The market of domestic agricultural machinery showed growth in monetary terms in the first half of the year
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The market of domestic agricultural machinery showed growth in the first half of the year immediately by 8.7% in monetary terms. But in real terms, the segment is falling – against the background of the investment pause of farmers, sales increase only due to rising prices. Local players are talking about the rise in production costs, and imported equipment is also adding to the price against the backdrop of the exchange rate and rising salvage fees. At the same time, the last two factors did not lead to the traditional revival of demand – warehouses are overstocked with equipment at old prices, and given the situation, the stocks will last until the end of the year.
Sales of domestic agricultural machinery in money terms grew by 8.7% in the first half of the year, to 124.4 billion rubles, Rosspetsmash calculated. Production increased immediately by 17.2%, to 145.9 billion rubles. At the same time, according to the results of the first quarter, both shipments to the domestic market and output were declining (see Kommersant of May 2).
In volume terms, all large segments, with the exception of combines, show a negative trend. Thus, the production of tractors in the Russian Federation in January-June fell by 3.8%, to almost 2.9 thousand units, plows – by 20.4%, to almost 1.6 thousand units, harrows – by 28.4% , up to 2.6 thousand pieces. The output of seeders decreased by 27.1%, to 3.8 thousand units, machines for applying fertilizers – by 21.7%, to 419 units, sprayers – by 18.7%, to 1.1 thousand units, mowers – by 19.8%, up to 1.3 thousand pieces, headers – by 17%, up to 1.2 thousand pieces, balers – by 15.7%, up to 931 pieces, grain cleaning machines – by 14.6 %, up to 765 pieces. At the same time, the production of grain harvesters increased by 32.6%, to 3.2 thousand units, self-propelled forage harvesters – by 38.8%, to 204 units. However, the reason for the growth in the production of combines in Rosspetsmash is not the revival of demand, but the low base of last year in this segment.
The association notes that the growth of the market in money terms with a reduction in production in the main segments is associated with an increase in cost, including against the backdrop of an increase in the cost of components, more complex logistics and other things. Demand for agricultural machinery remains low due to a decrease in the profitability of farmers “due to prohibitively low prices for agricultural products and existing export duties on grain.” Rosspetsmash has already called for zeroing the duty for five years, but the government is not considering the idea.
Also, Rosspetsmash draws attention to the fact that the import of agricultural machinery in the Russian Federation is growing. So, in January-June, the import of tractors “from far-abroad countries” increased by 64%, to 9.8 thousand units, sprayers – by 47%, to 1.2 thousand units. The association believes that “a sharp increase in foreign supplies became possible thanks to the comprehensive and systematic state support of importers from their states.”
Alexander Altynov, Chairman of the Board of the Association of Dealers of Agricultural Machinery ASHOD, notes that the investment pause in the market continues: “Prices for agricultural products are not very high, last year’s harvest is still left, and a new one is already approaching.” At the same time, in the spring, manufacturers from China brought to the Russian Federation volumes of equipment that are incommensurable with the real level of demand on the market, and the warehouses are still packed. At the same time, imports of well-known Western brands on the market, including those for especially powerful tractors, for which there are no alternatives, amount to only a few hundred units, and not all of them have been sold. As a result, even the increase in waste collection and the weakening of the ruble did not give a surge in demand or supplies, Mr. Altynov says: “Farmers know that stocks at old prices are large and there is no point in rushing. As a result, these stocks will be sold before the end of the year, and there will be no expected increase in the collection of scrap.” Recall that the salvage tax has increased since July 1, to the greatest extent for tractors with a capacity of 90–130 hp. s. – 4.8 times, up to almost 1.3 million rubles.
At the end of the year, Alexander Altynov believes, the agricultural machinery market will shrink by 20-25%. “If you look at dealer revenue, it has never fallen, even if sales volumes have declined — this year claims to be the first,” he concludes.
For the first half of the year, demand and purchases in the agricultural machinery market, according to various estimates, fell by 25%, while dealer networks are quite overstocked, Tatiana Fadeeva, CEO of Optitech Agro, confirms. “We see a rather difficult situation for agricultural producers, which, firstly, is associated with the high availability of their goods in warehouses. For many, the second harvest falls on the stocks of our customers.
Secondly, the extremely low domestic price for grain – despite the fact that the cost is high on world markets and is growing due to events that are obvious to us, demand is restrained in the domestic market by duties, and the domestic price for products remains extremely low, ”she explains. “The situation with the profitability of end customers is likely to continue until the end of the year, so we do not predict any significant improvement in the situation,” continues Ms. Fadeeva. “Customers will only buy the equipment that they critically need.” Even those local producers that are not covered by the increase in recycling fees are experiencing serious problems with demand, with congestion in both dealer and own warehouses, she concludes.
Dmitry Babansky of SBS Consulting calls the half-year results “pretty worrying.” The growth of the market in money terms is due to the rise in the cost of equipment; agrarians, against the backdrop of unfavorable price conditions and the growing cost of domestic equipment, minimized the purchase of new equipment, he continues. The situation requires decisions to improve the financial condition of farmers and increase the availability of new Russian equipment for them, the expert concludes.
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