Released on: October 22, 2008, 2:08 am

Press Release Author: Bharat Book Bureau

Industry: Agriculture

Press Release Summary: Global demand to rise 3.7% annually through 2012. World
demand for agricultural machinery and equipment is forecast to increase 3.7 percent
annually through 2012 to $111 billion. Gains will be paced by the accelerating
mechanization of the agriculture sectors in currently large agricultural equipment
markets such as China and India whose farm sectors are nevertheless still
significantly unmechanized and inefficient in comparison to those found in more
developed markets.

Press Release Body: Moreover, rapidly rising global staple food crop prices and
shortages in 2007 and early 2008 indicate a growing necessity to increase farm
productivity and effi- ciency in developing countries. To some extent, gains could
be hindered if energy prices remain at their current high levels through the
forecast period and negatively impact global economic growth.

China, India hold best growth prospects in developing areas

Strongest growth in agricultural equipment demand will be registered in developing
countries, with China and India holding by far the best prospects. Other large
developing nations with sizable agricultural sectors, such as Brazil and Russia,
will also post healthy gains as a result of increasing mechanization of their
agricultural sectors. Besides benefitting from rising incomes, farmers in these
regions will continue to strive to increase productivity through further automation
and replacement of older equipment. Increasingly, draft animals such as horses and
oxen used during various stages of the farming process will be replaced by
agricultural equipment. In addition, rising wages in many of these countries as well
as large scale migration to urban areas will necessitate the replacement of human
capital with fixed capital such as farm machinery.

Gains in developed regions to lag world average

The US will experience gains that will lag the world average due to decelerating
growth in economic and agricultural sector output in the country through 2012.
Western Europe will post particularly anemic growth through 2012, with gains arising
from a strong 2007 when demand (in dollars) was bolstered by a strong Euro. Farmers
in both the US and Western Europe will be adversely impacted by continuing trends in
favor of free trade and against protectionist measures such as subsidies for
domestic farmers and tariffs on agricultural product imports. Throughout the
industrialized world, virtually all demand will be replacement oriented in nature,
as the farming sectors of most countries are not growing in terms of number of
farms, acreage harvested and similar physical variables. Given the widespread
diversity and often interrelation of applications, growth prospects for specific
types of farm machinery do not vary substantially when viewed at the global level


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