The slowdown in agricultural sales in the United States and other markets is probably too big for China to counter alone, although CNH International expects “significant acceleration” in the country overall, said Luca Mainardi, head of agriculture construction operations in China for CNH International.
“The main growth is from cooperatives, which have been growing rapidly in number the last five years thanks to Chinese government support,” Mainardi said.
CNH sells tractors of 140-230 hp in China, the high end of the market, and just started producing combines there. Mainardi reckons there could be about 5,000 co-op farms in China, with their number growing by 15-20 percent each year.
Subsidies – which can cover up to 30-40 percent of the cost of a tractor or give incentives for deep ploughing – have also encouraged rapid gains in mechanization in a sector still dominated by the lower-horsepower tractors and other machinery used on smaller farms.
“There are a lot of subsidies, and with a bigger land area you get more efficiency and more income,” said Zhao Shuanzhen, director of the Gaocheng Zengshou Agricultural Machinery Service Cooperative in Hebei province.
Zhao’s cooperative originally only leased equipment and services to farms across China, but since 2011 has also been farming on its own account, and now rents 40 hectares from more than 100 households.
The co-op has more than 200 wheat harvesters – including more than 30 it bought this year – 180 tractors and 24 corn harvesters, almost all of them domestic brands.
“If our land area was bigger, we might consider buying some good (foreign) equipment,” said Zhao.
Foreign players now account for an estimated 80 percent of the high-horsepower market, although they can expect to face greater competition from local counterparts in the future.
Under the national “Made in China 2025” plan, Beijing wants domestic companies to take 30 percent of the 200-plus horsepower market by 2020, and 60 percent by 2025.
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