This is marketing research on the Agricultural Equipment industry and can include information on the background, market structure, definitions, competitors, trends and developments of abrasives and is related to other topics such as farming, plows, tillers and crops.

Table of Contents

[edit] Background

Agricultural equipment covers all every machinery and equipment used in farming and the agricultural sector. Mechanized agricultural equipment appeared after the Industrial Revolution which had laid the beginnings for the introduction of steam engines and new sources of combustion. Equipment soon evolved that was more complex and able to perform a greater range of functions and at faster speeds. Cyrus McCormick’s reaper was responsible for bringing the Industrial Revolution to the farm. It was rolled out as early as 1831 in Virginia. The machine could cut six times as much wheat per day as a man could with a scythe. The impact was immediate and an industry was born. McCormick’s reaper was expensive so he innovated but letting farmers buy it on the installment plan. Sales took off. By 1851, McCormick sold 1,000 reapers annually. By 1857, he was selling 23,000.

John Deere launched a steel bladed plow in 1837. It took advantage of the advances made in steel production and fabrication. The internal combustion engine – fired by oil – rapidly expanded the agricultural equipment industry. All of the advances of the time worked together. Oil, steel, iron worked with the new railroad transportation system to get new equipment to farmers and then their produce back to the market. Agricultural equipment became a mainstay industry. Tractors, reapers, plows, tillers and combines led the agri equipment industry.

[edit] Market Structure

The agricultural equipment industry has a very broad and extensive dealer/wholesale merchandising system. In total, the industry is worth approximately US $63 billion. Categories related to the industry such as farm material supplies add another US $19.1 billion in revenues.

The agricultural equipment industry generally requires highly skilled laborers to manufacture equipment. In the United States alone, industry employees receive wages totaling US $2.4 billion - or an average of about $41,000 per worker. Dealers and wholesalers pay about US $33,500 per worker. Total payroll for the industry in the U.S. totals approximately US $8.5 billion.

Exports of agricultural equipment is a leading foreign exchange revenue source for most countries involved in manufacture. The United States earns over US $6 billion in export revenues from agri equipment and the U.S. represented approximately 30% of total revenue for the global agricultural equipment industry.

[edit] Market Metrics

World Market

World demand for agricultural machinery and equipment is set to rise at least 4.3 percent per year through 2010 to US $80 billion. The growth will come from accelerating global economic activity, which will fuel farmers’ income levels and enable them to purchase newer machinery and equipment, particularly in developing regions.

Also, continuous pressure on western governments to reduce agricultural subsidies and other forms of assistance in order to abide by World Trade Organization regulations will benefit farmers in the developing world. They will be able to leverage their advantage of lower labor costs. Both India and China hold promising sales opportunities for the industry. Other large developing nations such as Brazil and Russia should also record strong growth resulting from increasing mechanization of their agricultural sectors, with farmers in these regions increasing productivity through further automation and replacement of older equipment.

U.S. Market

The United States is the world’s third largest agricultural economy and produces a broad range of crops under widely different climactic conditions ranging from Florida in almost the tropics to 17 million pounds of potatoes being produced in arctic-climate Alaska. The U.S. is also the single largest market for agricultural equipment, worth approximately US $21 billion annually. More then 1000 manufacturers employ almost 50,000 laborers. These firms range from small, niche producers to large multi-national corporations.

Net U.S. exports of agricultural equipment were worth US $6.8 billion in 2006, compared with imports of US $ 5.7 billion. U.S. exports increased last year by 9.8 percent, while imports declined 5.7 percent. Out of 452 major industries that export domestically produced products, agricultural equipment is ranked 28th. The industry has a major employment and payroll impact on Iowa, Wisconsin, Illinois, California, Texas, Nebraska, Kansas, and Minnesota. Some eastern states such as Pennsylvania, North Carolina, Florida, and Georgia also have strong economic ties.

[edit] Industry Players

• Deere & Company

Headquarters: Moline, Illinois

Net sales of USD 19.9 billion, in 2006

• Case New Holland

Headquarters: Lake Forest, Illinois

Owned by Fiat of Italy

2006 sales at USD 12.1 billion

• AGCO

Headquarters: Duluth, Georgia

2006 sales of USD 5.4 billion

75% of sales are from outside the U.S.

• Claas KG

Based in Germany

2006 sales of USD 1.8 billion

Other key players

• CNH Global Escorts
• Honda Motors Co,
• Isuzu Motors
• Iseki & Co.
• Kubota Corp
• Kverneland Group
• Mahindra & Mahindra Ltd
• Mitsubishi Agricultural Machinery Co
• Punjab Tractors Limited

[edit] Trends and Recent Developments

The industry has not been generally characterized by high innovation recently. Technological enhancements have been the main focus of recent innovations. More computing has replaced manual direction and GPS systems have been built to aid in running agri equipment.

New directions include development of nanotechnologies and the introduction of small biological agri equipment. There is accelerating consolidation in the farm field segment of the agricultural equipment industry worldwide.

The industry is currently doing very well. Although sales in the U.S. and Canada are forecast to grow only 5% in 2007, overseas growth may be as high as 16%. South American purchases of agricultural equipment are particularly strong, led by more corn planting by Brazilian farmers to produce ethanol.

[edit] Sources

International Trade Administration

Smithsonian Institution

Alaska Farm Bureau

Wikipedia

Association of Equipment Manufacturers

[edit] Related ResearchWikis

Farm Machinery Marketing Research

Agricultural Chemicals Marketing Research

Chemicals - Asia Markets - Marketing Research