Nov 12, 2013

Agricultural Equipment Sales Remain Strong in Brazil

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

The combination of strong commodity prices last growing season, credit incentives from the federal government, and increasing agricultural production has encouraged Brazilian farmers to increases their purchases of agricultural equipment. According to the National Association of Vehicle Manufactures (Anfavea), sales during January through October have already surpassed those for all of 2012.

During the first ten months of 2013, 72,240 units left the factories destined for Brazilian dealerships, which was 21.7% more than during the same period in 2012. Combine sales registered the greatest increase at 6,380 during the ten months compared to 4,450 in 2012. Tractor sales during the period totaled 56,800 units or 20% more compared to last year. Brazilian industries have kept pace with the increased sales by produced 85,180 units during the January to October period or 20.8% more than last year.

Credit programs put in place by the federal government have proven to be very popular with Brazilian farmers. Toward the end of 2012 a line of credit was made available from the federal government at interest rates just slightly above 3% with generous repayment terms. The program was scheduled to end in early 2013, but it proved to be so popular that it was extended further into 2013.

While domestic sales of agricultural equipment remained strong, export sales have declined compared to 2012. In October, Brazil exported 1,300 unites which was down from the 1,600 exported in September. During the first ten months of 2013 export sales have fallen 5.9% compared to 2012. The main reason for the decline in exports is protectionists policies adopted in Argentina that are designed to shelter domestic manufactures from Brazilian imports.

Truck manufactures in Brazil have also reported strong sales. During the January through October period, truck sales in Brazil have totaled 125,600 units compared to 110,000 units during the same period in 2012 or an increase of 14.2%.