechnik GmbH Frielinghaus GmbH Fritzmeier Systems GmbH & Co. KG GEA Farm Technologies GmbH Carl Geringhoff Vertriebsgesellschft mbH GKN Walterscheid GmbH GLORIA Haus- und Gartengeräte Friedrich Graepel AG Grammer AG Grasdorf - Wennekamp GmbH Grimme Landmaschinenfabrik GmbH & Co. KG Hako-Werke GmbH System Happel GmbH Hardi GmbH HJS Fahrzeugtechnik GmbH & Co KG Max Holder GmbH Honda Motor Europe (North) GmbH Kalkwerk Hufgard GmbH Hydac Technology GmbH IFA-Maschinenbau GmbH ifm electronic gmbh Impulsa AG InMach Intelligente Maschinen GmbH Inter Control Hermann Köhler Elektrik GmbH & Co. KG Interkat Katalysatoren GmbH Inuma Fahrzeug-Service und Maschinenbau GmbH Iseki-Maschinen GmbH Deutschland Isringhausen GmbH & Co. KG iwis agrisystems JCB Deutschland GmbH Jensen Service GmbH Jetter Aktiengesellschaft

Tractors

Members of VDMA Agricultural Machinery

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Franz Kleine Vertriebs & Engineering GmbH

www.franz-kleine.com

Köckerling GmbH & Co. KG Komptech GmbH Köppl GmbH Kramer-Werke GmbH Maschinenfabrik Bernard Krone GmbH Kubota (Deutschland) GmbH Kuhn Maschinen-Vertrieb GmbH Kverneland Group Deutschland GmbH Lechler GmbH Lely Industries N.V. Lely West N. V. Lemken GmbH & Co. KG Lemmer-Fullwood GmbH MAN Nutzfahrzeuge AG Manitou Deutschland GmbH Maschio Deutschland GmbH matev GmbH Merlo Deutschland GmbH Mesto Spritzenfabrik Ernst Stockburger GmbH MFT Motoren- und Fahrzeugtechnik GmbH Michelin Motec GmbH MTD Motorgeräte GmbH MTD Products AG Müller-Elektronik GmbH & Co.KG MX GmbH Niemeyer Agrartechnik GmbH OSB AG Alois Pöttinger Maschinenfabrik GmbH Pumpenfabrik Wangen GmbH Rabe Agri GmbH Rafi GmbH & Co. KG Rapid Technic AG Rauch Landmaschinenfabrik GmbH Reform-Werke Bauer & Co Gesellschaft m.b.H. Reichhardt GmbH Same Deutz-Fahr Deutschland GmbH Sauer-Danfoss GmbH & Co. OHG Schanzlin Traktoren und Maschinen GmbH Schmidt GmbH Schmotzer Agrartechnic GmbH Schuitemaker Machines B. V. Gebr. Schumacher GmbH Sgariboldi Deutschland Schneider KG SHW Schmiedetechnik GmbH & Co. KG Sontheim Industrie Elektronik GmbH Spraying Systems Deutschland GmbH Wilhelm Stoll Maschinenfabrik GmbH B. Strautmann & Söhne GmbH & Co. KG Suevia Haiges GmbH Sulky-Burel Tecnoma Technologies SAS TeeJet Technologies Denmark ApS Thiele GmbH + Co. KG Thomas Magnete GmbH Julius Tielbürger GmbH & Co.KG Gebr. Tigges GmbH & Co. KG Trelleborg Wheel Systems GmbH Trioliet Mullos B.V. Valtra Vertriebs GmbH Vector Informatik GmbH Vetter Umformtechnik GmbH Voss Fluid GmbH WABCO Fahrzeugsysteme Wachendorff Elektronik GmbH & Co. KG Walker-Technik GmbH & Co. KG Hans Wanner GmbH Weber-Hydraulik GmbH Welger Maschinenfabrik GmbH Werner GmbH Wiedenmann GmbH Wika Alexander Wiegand GmbH & Co. KG WM Kartoffeltechnik GmbH WTK-Elektronik GmbH Zetor Deutschland GmbH ZF Friedrichshafen AG ZF Passau GmbH

www.koeckerling.de www.komtech.com www.koeppl-motorgeraete.de www.kramer.de www.krone.de www.kubota.de www.kuhn.de www.kvernelandgroup.com www.lechler.de www.lely.com www.lely.com www.lemken.com www.lemmer-fullwood.info www.man-nutzfahrzeuge.de www.manitou.com www.maschio.de www.matev.org www.merlo.de www.mesto.de www.mft-cunewalde.de www.michelin.de www.motecgmbh.de www.mtdeurope.com www.mtdeurope.com www.mueller-elektronik.de www.m-x.fr www.niemeyerweb.de www.osb-ag.de www.poettinger.at www.wangen.com www.rabe-agri.eu www.rafi.de www.rapid.ch www.rauch.de www.reform-werke.at www.reichhardt.org www.deutz-fahr.de www.sauer-danfoss.de www.schanzlin.de www.schmidt-auma.de www.schmotzer.de www.schuitemaker-machines.nl www.gebruederschumacher.de www.sgariboldi.de www.shw-fr.de www.s-i-e.de www.spray.de www.jf-stoll.com www.strautmann.com www.suevia.com www.Sulky-Burel.com www.tecnoma.com www.teejet.dk www.thiele.de www.thomas-magnete.com www.tielbuerger.de www.tigges.com www.trelleborg.com www.trioliet.nl www.valtra.de www.vector-informatik.de www.vetter-forks.com www.voss.de www.wabco-auto.com www.wachendorff.de www.walker-technik.de www.wanner-maschinenbau.de www.weber.de www.welger.com www.werner-trier.com www.wiedenmann.de www.wika.de www.wm-kartoffeltechnik.de www.wtk-elektronik.de www.zetor.de www.zf-group.de www.zf.com

Status: June 2010

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Lawn and Garden

Harvest

Plant Protection

Fertilizing

Sowing

Soil Working

Livestock

Homepage www.kemper-stadtlohn.de www.kersten-maschinen.de

Trailers / Transport

Company Maschinenfabrik Kemper GmbH & Co. KG Dipl.-Ing. Georg Kersten Maschinenfabrik

Tractors

Members of VDMA Agricultural Machinery

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Imprint

Editors Gerd Wiesendorfer Alexander Haus Dagmar Häser Design and Layout VDMA DesignStudio Photos Amazonen-Werke H. Dreyer GmbH & Co. KG (cover) Deere & Company European Office (p. 5) Schuitemaker Machines B.V. (p. 7, p. 18) Kuhn Maschinen-Vertrieb GmbH (p. 11) agria-Werke GmbH (p. 13) Merlo Deutschland GmbH (p. 16) CNH Deutschland GmbH (p. 21) WM-Kartoffeltechnik GmbH (p. 22) Faresin Deutschland GmbH (p. 24) Status June 2010 Subject to correction. © VDMA

35

VDMA Agricultural Machinery

www.vdma.org

VDMA, Titel DesignStudio

Lyoner Strasse 18 60528 Frankfurt am Main Germany Phone +49 69 6603-1298 Fax +49 69 6603-2298 E-Mail [email protected] Internet www.vdma.org