Argentina: an attractive market for agricultural machinery

Date:10-12-2016

Based on data from AGCO in Argentina, a harvester can be found at every 700 hectares. Meanwhile, in Europe, there is one at every 150 hectares, so the company believes there is still room to expand in the local market.

In 2050, the Argentinean population is expected to reach 9,000 million people, so it is necessary to increase food production. South America is one of the regions that shows the most potential for growth, according to the CEO.

AGCO is a global company operating through brands such as Massey Ferguson, Valtra, Challenger, AGCO GSI, and Power. It manufactures agricultural tools---mainly tractors and harvesters---and has a presence in 140 countries. The company's turnover in 2015 was US$7,500 million.

In 2020, the company explained, each farmer will have to feed 200 people, and in 2050, 250 people.

They estimate some 144 million hectares have been planted in the region, but the potential exists to exceed 450 million hectares. Brazil has the greatest potential for increasing the planted area, with 78 million hectares being planted currently, which could reach 218 million.

Argentina has 37 million hectares planted and the potential to reach 56 million hectares.

Despite this potential for growth, the region only has access to a fleet of small machines compared with other countries. In Argentina, a tractor is placed every 167 hectares, whereas in Germany, one is found every 12 hectares. In addition, there is a harvester every 707 hectares in Argentina, while in the European country, it is placed every 147 hectares.

To meet the demand and spur growth, AGCO Argentina intends to produce harvesters in the country over the next three years. The year 2016 began with losses due to climate issues, delaying the harvest, but the latter half of the year saw gains, mainly in the sectors of grain and meat, but not in the regional economies, which are struggling to improve by managing the exchange rate. According to AGCO executives, the company market share in tractors in the country is 31%.

Precision agriculture will also increase production with added technology and machinery, so AGCO has invested $1 million in a center to train distributors and operators.