Sales of agricultural machinery in the first quarter of 2021 increased by 53% to 32.5 billion rubles. The production of equipment increased by the same amount during this period. It was influenced by measures of state support for the industry: decree No. 1432, which allows agricultural producers to purchase agricultural machines at a discount, as well as preferential leasing and “stable acceptable” prices for agricultural products.
According to John Deere, the entire machinery market in January-March grew by an average of 18-20%. The company is observing positive dynamics in its sales in almost all segments. The main factors that influenced the upward trend are a good level of the harvest in 2020 in Russia, a significant increase in world, and then domestic prices for major crops, a relatively low level of world grain reserves in 2020. In this case, the “low” ruble exchange rate became an advantage for Russian farmers: they were able to increase exports and make good money in the background of world trends. The company representative also predicts an increase in demand for food under condition of pandemic and lockdowns, so in the medium term, the demand in the market will be greater than the supply.
Demand may fall
However, according to Rosspetsmash (Russian Association of Manufacturers of Specialized Machinery and Equipment), in the near future demand will obviously fall against the background of the imposed export duties on grain and oilseeds, the rise in prices for seeds, agrochemicals and other resources for farmers. On the one hand, the authorities are trying to keep food prices down, on the other, the cost is constantly growing. The market of agricultural machinery is likely to shrink by the end of the year, including due to insufficient supply of machinery. Dealers have contracted 60-100% of the volume of equipment available for a year, it is beginning to be lacking and this trend will continue for some time.
An unprecedented increase in metal prices, constantly growing electricity tariffs, as well as an increase in the cost of fuels and lubricants may slow down the growth rates in the industry. If this problem is not resolved, then it will be difficult for Russian manufacturers to maintain the high dynamics that they showed in the first quarter throughout the year. Despite all the above negative factors, Rosspetsmash predicts that the production of Russian agricultural machinery in 2021 will not be lower than the level of 2020.
Agrobusiness uses both domestic and imported equipment
Rashid Korsakov, general director of Zerno Zavolzhya Trade House, sais that last year the company purchased agricultural machinery with a stock of ten tractors. The company prefers domestic agricultural machinery, because its quality has improved recently. Agro-Lux company also plans to buy domestic agricultural machinery, because it is cheaper than imported ones.
Press service of “Agrocomplex” notes that the company’s investment program for 2021 is already at the delivery stage: tenders have been held, contracts have been concluded, equipment is being accepted. In total, investments of “Agrocomplex” for the crop growing industry will amount to 900 million rubles, of which 400 million rubles will be used for leased equipment (rice harvesters and beet loaders). The program for the renewal of equipment for the livestock industry includes 260 million rubles. In crop production, “Agrocomplex” uses both domestic and imported equipment in a ratio of about 50/50%. In animal husbandry, foreign equipment is purchased for forage procurement, and Belarusian machines are used for preparation of forage. The company estimates the average age of machinery fleet in crop production at 12 years. First the enterprise needs to renew the fleet of grain harvesters, imported high-energy tractors, tractors of traction class 1.4-2 (80-130 hp), as well as trucks and cars. In general, they update their fleet of equipment in a regular mode and keep it in good condition.
Export and Import
At the end of 2020, exports of Russian agricultural machinery increased by 30% compared to the previous year and reached a record 16 billion rubles. In 2020, shipments to Germany in monetary terms increased 4.6 times, to Austria – 4.5 times, to the Czech Republic – 2.9 times, to Bulgaria – 2.1 times, to France – by 84%, to the Netherlands – by 73%, to Kyrgyzstan – by 51%, to Hungary – by 44%, to Kazakhstan – by 29%.
To produce only competitive products for supply to the domestic market of Russia and decrease in import volumes are the main goals of domestic tractor plants, However, Russia buys tractors 14 times more than it sells. In 2020, the import of tractors to Russia amounted to an impressive volume – 90.5 thousand units (-18.2% by 2020) in physical terms or $ 1.3 billion (-20.1%) in monetary terms.
In 2019, tractors came to Russia from 25 countries. The leaders in terms of supplies were Belarus, the Netherlands and China. Imports from the Netherlands in physical terms increased by 24.3% to 4.6 thousand tractors (the third place after China and Belarus), in monetary terms – by 24.8% to 317.9 million dollars and took the leading position. The equipment was mainly delivered to the Moscow region and Moscow.
Room for opportunities of foreign producers
At the moment, the tractor equipment of Russia in many respects lags behind the level of foreign tractor construction, in particular, in terms of the pace of development of new tractor equipment. The remaining domestic tractor plants are still developing competitive wheeled and tracked tractors at an insufficient pace, which does not allow them to increase the supply of their tractors, and primarily to domestic consumers in Russian market. So, there is still the demand for the machines meeting the highest world standards, which can be provided by foreign manufacturers.
The Rosselkhozbank has compiled a rating of the most demanded equipment in agribusiness. The analysis showed that the leading positions among the machines for crop production are occupied by grain harvesting equipment. In particular, harvesters account for about 50% of the demand in this category. Also machines and equipment for soil cultivation, grain and seed cleaning, mowers and pick-ups are very popular. In addition, farmers are interested in grain dryers, reapers, equipment for harvesting and planting potatoes. In the section of equipment for livestock farming, agricultural producers most often show interest in forage harvesting and forage harvesting complexes (50% of the demand in this category), in particular, balers.
Sources: Dutch Ministry of Agriculture, LAN-Moscow Team, Agroinvestor, Spectrsbub, Rosspetsmash, SeaNews