Sales of agricultural machinery in the Russian Federation continued to grow rapidly in the first quarter, despite the high base of the previous year. Russian factories increased their sales by one and a half times, the largest importers - by 20%. Sales were also spurred by the expectation of an increase in waste collection amid a shortage of equipment: some cars have already been contracted before the end of the year. But according to industry participants and experts, in the coming months, demand will weaken: this will lead to the regulation of prices for agricultural products by the government, which will reduce the income of farmers.
Sales of domestic agricultural machinery in January-March increased by 53%, to 32,5 billion rubles. The dynamics of production was recorded at the same level, Rosspetsmash calculated. They talk about the impact on the market of "stable acceptable" prices for agricultural products, which allowed farmers to increase the pace of park renewal. The association also notes the positive impact of state support for demand (we are talking about discounts on equipment under the "1432 program"), which "is often the only opportunity for small and medium-sized agricultural businesses to update the means of production."
53 percent was the growth in sales of Russian agricultural machinery in the first quarter of 2021, according to Rosspetsmash
The segment of domestic equipment has been growing since 2013, and even in 2020, despite the pandemic, Russian factories increased their output by 29,6%. Daniil Nametkin, head of the Center for Investment Analysis and Macroeconomic Research of the Central Social Service, notes that the Russian Federation maintains aggressive plans to increase agricultural exports, including actively building grain transshipment terminals, so the issue of further increasing yields remains relevant. This requires the modernization of the fleet of equipment, while the retirement of the fleet, which was massively updated in the early 2010s, will soon begin, he concludes: the service life of an actively working combine is five to seven years.
The shortage of tractors and combines in the Russian Federation has been officially estimated at 20-25% of the available fleet for many years, says Alexander Altynov, Chairman of the Board of the Association of Agricultural Machinery Dealers "ASHOD"; Also, equipment that is 15–20 years old is massively going out of use, and farmers prefer to buy one more powerful machine to replace several old ones.
Demand is supported by high prices for farmers' products, the expectation of an increase in utilization (up to three times), and low bank rates, explains Alexander Altynov:
A very large volume of equipment - 70-80% of the available equipment - has been contracted, for some brands and mass-produced vehicles the delivery dates are October-November or even 2022. "
The restrictions against the backdrop of the pandemic still lead to production problems, including with components and materials, so many factories do not have the opportunity to increase the plan - including because of this, Mr. Altynov expects a reduction in the share of importers in the market in 2021. He believes that the excitement will weaken in the coming months, as the government introduced export duties on grain and restrains food prices in the domestic market, while the costs of farmers are growing, as are the cost of financing against the background of an increase in the base rate of the Central Bank.
Agricultural machinery manufacturers faced a shortage of railway platforms for their export
John Deere estimates the growth of the entire machinery market in January-March at an average of 18–20% and speaks of positive dynamics of its sales in almost all segments. “The main factors that influenced the upward trend are a good level of the 2020 harvest in Russia, a significant increase in world, and then domestic prices for major crops, a relatively low level of world grain reserves in 2020. In this case, the “low” ruble exchange rate became an advantage for Russian farmers: they were able to increase exports and make good money on world trends, ”explains Alexander Belyaev, head of the marketing department of the concern. He adds that also in the context of the pandemic and lockdowns, an increase in demand for food is predicted, therefore, in the medium term, the demand in the market will be greater than the supply.
But John Deere also sees risks in the introduction of export duties on grain and "artificial limitation of competition in the form of a possible serious increase in the collection of new imported equipment."
In addition, external factors must be taken into account, concludes Alexander Belyaev: ongoing political turbulence, which usually is reflected in the further weakening of the ruble.
Russian machine builders are counting on maintaining production in 2021 at a level not lower than last year. According to Rosspetsmash, the factors that can slow down the growth rates in the industry are "an unprecedented rise in metal prices, constantly growing electricity tariffs, as well as an increase in prices for fuels and lubricants."