Agricultural machinery: contractors the locomotive of the market

A survey sponsored by Edagricole/New Business Media and conducted by Nomisma shed light on the role of the agricultural mechanization enterprises play in providing for the economic and structural shortcomings on farms. The study disclosed a number of critical factors for them such as delayed of payment for their services and difficulties in gaining access to credit for the purchase of machinery

On the drive of demand for operations given over to agricultural mechanization enterprises – which came close to doubling from 2000 to 2010, from 3.8 days worked on average to 7.5 – contractors in agriculture in Italy have become the locomotive driving agricultural machinery demand. This is what was brought to the surface by Nomisma research reported at EIMA International in a conference entitled, Contractors as a Key Factor in the Competitiveness of Italian Agriculture. The conference was put on by Edagricole/New Business Media in collaboration with Unima, Confai, FederUnacoma, Unacma and Enama with sponsorship by BKT. During the conference, experts in the field provided updates on the phenomena relatively new to the Italian primary sector which has become an instrument for lowering production costs for farmers and their enterprises. In fact according to the Nomisma findings, 48% of the farmers need the support of agricultural mechanization companies due to their shortage of financial resources for the purchase of machinery and equipment whereas another 30% call on them to cut the costs of their own operations which are more costly than those performed by contractors. On the other side, these agricultural mechanization enterprises are capable of offering a wide range of services from combine harvesting, which accounts for 77.5% of their work, and soil preparation, 69.4%, to seeding and transplanting , 39.8%, and weeding, 14.9%. Nomisma explained that these operations are carried out with machinery with average ages between 5 and 10 years, which is the case for 73% of the tractors and 71% for other machinery, whereas the average age of 20% of the tractors and 71% of the other machinery is over 10 years and less than 5 years for only 7% of the tractors. This percentage is marginally higher for equipment at 8%. The need for to replace of these inventories with technologically advanced machinery has thus become very real for the agricultural mechanization enterprises themselves. As disclosed by the Nomisma findings, bank credit is their main source of financing, for 39,5% of the sample, with dealers and manufacturers accounting for 33% of the cases. For this reason these contractors are especially exposed to the delays of payments by farmers for their services, 30.2%, and variations in the price of production factors (25,5%) and they also bear the brunt of problems not directly connected to cash flows, such as the excessive burden of the bureaucracy, 13.5%, the problem of access to credit, 8.8%, and finding qualified manpower, 3.2%.