Italy, the largest ag equipment producing country after the U.S. and Germany, will likely see an 11.9% decline in tractor exports by the end of 2018. This is according to FederUnacoma, the Italian Agricultural Machinery Manufacturers Federation, which also reports that national production is dropping in the country as a result. Even so, other equipment segments are performing strongly which should lead to a production value in line with 2017 levels.
Turnover for gardening equipment and components is stable and showing a 19% growth, which should offset the decline in tractors. The addition of other machinery and implements leads to an outlook of production valued at €11 billion ($12.5 billion), in line with the previous year.
Italy fancies itself as the top ag equipment producer worldwide in terms of production capacity and breadth of range. Its two biggest export markets are Europe and the U.S., though FederUnacoma notes there are changes in where the country ships its products.
The group’s President Alessandro Malavolti said during a press conference at the International Exhibition of Agricultural Equipment International (EIMA) in November that 2017 saw an expansion of exports to France and the U.S. The first half of 2018 on the other hand has revealed a different trend.
Export value to France (the leading country in purchases of Italian equipment) reported a decline of 11.6% due to a decrease in demand. Exports to Germany slipped by 0.3% while Turkey saw 20.6% decline in exports to currency devaluation making foreign merchandise pricier.
Along with the forecasted decline of 11.9% for tractors, officials expect 2.4% declines in ag machinery and implements as well as 3.1% growth for incomplete tractors and tractor parts. Overall, the value of Italian exports is expected to decline 4.2%, from €5.2 billion in 2017 to less than €5 billion ($5.7 billion) in 2018. Because exports account for 70% of Italian sales, industry production has dropped.
By year’s end Italian tractors should reach a value of €1.8 billion ($2 billion), down 8.3% in 2017. Other ag machinery could decline by 1.8% while tractor parts are expected to increase 0.6%. These figures should be compensated for by the growth in components production, estimated to increase 10%, as well as a stable trend in gardening and groundskeeping machinery. All things considered, Italian ag production should finish the year with turnover of €11 billion ($12.5 million), in line with 2017.
Impact of TMR.
FederUnacoma also presented data on tractor sales for the first 10 months of the year, which are measured by registrations through the Ministry of Transport. These figures indicate a 6% decrease for tractors, an 18% decrease for tractors with loading platforms, a slight gain of 0.3% for trailers, a stable trend for telehandlers and a 1.5% decrease for combines.
FederUnacoma points out that market trends for 2018 should be considered an anomaly due to the recent implementation of “The Mother Regulation,” a new set of machinery standards in the EU. A larger than average number of machines were registered last year prior to the regulations going into effect on Jan. 1, 2018 (see Ag Equipment Intelligence, November 2018).
“This produced a downturn that continues in the 10 month totals and which, in anticipation of a stabilization of the market in the last two months of the year, should bring a final balance of around 19,000 tractors, a result essentially in line with average levels in recent years,” says FederUnacoma.
Also to be considered is the growing market for used machines. FederUnacoma indicates that between 2014-17, used tractors have gone from 24,766 units to 35,200, a 42% increase. A review of the sales in January through September reveals there are 29,711 used units vs. 14,353 newly registered ones. Used units increased 7.6% over the same period last year. Furthermore, comparing the first 9 months of the year between 2014-18, the association notes an increase of used sales of 56.7% in those 5 years.
“On this basis, we estimate at the end of the year the tractors market, including both new and used, will be around 56,000 units overall,” says FederUnacoma.
World Demand Falls.
The year presented unfavorable conditions in many parts of the world, reducing farm incomes and limiting producers’ spending capacity for the purchase of tractors and other equipment, notes FederUnacoma.
The figures for the first 9 months of 2018 shows sales decreased in Europe by 5% vs. the same period in 2017, due to bad weather conditions in the winter and spring months. Sales in China fell 26%, in part due to the tariff war with the U.S, while Turkey saw a 29% decrease due to currency devaluation. Positive trends were seen in India (up 18%) and the U.S. (up 8%).
In comparison, 2017 tractors sales reached 2.15 million worldwide — an increase of 13% vs. the previous year.