More than 400,000 visitors poured onto the grounds of Agritechnica in Hanover, Germany, in November as the event resumed following a pandemic-induced pause. The latest innovations in farm equipment and machinery were on display by 2,800 exhibitors from more than 50 countries as the industry works to recover from the supply chain induced nightmare of the past few years.
“Obviously, many of our equipment manufacturers, some based in the United States, are multinational companies selling around the world,” says Curt Blades, senior vice president of agriculture services and forestry at the Association of Equipment Manufacturers (AEM). “The dynamic of each country ultimately affects our ability to sell grain around the world, and obviously that has a tremendous impact on the equipment we sell in the United States.”
AEM is part of a coalition of 13 trade associations called Agrievolution. It just released a report on the latest ag equipment trends shaping the future of the industry and sales.
A key finding is the evolution of agricultural commodities trade flow over the past two decades has grown from $405 billion to $1.2 trillion. Agrievolution says that’s changing the demand for mechanization worldwide.
Mechanization is the Answer
According to data from OECD-FAO and it’s Agricultural Outlook for 2023 to 2032, one of the key drivers in crop production won’t be increasing land use or crop intensity. Instead, it says 87% of crop production growth will come from yield increases.
How will farmers achieve those gains globally? Mechanization continues to be the answer.
“We’ve been talking about sustainability and efficiency for the past few years,” Blades says. “We’re now recognizing the convergence of that is technology as it lines up with the economics of doing more with less.”
In its report, Agrievolution lays out global trends for different machinery by region. In recent years, sales of large farm tractors have increased with the largest purchases coming from Latin America. New seeder demand is seeing strong sales in North and South America along with Africa and the Middle East. Meanwhile, combine purchases are also up.
Based on a survey of manufacturers, in the next six to 12 months, the sales curve might come down a little bit in terms of equipment sold, says Charlie O’Brien, Agrievolution secretary general. “Longer term, the outlook remains very solid,” he adds.
Lessons Learned
The biggest trend uncovered in the survey is the impact to supply chains post-pandemic.
“There’s an evolution that’s taking place and that’s to keep a little inventory on hand, especially the critical components,” O’Brien says.
Today, there’s going to be more parts and inventory on the shelves.
“The supply chain is truing up, but we had to change our business a little bit to make sure we have the inventory, parts and components to run our factories,” says Todd Stucke, president of Kubota Tractor Corp. “For the most part, we‘re back to normal.”
According to the Agrievolution survey, the new normal might mean more manufacturing at home and in house. Some two-thirds of manufacturers are considering more reshoring, or doing business with in-country suppliers.
“We learned something during the pandemic, and that was our supply chain is wildly efficient and pretty fragile,” Blades says.
Walk the aisles at Agritechnica with Clinton Griffiths for a glimpse of the new products and innovations.
