Agricultural machinery: Mediterranean area market growing
A Nomisma/FederUnacoma market survey on tractors and implements in the countries around the Mediterranean region was presented at Agrilevante. Agricultural machinery imports showed net growth in 2014 and the first half of 2015. The Italian industry is playing a leading role in market shares in a number of companies but imports from such emerging countries as China and India are carrying increasing weight
Agrilevante international, organized by FederUnacoma and the Fiera del Levante, is the most important exposition of agricultural machinery and technologies in the entire Mediterranean region and it was held in a market setting which is especially dynamic and promising. Following the crisis associated with the 2010 Arab Spring, which led to a drastic downturn for the North African and Middle East economies with difficulties in the primary sector and the agricultural machinery and equipment market crash, the general picture finally appears favorable.
A positive scenario
Data on the agricultural economy and imports of tractors and other machinery, developed by Nomisma commissioned by FederUnacoma for the Agrilevante event, now point to significant recovery in such key countries as Algeria, Egypt, Iran, Morocco and Tunisia. Simultaneously, other important countries in different economic contexts are reporting substantial developments in agriculture and thus in their machinery markets. This is especially the case of Spain, heading into substantial recovery after the 2008 financial and economic crisis, as well as Turkey, coming forth as one of the emerging economies with increasing weight.
The Mediterranean area is very important for the agricultural machinery industry in that the majority of the countries in the region are showing growing technologies demand without the capability of their own industries to meet this demand. This means the countries producing machinery and equipment for agriculture are being called on to contribute to the economic growth in the region and pursue increasingly greater opportunities for technical and economic cooperation with the countries of the area.
The Italian platform for the Mediterranean
Among national manufacturers, Italy can claim a front rank role not only because of the country’s great tradition in the production of agricultural machinery but thanks to geographic location and wealth of the ranges of products built for all types of farming operations performed in almost any environmental and socio-economic setting. The Mediterranean region is home to an immense variety of agriculture production, from seeds to olive cultivations, from vegetable to fruit crops and on to livestock raising, especially cattle, sheep and poultry, all of which need specific technologies for, among other purposes, achieving quality standards to ensure access to the most demanding and profitable markets for these producer countries.
This year, Agrilevante can report an all-time record for the number of companies taking part, the exhibition area allocated and the number of delegations arriving from abroad to confirm the standing of the event as the ideal platform for taking advantage of the opportunities offered, the now favorable trend and a fine example of programming. Created in 2009, in the full-blown international crisis and on the eve of the Arab Spring, Agrilevante came along intended since the beginning as an investment in the future with the conviction that sooner or later Mediterranean agriculture would overcome negative conditions for a comeback as a leading area on the economic scene.
The North African recovery
Algeria
With GDP growth at 3.7% in 2014, Algeria is displaying important signs of recovery in a number of economic sectors, especially in agriculture, and a resulting growth in demand for machinery and operations. Algeria’s tractor imports in 2014 rose overall by 31% and by 22% for other machinery. The trend for the first six months of 2015 indicates a further increase for tractors, ahead 18%, and gains for other types of machinery. Italy is playing a leading role in this process as the third exporter of tractors to Algeria and a 9% market share as well as a steep 31% increase in volumes exported with an outlook for an even more positive ranking in the years to come. As regards other machinery, Italy’s performance is even greater with 2014 exports reaching 33% to boost the country to first place among exporters with a market share at 17%
Egypt
Also Egypt – a key country from an economic and demographic point of view with a population expected to climb to 90 million – is reporting substantial economic recovery with tractor imports which climbed 26% in 2014, followed by another surge of 33% in the first six months of 2015. After losses in 2014 when Italian exports slipped to fourth place among the country’s suppliers of tractors and other agricultural machinery, substantial gains of 14% were disclosed for the first six months of the current year over the same period in the previous year.
Tunisia
Tunisia is a country with an agricultural economy based on olive cultivations and the production of milk, chicken meat and dates. After stagnation in recent years, economic forecasts are for substantial growth from 2016 to 2020. The Tunisian agricultural machinery market has been reporting a decidedly positive trend over a long period displaying the country’s determination to develop technologies, with Italy in the front rank as Tunisia’s leading trade partner covering a 45% market share for tractors and 22% for other types of agricultural machinery.
Morocco
A less positive trend is disclosed for Morocco where agricultural activities are declining as are imports of machinery from all countries, with the exception of Spain which reported a positive trend for their exports in 2014. Aside from the 2014 slowdown and a trend which was still negative for the first six months of the current year, Italian agricultural machinery has managed to hold down a strong position in Morocco with a top standing in the tractor export classification, accounting for a 40% market share, and comes second after Spain with a 20% market share for other types of agricultural machinery.
The key Middle East countries
Iran
Of special importance in the Middle East is Iran where two years of recession gave way to GDP rising 2% in 2014 and where considerable growth is expected in the wake of the Joint Plan of Action on Iran’s nuclear program and the lifting of trade sanctions next year. A clear signal of recovery has already been seen in the first eight months of 2015 when tractor imports leaped fourfold to $ 21 million, with Italy ranked fourth as Iran’s supplier, and showing net gains in sales in moving from a balance of $ 1.5 million in 2014 to $ 5.2 million. For the time being, other agricultural machinery is following a different trend with a 20% drop in imports over the first eight months of 2015 and downturns for other machinery from Italy which is still, however, holding fourth place in the standings for the country.
Israel
In the Middle East a special focus is trained on Israel which can vaunt avant-garde agriculture in steady growth over the past ten years along with gains in imports of agricultural machinery. In the period from 2014 through the first six months of 2015 these imports look to be declining for tractors and in steep growth for other types of agricultural machinery. Italy is preeminent on the Israeli market, the leading exporter of tractors for a 29% market share, in second for other machinery with 10% of the market and looking forward to further gains driven by an economy pursuing growth in the years to come.
The phenomenon of Turkey
Turkey takes on a position of great importance among new markets with a standing as a one of the countries most committed to the acquisition of tractors and other agricultural machinery, and an emerging manufacturing capability based on the strength of industrial developments in the sector. In general, GDP is expected to show consistent growth over the coming five years at the rate of 4% annually, along with the steady development of agriculture based on wheat, milk, beef and tomatoes leading to machinery demand. Over the past ten years tractor imports have doubled and shot up by 48% in the first six months of this year compared to the same period in 2014. For this country, Italy ranks second for tractor exports, behind India, with 22% of the market, and displayed consistent export gains in 2014 and a huge 75% increase for the first half of 2015.
The European Mediterranean
The Mediterranean countries mainly in the sights of the Agrilevante exposition include those of South Europe, especially France and Spain, the two continental countries with the largest land areas dedicated to agriculture and accounting for sizable imports of mechanical engineering products. France stands as the European country with the greatest overall volume of imported agricultural machinery.
France
France experienced a long spell of stagnation in the primary sector which did not, however, block the expansion of the agricultural machinery market in recent years, followed by scaling back in 2014 and the opening months of 2015. Last year, in fact, the French tractor market came to a closing balance of imports down 24%. Reduced volumes were also reported for all countries with falloff of 29% in Italy, which ranked second as France’s trading partner below Germany. Another 23% decline came in the first seven months of 2015 while imports from Italy dropped 13%. There were better performances shown for other agricultural machinery – especially machinery for moving and transport, harvesting and the initial processing of products – which fell by about 5% while Italy held second place, again behind Germany. The front rank role and consolidation of traditional trade relations between France and Italy leads to the thinking that the French recovery expected to come next year and last in the following year will be a decisive factor for the further development of these commercial ties crossing the Alps.
Spain
Recovery has already begun in Spain following the 2009-2013 recession which brought on a drastic decline for the agricultural machinery and equipment market before a reversal of the course in 2014 to generate forecasts of a general 2% growth rate over the next five years. Spain’s tractor imports rose 16% in 2014 and the important role played by Italy led to a 15% climb in exports to consolidate the country’s position in second place with 26% of the market, following Germany. A similar trend was reported for other agricultural machinery with increasing imports. Italy again held second, after Germany. Conditions seen in the first half of this year indicate a generalized downturn for imports but the medium term trend should remain positive.
A strategy for agricultural machinery
In the overall Mediterranean scenario of agricultural machinery, the present trend appears positive and promising for the near future. Italy is called on to play a role of primary importance due both to the country’s geographic location, advantageous for trade relations, as well as the excellence of its level of technical production. This means that prospects are solid but must be accompanied by sufficient political stability in the countries involved and a precise commercial strategy. This strategy must be aimed at enhancing the worth of quality mechanical engineering to counter the risk of an overly rapid spread of technologies produced in emerging countries and offered with aggressive pricing packages. A look at the positions achieved in a few years by countries like China targeting the Mediterranean region shows that China has become the leading exporter of tractors to Egypt, Iran’s second exporter, the first for other agricultural machinery for Turkey and Iran, in second place for Algeria and Tunisia and fourth for agricultural machinery to Spain. Then there is India’s standing as second ranked exporter of tractors to Turkey and running also second for tractors shipped to Morocco and Tunisia. These considerations underscore the importance of speedy and ongoing presences on these markets with targeted products and efficient assistance networks.
Promotions and innovations for the Mediterranean economy
In this setting, trade fair events play a fundamental role as a platform for the development of business relations, for offering a complete picture of the finest technologies and allowing business people to draw comparisons of the solutions set forth by the manufacturers. Back in the time of crisis weighing on the Mediterranean economies, the Agrilevante review aimed for internationalization and bet on economic recovery around the region and today comes out as a point of reverence, an event which cannot be missed today or in the future to ensure participation in the development of the agricultural economies in an area now emerging with extraordinary potential.
