Agricultural machinery: demand declining on foreign markets
The downturn in agricultural incomes at the global level is carrying repercussions to the tractor and farm machinery markets. As a result, Italian exports are off by 2% and national production stopped at € 7.4 billion, down 2%. The forecast for 2016 is for decline, especially due to the negative trend of such key markets as those in Germany and the United States.
The world tractor market disclosed a decrease in 2015 and this development had a negative impact on Italian exports. The reduction of farm incomes around the globe caused by bumper crops leading to lower prices for the main commodities resulted in shrinking investment capabilities by agricultural enterprises and a substantial drop in demand for machinery. This was the global scenario of agricultural mechanization presented this morning in Varignana, near Bologna, at the national assembly of FederUnacoma, the Italian Agricultural Machinery Manufacturers Federation.
After achieving peak tractor sales in 2013 of 2 million 200,000 units, the market showed a decline of 3.2% for 2014 and a further 6.6% slump in 2015. In India, tractor sales fell 18% in 2015 to 486,000 units and in Western Europe the downturn was 8.6% with 153,000 units sold; sales in Brazil plunged by 33% to 37,400 tractors moved. Other reductions came in the Russian Federation, down 42% at 22,000 units, and were more limited in the United States at minus 1.6% for 205,000 units sold. The only countries running against the trend were China, with sales increasing by 6% for 557.000 units moved, and Turkey, up 14% on the boost of 67,000 tractors sold.
The price paid for these unfavorable conditions by the Italian industry, traditionally strong on foreign markets, was a 7% decline in the value of tractor exports in 2015 offset by an ability to hold our with other types of agricultural machinery and equipment, which closed the year with a small 0.7% gain. Overall, Italian exports wrapped up 2015 sales with a 2% decline. Decreasing demand on foreign markets – especially in Europe, accounting for Italy’s major markets – meant a slump in national production to € 7.4 billion, 2% down under the previous year’s figure. In detail, tractor turnover came to € 1.9 billion, off by 9% with 56,900 units produced; the sector of incomplete tractors and tractor parts disclosed sales up 1.2% over 2014 to € 790 million and along with other agricultural machinery and equipment the value came to € 4.75 billion, ahead by 0,3%.
The negative trend is expected to be confirmed for 2016 in light of data on sales on foreign markets which already signalled reductions for Italian manufacturers in the first part of the year. Foreign market commerce data for the January-March period compiled by ISTAT, the Italian National Statistics Institute, point to an 8.2% decline for Italian exports to Germany, a 19% drop for the United States and a 23% falloff for the UK. A 25% leap was reported for China but this gain was less in volume than the losses of exports to Germany and the United States. A separate case is the French market in strong growth by more than 20% in the first four months of the year, in the wake of a 25% dive in 2015. For France, Italy came out of the first quarter of the year with a 22% export surge.
FederUnacoma President Massimo Goldoni commented, “The case of France shows that the decline of our exports is not due to a loss of the competitivness of our products but solely to present conditions in various countries. Just as soon as conditions more favorable for the acquisition of agricultural machinery are reestablished demand for Italian products will immediately return to a high, especially in those countries, like in Europe and the United States, which require mechanization with high technological levels and see machines Made in Italy as a guarantee of quality.”
Varignana (Bologna), June 23, 2016
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