Situation & Trends of Chinese Ag-machinery Market

The Current Situation

Up to now, there are more than 2500 agricultural industrial enterprises with annual revenue of 20 million yuan or more from their main business operations. The whole industry is showing a steady growing state. The prime operating revenue of agricultural machinery industry is above 321 billion Yuan or 48.5 billion US dollars from January to August this year, a 8.9% increase from the same period last year. However, the development of agricultural mechanization inChinais extremely uneven. The level of mechanization differs dramatically according to different crops. 

The machinery tillage is in a rather high level for all kinds of crops. Besides soy bean, rape, potato and peanuts, almost all the food crops have achieved machinery tillage. Wheat and cotton machinery tillage are even near 100%. But the level of machinery seeding is not so high. Wheat, maize and cotton are OK, and there is large room for improvement of other crops in machinery seeding aspect. Especially for rice, which is largely cultivated inChina, the machinery transplanting rate is only 44%.

The machinery harvesting level is also imbalance. For example, we are doing good in wheat and rice mechanical harvesting, but maize is a weak point. And other crops, especially for the economic crops, we have an even lower machinery harvesting rate. So let’s talk about different types of agricultural machinery. In the aspect of power machinery, the ownership of tractors inChinahas reached 23 million in the end of last year. The market of tractors is nearly saturated. However, the ownership of high and medium horsepower tractors is still increasing, showing a 6.3% YOY increase last year. That indicates a high horsepower and intelligent trend. In the aspect of harvesting machinery, as is shown in the table, the ownership of all kinds of harvesters inChinareached 1.9 million by the end of 2016, and the increasing speed is slowing down in recent years.

In the aspect of export and import, we have seen a small increase this year.Chinaexported 6.35 billion US dollars of agricultural machinery, an 8% increase year on year, and imported 1.55 billion US dollars, a 1.1% increase.

Market Circumstance

Chinais a large country; agriculture is an important section ofChina. The cultivated land area is about 135 million hectares, ranking the 3rd in the world. Meanwhile,Chinahas a huge population doing farming related works, so agriculture remains the top priority of our country's future work.

China adopted agricultural machinery subsidy policy since 2004. From then on, agricultural machinery market has been booming as is known for the golden ages. It lasted for 10 years or so. We could see in the table, from 2010, the sum of the subsidy keeps increasing, but the increasing rate slows down. We estimate that the sum of subsidy will not increase next year.

And China has becoming an aging society; it means there is still large room for the development of agricultural machinery. Younger people leave their hometown to the urban, only elder people remain in the rural areas. They are too old to do the labor work, so the need of mechanization is very urgent. Our government has already noticed of that and the input of agricultural machinery will be strong and steady. The agricultural machinery seems larger and larger nowadays inChina, and the land transfer will accelerate this trend. And land transfer also impels big farmers and agricultural cooperatives, they are obviously the potential users of advanced machinery.

The Future Trends

As the mechanization level ofChinahas already reached a rather high level, we estimate that the rapid increasing period has ended. But along with the need of large, intelligent machinery, in 3 years or so, the market will be showing a solid grows of 6%-7%. We also estimate a 9.5 billion US dollars export and a 2.4 billion US dollars import of agricultural machinery in the year of 2017. As for high and medium tractor, we estimate the sale will be 500 thousand for this year, and 540 thousand for next year. Harvesters will be decrease in recent 2 years. The sale will be about 580 thousand for this year, and 500 thousand for next year. Transplanters’ need will be booming. This year, the sale of transplanter will be 80 thousand, and next year, the figure will be 95 thousand. And dryer, 23 thousand for this year, 20 thousand for next year.

The first point is comprehensive mechanization. That means mechanization of all crops, besides the food crops, we must also focus on economic crops. And that also means the whole process of mechanization. The second point minority market, including intelligent machinery, for example, dryers, balers, green forage harvesters. Intelligent machinery could meet the need of precision farming, which is developing in China.