Association of Equipment Manufacturers (AEM)

Global business climate for agricultural machinery has weakened, says Agrievolution Alliance survey


Agrievolution Alliance says manufacturers of tractors and agricultural machines are less satisfied with their current business situation than they have been in the past four years, based on responses to its latest biannual survey of machine manufacturers and importers.

Agrievolution Alliance, a global network of the leading agricultural machinery associations representing more than 6,000 equipment manufacturers worldwide, presented the survey results during a press conference November 13 at EIMA International 2014 in Bologna, Italy.

The Association of Equipment Manufacturers (AEM) serves as the alliance secretariat.

Only 18 per cent of the companies surveyed described their business situation to be “good” or “very good.” This share was still around 50 percent in April. The correspondent Agritech Business Climate index dropped considerably, by 33 points, and has reached a value of ?]7 on a scale from +100 to ?]100.

“Mainly the industry in Europe and Japan has driven the global index into the negative range,” said Gerd Wiesendorfer, chair of the Agrievolution Economic Committee. “One out of two agricultural machinery manufacturers from those regions are dissatisfied with the current business situation.”

Machinery orders, sales up in China, Turkey

Nevertheless, the readiness to invest in new agricultural technology is still very pronounced in many markets.

Both order intake and sales have recently revived again in China, where the need to increase the mechanization levels on farmland remains very high. The local industry reported a higher order level than in the past year.

A similarly positive trend and expectation can be seen in Turkey, according to the recent survey, although this market had shown high volatilities in the course of this year.

U.S. dairy and livestock farmers benefit from lower commodity prices

The agricultural business climate in the United States has cooled down slightly, according to the estimation of the machinery industry. On the other hand, the decline seems to be limited to the arable sector, while dairy and livestock farmers benefit from lower cost due to the commodity price decrease.

U.S. agricultural machinery manufacturers are less optimistic on their market than six months ago, but around 40 percent of them expect their order intake and sales to increase over the next couple of months.

Manufacturers foresee further decline in Europe, South America

Globally, the best market performance in the next half year is foreseen for the Asian continent and Oceania, while sales in Europe and South America are supposed to further decline.

In 2013, the worldwide agricultural machinery industry reached a record production volume of ca. EUR 96 billion (USD 130 billion). For 2014, Agrievolution expects a production decline of ca. 5 percent, followed by another slight decrease in the coming year.

Despite this downward trend, the industry output clearly remains above the long?]term average. On behalf of the positive basic market conditions and due to the important role of mechanization for the productivity increase of farming, the next economic upswing is expected within a short period.

Agrievolution Alliance conducts its Agritech Business Barometer Survey twice each year, in April and October. View the public version of the report here.

About the Association of Equipment Manufacturers (AEM) -   
AEM is the North American-based international trade group providing innovative business development resources to advance the off-road equipment manufacturing industry in the global marketplace. AEM membership comprises more than 850 companies and more than 200 product lines in the agriculture, construction, forestry, mining and utility sectors worldwide. AEM is headquartered in Milwaukee, Wisconsin, with offices in the world capitals of Washington, D.C.; Ottawa, Canada; and Beijing, China.

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