This is free marketing research on the Farm Machinery industry and can include information on the background, market structure, definitions, competitors, trends and developments of farm machinery and is related to agriculture, crops, plows and tractors.

Table of Contents

[edit] Background

The farm machinery sub-sector is defined as consisting of farm field and farmstead machinery used for the production of crops and agricultural livestock. Major product lines for the industry include wheel tractors, planting and fertilizing machinery, tillage equipment (plows, cultivators, and harrows), fertilizer and chemical application equipment, harvesting machinery (e.g., combines, cotton pickers, root/tuber harvesters), haying and mowing machinery (including balers), milking machines and other farm dairy equipment, poultry equipment (e.g., incubators, brooders, egg collectors), barnyard equipment, sprayers and irrigation equipment, grain driers and blowers, commercial turf and grounds care equipment, and parts for farm machinery. Because of the rugged construction and long service life of many farm machines (e.g., the median age of a farm tractor in the United States is 19 years), replacement parts represent a significant industry segment.

The major categories of farm production machinery correspond to the three fundamental types of farming practiced around the world. Large-scale, highly mechanized agriculture is practiced in North America, Australia, Argentina, Saudi Arabia, Brazil, and South Africa. Russia and Former Soviet Union (FSU) republics such as Ukraine, Uzbekistan, and Turkmenistan, which had large state farms under the Soviet system also continue large-scale operations. Medium-scale but highly sophisticated farming is practiced in most of Europe and some parts of Asia and Latin America, while small-scale farming is the norm in most of Asia, Africa, and the Caribbean.

[edit] Market Structure

The farm machinery manufacturing industry is structured on a global basis to produce sizes and models of machinery in economically rational areas where the highest volume of such equipment is used. By exporting tractors, harvesters, and other machinery from consolidated locations to dealers throughout the world, farm equipment producers have been able to offer customers around the globe a wide variety of types and sizes of equipment at the lowest cost possible. The United States and Canada dominate in the manufacturing of powerful high efficiency, high-horsepower [100 horsepower (HP) and above] equipment. Europe leads in the production of medium-range (40 to 100 HP) equipment, but there is increasing production in Latin America. Japan is the major producer of tractors under 40 HP and other small-scale units.

The number of establishments in the farm machinery industry continues to contract. The period up to 2002 showed a small decline and establishments had falled to below 3,000 at the end of the period.

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Likewise, employment of the industry has dropped. Farm machinery workers totaled just above 170,000, down approximately 20% in the five years up to 2002. The industry, in general however, has continued to do well.

This a moderate to high concentration industry. The eight largest players alone in this business account for almost 2/3rds of the industry's revenues.

Concentration of Revenue by number of firms in the industry is as follows:


Total Number of firms       Revenue as % of all firms in the industry

     4 largest                              57.6%
     8 largest                              64.7%
    20 largest                              73.2%
    50 largest                              81.5%

[edit] Market Metrics

Despite the drop in number of establishments and the wokforce, farm machinery manufacturers continue to do well. Revenues have experienced a steady climb through the decade and this may be attributable in large part to expanding emerging markets overseas which account for significant American exports.

[edit] Industry Players

These are major players in this market, but it is not an exhaustive list of all key firms.

Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

[edit] Recent Trends and Developments

The farm machinery manufacturing industry is characterized by increased globalization and mergers. Consolidation activity is widespread throughout the agribusiness industry, and there have been numerous mergers of farm cooperatives, grain companies, seed companies, and food processors in the United States and internationally. The largest manufacturers, such as Deere, Case Corporation, Caterpillar, AGCO, and New Holland, are multinational businesses that have manufacturing joint ventures and/or assembly operations on every continent. Many other U.S. farm machinery companies have agents and distribution channels around the world or distribute through export management companies. The products of overseas farm equipment manufacturers such as Kubota and Yanmar of Japan, Claas of Germany, Fiat of Italy, Zetor Tractor of the Czech Republic, Mahindra of India, Baldan of Brazil, and Kvernland of Norway have long been distributed in the United States and throughout the world.

Parts and components are shipped globally for use in original equipment manufacturing and as replacement parts. Those parts account for a large share of farm machinery exports and imports (e.g., components exports can constitute as much as half of U.S. exports to European markets). It is difficult to determine accurately the exact local content of machinery produced in the United States and elsewhere because U.S. components are shipped to companies’ overseas subsidiaries and U.S. farm machinery can contain parts and components manufactured offshore, particularly in Canada and Europe.

Growth in farm size, along with increased mechanization and the use of larger, higher-production machinery, is a continuing trend in the agricultural industry, especially in sophisticated and mature markets such as the United States, Canada, Europe, Australia, and the larger Latin American markets such as Mexico, Argentina, and Brazil. In the United States, farmers make up only 2 percent of the population, and about 50,000 of the largest farms produce half the crops. The real profits in the industry are realized by the larger agricultural producers. In mature markets, most farm machinery sales are replacement sales, with larger high-efficiency machinery replacing less productive and powerful older models. The growth in average farm acreage has resulted in fewer total farms and fewer units of farm machinery sold. Major food and cereal producers such as Archer Daniels Midland and independent contractors that provide crop services such as planting, nutrient, and pesticide application and harvesting to farms are the major purchasers of farm machinery.

[edit] Sources

• Most current US government sources

[edit] Related ResearchWikis

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