Demand for Agricultural Equipment in China to increase 6.8 percent annually

Demand for agricultural equipment in China is projected to increase 6.8 percent annually to 118 billion yuan in 2012, outpacing growth in most other parts of the world.  Gains will be supported by healthy expansion of agricultural activity as agricultural mechanization efforts continue and income levels rise in rural areas.  Moreover, as increasing numbers of rural population migrate to urban areas, more pressure will be placed on equipment to replace a reduced agricultural labor force.  Increased government subsidies for agricultural equipment purchases and technological improvements in part due to sustained foreign direct investment will also contribute to product gains. In addition, growing demand for higher-value large tractors, transplanters and computerized harvesting machinery will boost overall market value.  However, advances will be constrained to some degree by short-term declines in agricultural product prices and improvements in the quality of domestically made equipment (thus reducing replacement demand).  The reduced profitability of grain farming and the continued small size of household farms will prevent agricultural equipment demand from growing at a faster pace.  These and other trends are presented in Agricultural Equipment in China, a new study from the Beijing office of The Freedonia Group, Inc., a Cleveland-based industry research firm.

Tractors accounted for 34 percent of overall Chinese agricultural equipment demand in 2007.  Tractors will remain the largest product category through 2012, spurred by growing demand for large tractors from collectives and large farms and increasing affordability of small tractors for household farms.  In addition, improving technological capabilities, particularly for large tractors, will contribute to advances.  Demand for harvesting machines will also grow at an above average pace, stimulated by government subsidies aimed at promoting their use and by purchases of higher priced combines.  Demand for planting and fertilizing machinery is projected to grow at a healthy rate, driven by higher priced transplanters and increasing product replacement at large farms and collectives. Sales of plowing and cultivating machines will grow at a below average, but respectable pace, fueled by government efforts to increase mechanized cultivating levels.  Demand for other agricultural equipment -- such as irrigation equipment, sprayers, separators, haying machines, milking machines and poultry-related equipment -- will grow at a solid pace, driven by fast growth in demand for meat and dairy products.      

The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.