Affected by the ongoing crisis in EU agricultural markets, the European agricultural machinery industry is expected to face further losses this year, after suffering a decline in sales in 2015.

According to data published by the European Agricultural Machinery Industry Association (CEMA), the machinery sales in almost all markets of its network (Belgium, France, Germany, Italy, Netherlands, Spain, UK) are down in the first half of 2016.

“It is expected that markets will decline further in the second half of 2016 with rates of decline up to 9%, as in Germany. Spain is a notable exception with an expected increase of 9.5% in 2016. The French market is also performing well so far (+7%), yet is expected to weaken during the second half of the year to decline by 2%,” CEMA stressed.

Downward trend for tractors

The data showed that in the first half of 2016, all major machinery types with the exception of sprayers faced decreases compared to the first half of 2015.

Tractor sales in all European countries combined were 5.5% lower, a decrease attributed to the drop in demand for tractors between 50 and 250 horsepower.

“This power category is mostly bought by farmers that are currently facing a difficult situation due to low commodity and milk prices. These difficulties could aggravate given mixed wheat harvest results in many European countries and continuously strong global supply,” the machinery association underlined.

Similar decreases were marked on the harvester, baler, and mower markets.

The only market that is expected to remain stable is the one for sprayers. The Spanish market is the only one experiencing growth in Europe, while other markets are stable.

CEMA’s Secretary General, Ulrich Adam, told EurActiv.com that the agricultural machinery business closely follows the business cycles of farming.

“When prices for agricultural commodities – such as milk, wheat, corn or sugar – rise, demand for agricultural equipment tends to rise accordingly,” he stressed.

He added that although recent surveys showed that European farmers definitely want to invest, particularly in new machinery, a combination of low commodity prices, below-average harvests, and high land prices make it difficult for many of them to make these investments right now.

“For instance, according to a recent customer survey by CEMA’s German member association VDMA, only 9% of German farmers said they were planning to invest in new machinery in the second half of 2016.

Agricultural machinery sales in Germany – the largest manufacturing country of agricultural machinery in Europe – fell by 14% during the first half of 2016.

However, the production of agricultural machinery in Germany was up by 1.5% compared to 2015.

http://www.euractiv.com/section/agriculture-food/news/monday-agriculture-market-crisis-hits-machinery-sales/