21 September 2015, 14:58
Ag Machinery International events
Split into four distinct events, the series will focus on key agricultural markets such as Eastern Europe, East Africa and Eurasian countries with regard to agricultural machinery investment opportunities. For the first time there will also be a dedicated event paying close attention around the component markets in the BRIC countries, Brazil, Russia, India and China.
With most major manufacturers sourcing in India or China with growing networking collaborations in these respective countries, it is important to analyse these markets and to highlight their particular characteristics. Russia and Brazil are huge agricultural machinery markets with a strong demand for high quality components and spare parts.
Each conference will deliver market reports, examples of best practice from firms with facilities already in situ and reports from practical farmers from each prospective country.
Emerging market events
On Tuesday 10 November at 10:00, the spotlight will be on the emerging markets of Ukraine, Poland and Romania, with presentations and a chance for networking after the seminar. This event is co-organised by VDMA Agricultural Machinery and supported by German Agribusiness Alliance at Committee on Eastern European Economic Relations.
Despite the political unrest currently being felt in Eastern Ukraine, the country is still seen as a good investment prospect for agriculture and its respective machinery.
The country has long sold itself as being the once and future breadbasket of Europe, and recognises that its fertile black earth is attractive for foreign investors.
It is also accepted that agriculture is a critical way of reversing Ukraine’s economic decline. At one point, agriculture made up 20% or Ukraine’s economy, now it only represents about half of that, despite more than half of the country being productive arable land.
Ukraine is already a leading exporter of barley and sunflowers, and is also increasing its acreage of maize to become one of the top exporters of the grain to Middle East and global markets.
Meanwhile, in Poland, farm incomes have tripled in the last ten years since the country’s accession to the European Union in 2004 and the adoption of a market economy over the former centrally planned system of fixed prices. Alongside funds from the Common Agricultural Policy, payments from the Polish government have also increase substantially.
Exports are particularly strong, with an increase of around 10% year on year for agri-food exports meaning the value of agricultural exports is close to $30bn each year. Poland is the world’s leading exporter of apples, overtaking China in 2013.
Sectors such as dairy have also flourished and international agri-food companies have also been attracted to the country.
Of Romania’s 23.8 million hectares, 14.7 million hectares is deemed agricultural. In 2014, the country ranked fifth in the total area put down to wheat, after France, Germany Poland and Spain. With regard to output, Romania was also in fifth position, after France, Germany, United Kingdom and Poland, however there is room for improvement in terms of yield, with it only achieving 3.6t/ha in apposed to the highs of 8.6t/ha for Germany and the United Kingdom.
There is a strong demand for imported machinery in Romania, with the number of tractors imported rising by 27% in 2014 on 2013 figures, totalling €445 million and the number of ploughs rising 24% on 2013 levels.
African markets of Ethiopia, Tanzania and Kenya
Also on Tuesday 10 November, from 18:00 to 21:30, the African markets of Ethiopia, Tanzania and Kenya will be looked at in more detail.
Ethiopia is one of the fastest growing non-oil dependent economies in Africa, with agriculture accounting for around 40% of GDP. Of the 111.5 million hectares of land, 75 million hectares is suitable for production and roughly only 14 million hectares currently under production, according to sources.
Large-scale agricultural investment has expanded partly due to foreign input, as the Ethiopian government is actively seeking investors to help with modernisation with the appropriate technology and machinery.
Tanzania is recognised as having excellent potential for agriculture-led economic growth, with abundant land and water resources, as well as access to international markets through a major port.
Kenya, meanwhile, has the largest most diversified economy in East Africa and agriculture makes up more than a fourth of the country’s GDP. Sectors such as dairy, horticulture and the production of staple goods such as maize and wheat all have room for expansion.
Eurasian countries of Russia, Belarus and Kazakhstan
On Wednesday 11 November from 10:00 until 13:30 the focus will be on the Eurasian countries of Russia, Belarus and Kazakhstan.
Following the announcement of a $2 billion investment fund to develop agricultural projects between China and Russia, as well as a free-trade zone between each country’s key farming belts, there remains strong opportunity for growth in Russia, despite high credit costs and strong trade sanctions.
Undoubtedly, this will concentrate on the vast hectares of uncropped land on the borders between the two countries, as well as increasing productivity inland.
There is significant room for investment growth in nearby Belarus, with several US automobile manufacturers having recently announced assembly plans for the Minsk region. The conflict in Ukraine has also made Belarus somewhat of a more reliable gamble for investors.
Investments into Kazakhstan’s agricultural industry rose by nearly 18% from 2013 to 2014, partly due to the implementation of Agribusiness 2020.
This government-led program has the aim of increasing the financial support of the sector by introducing new financing mechanisms, improving the access to affordable products and services, developing the state system for support and increasing the efficiency of the agricultural sector in general.
Components markets in BRIC countries
With the number of farm mechanisation factories expanding rapidly in Brazil, Russia, India and China, it comes as no surprise that there is increased demand for components in these regions.
For the first time, Ag Machinery International will hold a dedicated conference and stakeholder networking session concentrating on component supply in the BRIC region.
Thanks to major investments into roads, ports and infrastructure, as well as increased domestic demand, BRIC countries continue to be a major growth focus for many existing and new entrant manufacturers.
The Brazilian economy is characterized by a moderately free market and an inward-oriented economy. Import duties make it difficult for international component manufacturers to enter and be competitive. The Russian market with its import stop policy and diverse customs regulations is as well challenging. It is therefore even more important to hear market experts from these countries to get first hand information to evaluate the potential for the upcoming years. Brazil and Russia are appealing due to growth, however political problems and unfavourable customs regulations can make it a challenging market, meaning it is important to identify key partners at an early stage.
For manufacturers already based in India and China, it is recognized that a reliable components market is required to follow them to these key markets even though India’s and China’s emergence as a manufacturing hub attracts international participants to its components market. Mirroring the twofold increase of sales in the construction equipment market by 2015 - 2017, the market for components in construction and bulk material handling will also double during that period.
The trend to source from low-cost countries has gained momentum, and countries with a rich experience in manufacturing, large pool of skilled manpower, and ever increasing domestic volumes, have made the most of this environment to become a manufacturing hub for the global market. This new status will result in many multinationals clamouring to set up manufacturing facilities. The initial challenge of delivery lead times is reducing as global hydraulic component manufacturers are setting up manufacturing or assembling units and with the rising prevalence of multinational companies in these countries, competition from the price-sensitive unorganized sector will reduce. The elimination of these hurdles will clear the way for uninhibited growth of the component market.
Each of these events will take place in the Convention Centre at Hanover’s Exhibition Grounds on 10, 11 and 12 November during the Agritechnica Exhibition.
Source: DLG