U.S.-made farm equipment exports fall 6 percent
U.S.-manufactured agricultural equipment exports dropped 6 percent in 2013 for a total of $12 billion, according to press release from the Association of Equipment Manufacturers (AEM). AEM stated the figures came from the U.S. Commerce Department.
The 6 percent drop for 2013 follows three years of export growth. Exports were up 16 percent in 2012, 23 percent in 2011 and 12 percent in 2010. These strong years followed a 2009 decline of 23 percent during the depths of the recession.
There were many global causes at work to explain why the U.S. saw a slight downward trend in farm equipment exports, said Charlie O’Brien, Senior Vice President and agricultural sector leader for AEM.
In Brazil, rising costs and slumping crop prices were the culprits for the fall in exports. In addition, central bankers in Brazil carried out the steepest rate increases among major economies to tame inflation, he said.
“Rising costs to finance farm machinery purchases in 2014 will follow a 40 percent plunge in international corn prices in the past year and an 18 percent decline for soybeans,” O’Brien told DTN.
The U.S. equipment export situation for Argentina is a little brighter than in Brazil, O’Brien said. This is due to positive factors like good rains in 2012 following drought in 2011 and solid international commodity prices.
Overall, exports to South America declined 18 percent to 1.2 billion while exports to Central America remained steady with a minor gain of 1 percent to $1.2 billion.
Exports to Europe dropped 14 percent to $2.8 billion. O’Brien said the European Union market continues to be somewhat stagnant, although the short-term economic stress has lessened with certain regional differences in France and Poland decreasing.
“The UK, Spain, Germany and Italy are all rather flat,” he said. “Grain prices and farm income are lower but still remain near the long term average.”
On the positive side, exports to Asia increased 5 percent for a total of $1.2 billion while exports to Canada increased 6 percent for total of $4.3 billion. The increase in Asia was aided by China having government polices still supportive of agriculture focusing on productivity and increasing farm income, he said.
O’Brien said another country with a positive outlook is India. The government there continues to focus on agriculture with positive policies with a focus on mechanization. Growth in the ag sector is expected due to a very favorable 2013 monsoon season.
Other areas of the world with machinery equipment export data included Australia/Oceania, which saw exports decrease 26 percent to $912 million, and Africa where exports remained fairly steady with a loss of less than 0.5 percent to $442 million.
The top export destinations for American-made farm machinery in 2013 by dollar volume were: (1) Canada - $4.3 billion, up 6 percent; (2) Mexico - $988 million, up 3 percent; (3) Australia - $822 million, down 28 percent; (4) Brazil - $517 million, down 29 percent; (5) China - $491 million, down 5 percent; (6) Germany - $470 million, down 5 percent; (7) France - $344 million, down 7 percent, (8) South Africa - $303 million, down 4 percent; (9) Russia - $303 million, down 9 percent and (10) Ukraine - $269 million, down 30 percent.
O’Brien said while it may seem like the 2013 export numbers are somewhat bleak, not all is lost for American farm equipment manufacturers. Equipment exports will continue to be stronger than what was seen in the 2009 and 2010 time frames due to the worldwide recession.
“As always, manufacturers will look to fit the production schedule to the worldwide demand,” he said.
O’Brien added the U.S. market is expected to be down next year from 5 percent to 10 percent due to the expected lower commodity prices and changes in tax and depreciation incentives that have gone away in 2014. — Russ Quinn, DTN