VDMA Agricultural Machinery Association

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The VDMA Agricultural Machinery Association is a structural unit of the Mechanical Engineering Industry and the leading industry Association of agricultural machinery and components manufacturers that unites German and European companies. Only in Germany the VDMA Agricultural Machinery Association unites companies with a total annual turnover of 8.3 billion euros with more than 30 000 employees.

Portrait of the Branch

The VDMA Agricultural Machinery is a structural unit of the Mechanical Engineering Industry and the leading industry Association of agricultural machinery and components manufacturers that unites German and European companies. Only in Germany the VDMA Agricultural Machinery Association unites companies with a total annual turnover of 8.3 billion euros with more than 30 000 employees. China is one of the leading markets for German machinery outside EU. Besides that, the significance of China as an important manufacturing site is steady increasing. VDMA Agricultural Machinery member companies are represented in China at various levels from representative offices to fully localized production facilities and enjoy well-deserved trust from China’s agricultural sector. 

 

Suppressed sentiment in the agricultural machinery market in China, but with interesting long-term prospects

Chinese agriculture is currently undergoing structural change. The average age of agricultural workers is now 62.5 years. Only a few young workers remain in rural areas because the income differences between urban and rural areas are immense. The incomes in the cities have almost doubled in the last 5 years, while the majority of farmers have hardly earned any money in the last 2-3 years. There are also gaps in rural infrastructure: few schools, limited medical care, etc. In the recently published "Document No. 1" (the strategic vector of Chinese policy), the Chinese Central Government is now targeting to improve life quality in rural areas and alleviate poverty. In addition, the aim is to provide greater support for the production of oilseeds such as soybeans and rapeseed while maintaining the production level of rice, wheat and maize. It is a logical step, since China produces less than 20 million tonnes of soybeans itself with an annual requirement of 110 million tonnes. Economically, however, it is an immense challenge, as the majority of Chinese farms are economically unable to compete with soy imports from the USA or South America. Due to its small structures, low efficiency and high input costs, China is also not competitive with the most crops. A good example is this year's minimum purchase price for bread wheat of 2453 RMB (approx. 320 euros) per tonne. Although the price is almost 50% higher than the world market price, cultivation is not profitable in many regions. It can therefore be assumed that even more farms will cease their activities and thus create the conditions for more modern and efficient agriculture in the long term. We can already see that modern structures such as merged farms, machinery rings and contractors are emerging. Large state farms are also increasingly acting like private enterprises and even offering services beyond the province boarders. The China experts of the VDMA companies do not expect a significant recovery in the market this year after a decline in 2018. Whether this will still happen, at least in part, depends primarily on the distribution of subsidies. In the long term, however, there are good prospects for manufacturers of high-performance tractors and agricultural machinery. The larger private and state farms are leading the way. In addition to subsidies, the focus of their investments is on return on investment, the machinery performance and service. In the last 3 points, some local, but also many Western brands are set apart from low-cost Chinese mass products. If the direct subsidies on machines are further reduced, as the trend of the last 3 years shows, Western products may gain even more importance. The switch to China Stage IV by Dec. 2020 should also increase the demands on technology and thus improve the chances of Western manufacturers on the market.

 

Trade Shows in China

With 1,900 exhibitors on 200,000m² exhibit space from 14 countries and 130,000 visitors from 60 countries CIAME is Asia’s largest agricultural machinery exhibition. 2019 the fair will move from Wuhan to Qingdao. The event will be held at the brand new Qingdao World Expo City International Exhibition Center from October 30th to November 1st offering most modern exhibition facilities at one of the largest exhibition Center in China. VDMA Agricultural Machinery cooperates with the leading national fair on agricultural machinery CIAME. Already in the past the association organized different events at the fair. From 2019 on VDMA Agricultural Machinery initiates the German pavilion at CIAME giving a chance to German medium-sized companies to display their products. 

 

Contact in Frankfurt (also for Newsletter): 

Alexander Haus
Phone: +49 69 6603-1303
Fax: +49 69 6603 2303
E-Mail: alexander.haus@vdma.org

 

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