Solid farm profits | German co-op says an optimistic view of future has sparked a record pace of farm machinery sales
HANOVER, Germany — Farmers plan to buy machinery at record or near record levels for the rest of 2013 and into next year, says the head of a German farm co-operative.
Reinhard Grandke, chief executive officer of Germany’s large farmer co-operative DLG, says his organization’s analysis of the international markets for farm equipment and technology is that sales will be similar to the record year of 2012 or exceed that.
Grandke said the world’s farmers have confidence that farming will continue to be profitable.
He said even sectors such as dairy in Europe and the United States and hogs worldwide are seeing better returns.
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“Arable farmers, (cereal, pulse and oilseed) producers, have had excellent economic conditions since 2008, and livestock sectors are seeing improvements,” he said during the German Agricultural Society’s farm show, Agritechnica, in Hanover Nov. 12-16. “The plan is to invest in new equipment.”
DLG’s research indicates that farmers expect several years of steady markets and reasonably low input costs, and that level of security is prompting them to plan capital investments at near record rates.
“Farmers assess their current business situation fairly stably,” he said.
“It has been five years since the crisis of Lehman Brothers, and farmers are developing a certain serenity about their futures,” he said.
DLG’s polling suggests that 50 percent of farmers in Germany and Poland are planning to make significant investments in the next year.
It’s only 30 percent in France, where producers are experiencing tougher times, due in large part to higher dependency on livestock for returns. Two-thirds of those investments will be made in field equipment.
In the United Kingdom, 30 percent of producers plan to buy before then end of next year.
Agritechnica is the largest farm technology event in the world, with more than 2,700 exhibitors. Fifty-five are from Canada.
Grandke said producers around the globe are planning to buy. North American farmers are looking for more single pass seeding and re-duced tillage technology. Brazil and most of South America are focused on greater efficiency when operating large farm sizes and, like the United States and Canada, want to cut operations and tillage.
South America is also interested in improvements to high throughput combine harvesting tools.
Russia wants improvements to farm agronomy and management information and overall operational training for producers and workers.
Asia wants greater crop production efficiency as farm size and mechanization grows. China is especially looking for these tools as land market restrictions are relaxed.
Africa shows signs of becoming a large market in the future for equipment and plant genetics.
Grandke said that in the short term, Africa is looking to improve crop yields and production efficiencies. Mechanization is the next step for the continent.
“We are seeing a lot of desire for basic technology there,” he said.
In the European Union, farmers are asking for more precision agriculture tools to customize operations.
Berndt Schuler of VDMA, the German association that represents agricultural manufacturers, said farmers’ optimism has never been better, which promises potential sales for equipment manufacturers.
He said worldwide production of machinery is on a record pace of growth and will likely have increased more than 10 percent when 2013’s sales are assessed. Next year will produce similar sales figures, he added.
He said China now represents 19 percent of production.
“China’s production is domestically based and they use what they build. However, their world share is playing a substantial role, increasing the world’s supply of machinery.”
