In the past calendar year, the manufacturers of agricultural machinery, tractors and associated software systems organized in the VDMA Agricultural Machinery Association an 18% increase in sales from German production across all segments compared with the previous year.
"We thus succeeded for the first time in achieving industry sales of more than 12 billion euros ($12.7 billion). Innovative agricultural machinery is in demand at home and abroad as rarely before, because it is an indispensable element in ensuring security of supply around the world. A factor that counts right now," said Dr. Tobias Ehrhard, managing director of the VDMA agricultural machinery industry association.
Good producer prices in almost all agricultural segments, especially for milk and wheat, fueled demand for technology from farmers and contractors from all corners of the globe. "We have seen a real run on global producer markets in recent months. However, it is not yet clear whether this trend will continue, given possible speculative effects on the commodity markets," explained Ehrhard.
Orders from Russia and Ukraine, which were lost as a result of the Russian war of aggression in Ukraine, were more than compensated for overall. "In North and South America in particular, but also in the key Western European markets, the good earnings situation in agriculture triggered strong buying impulses," said Ehrhard.
Positive Exchange Rate Effects
Agricultural machinery manufacturers in Germany as a manufacturing location also benefited from positive exchange rate effects. A significantly devalued euro, accompanied by an appreciation of the dollar, resulted in sharply rising export values to the United States. Similar effects were observed for agricultural products from the euro zone.
Supply and logistics bottlenecks, on the other hand, caused continuing friction in the global agricultural machinery business, which is now only gradually being resolved. "Since the end of the year, the situation has been easing slowly but steadily. In the fourth quarter, we managed to realize a 50% increase in sales, primarily due to the improved supply and logistics situation," emphasized Ehrhard.
Full Order Books
There is no shortage of orders in the industry at present. Full order books make for good prospects: "The challenge lies above all in consistently implementing the high order backlogs. The entire industry is working flat out on this," said Dr. Ehrhard. However, the tense cost situation of agricultural businesses remains to be observed. Exceptionally high input prices, for example for fertilizers and crop protection products, are making life difficult for farmers and contractors. Volatility on the commodity markets, combined with continuing geopolitical uncertainties, is also to be expected.
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