Jul 10, 2015

Ag Equipment Sales in Brazil during First Semester Down 25%

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Agriculture equipment sales in Brazil have declined to the lowest level in years due to falling commodity prices. According to the National Automobile Manufacturers Association (Anfavea), sales of agricultural equipment during the first half of 2015 were down 25% compared to the same period in 2014 resulting in the worst semester since 2009.

During the first semester of 2015, equipment sales in Brazil totaled 24,700 units (-25%) compared to last year and significantly below the record sales of 41,000 units sold during the first six months of 2013. This marks two years in a row of declining sales. Sales recovered slightly in June to 4,400 units, which represented an increase of 6.9% compared to May, but still well below the 5,800 units sold during June of 2014.

According to Anfavea, the biggest drop in sales during the first semester was for combines which declined 32% followed by tractors which declined 22%. During the first semester, combine sales in Brazil totaled 1,900 units and tractor sales totaled 20,800 units. The drop in sales was also noted at the big farm shows in Brazil such as the Agrishow held in April. A lot of manufactures run special pricing during these shows to entice farmers to buy, but sales during the April Agrishow totaled R$ 1.9 billion, which represented the first year-on-year decline in 22 years.

As a result of the falling demand, manufactures have adjusted their production schedules by laying off workers. The agricultural equipment manufacturing workforce declined 19.6% during the first six months of the year to 16,700 workers.

The export of agricultural equipment from Brazil has declined as well during the first half of the year, but not as much as domestic sales. During the first semester, 5,300 units were exported, which represented a decline of 18.3% compared to 2014.