Production of agricultural machinery fell by 50% in multinational companies that manufacture in Argentina. In the first half of the year, patent registrations fell by 20% for combine harvesters and by 30% for tractors compared to 2023.
“With these values, we believe it is unlikely that the entire market will be able to recover in the remainder of the year; therefore, we estimate that we will be, on average, between 25% and 30% below what it was last year,” said Sergio Fernández, president of AFAT (Argentine Association of Tractor and Other Agricultural and Industrial Equipment Manufacturers).
The sector employs around 16,700 people, divided into 2,700 direct jobs, 5,500 in the distribution network and 8,500 indirect jobs. If the market does not recover, staff suspensions will be followed by layoffs.
The Whys
The drop in demand has many causes. Experts refer to a combination of factors, including a less active agricultural campaign than expected, the effects of the corn slash and the evaluation of the situation by producers. The decisions not to invest were made at the end of last year, when it was not known what would happen to the economy.
Considering that, for example, a harvester can cost between 300 thousand and one million dollars, producers and contractors need to have credits to acquire them, which were not available due to the “market turbulence.”
Obsolete machines in the Argentine countryside
Another point of attention is the obsolescence of the agricultural machinery fleet, with 70-80% of tractors older than 15 years and 70-80% of combine harvesters older than 10 years.
This represents a problem for agricultural machinery manufacturers in two ways.
On the one hand, machinery is not replaced, but at the same time, obsolete machinery lowers productivity due to extra costs in fertilization and spraying, waste during sowing and harvesting, and lower efficiencies in general.
This “combo” results in lower profitability and, therefore, less capital available for investment in machinery.
