China Agriculture Machine Market Growth Seen 10%-15%/year To 2020

Agricultural machinery sales in China are forecast to grow 10%-15% a year over the next decade as the country's agriculture sector becomes more mechanized and diversified, officials from the Chinese Agriculture Ministry said Wednesday.

Over the past five years the Chinese agricultural machinery market, which includes all equipment needed for farm work from sowing to irrigation and harvesting, grew to CNY280 billion in value from CNY70 billion, said Liu Xiaowei, deputy director of the farm mechanization division at the Chinese Agriculture Ministry.

Xiaowei spoke at the Sima international agribusiness show here.

Around 52% of Chinese farm jobs are now performed by machines, against 36% in 2006, and the government targets a 70% rate by 2020, said Zecheng Liu, president of the Sichuan Research and Design Institute of Agricultural Machinery.

The Chinese government has strongly supported the increased use of farm equipment through tax breaks and subsidies, the officials said. Subsidies, they said, represent up to 30% of the price of high-technology machinery.

Though most machines are produced locally, several foreign companies are active in China, mostly through joint-ventures, including U.S.-based Deere & Co. (DE), the world's largest maker of farm equipment by sales. Another is CNH Global NV (CNH), a unit of Fiat Industrial SpA (FI.MI) and the world's number-two in the farm equipment market, which makes the Case IH and New Holland marques.

Martin Richenhagen, chief executive of Agco Corp. (AGCO), the world's third-largest agricultural equipment maker, said earlier that his company plans to build a plant in China as part of a strategy to accentuate the sale of combine harvesters. Agco owns the Massey Ferguson and Challenger brands.

The Chinese are eager to receive foreign technology to boost farm output and productive diversity, said Laure Elsaesser, a representative of France's foreign investment agency UbiFrance, particularly seeking higher-end equipment that consume less energy and disseminate less water and fertilizer an acre.

-By Angeline Benoit, Dow Jones Newswires; 33-1-40-17-17-66; [e-mail]