In 2021, agricultural machinery may become more expensive
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‘As part of the initiative to increase rates of recycling fee for agricultural machinery Association of agricultural machinery dealers "ACKHOD" expresses serious concern over the issue of providing agro-industrial complex with modern technology and the implementation of the investment plans of the industry, which is a driver of growth in the Russian economy. A 10-25% increase in prices, at least for imported equipment, before the start of fieldwork threatens to disrupt hundreds of contracts and more than a thousand units of equipment previously approved under investment loans and leasing financing. Many of the types of equipment do not have any or proper supply of domestic production, in particular: tractors of small and medium power, high-performance grain harvesters, self-propelled sprayers and a number of other items, where the share of imports is from 20 to 80%.
According to the Ministry of Agriculture of the Russian Federation, the industry is experiencing a permanent shortage of equipment: about 60,000 small and medium-class tractors, 40,000 energy-saturated tractors, which is about a quarter of the current fleet, about 40,000 grain harvesters or 40% of the operating units. Even with the doubling of the current rate of renewal of the agricultural machinery fleet, it takes from 3 to 8 years to cover these needs.
The authors of the initiative state that there are no concerns about price increases, which is not true – over the past 5 years, prices for equipment of foreign brands have increased by 30-40%, mainly due to the fall in the ruble exchange rate.
At the same time, since the introduction and application of the recycling fee in 2016, prices for Russian agricultural machinery have shown a significant increase, exceeding the rate of inflation. All this leads to an inevitable increase in prices for agricultural products, which only recently shows double-digit rates of price increases and spurs inflation, the fight against which is declared a priority in the framework of macroeconomic policy.
The task of developing domestic production does not demonstrate proper implementation. Offer for harvesting machinery, despite all efforts, is growing slowly, for tractors – a little better, but is measured in hundreds of units and is insufficient on the need to 100,000 units of the deficit and low power availability per hectare, lagging 3-5 times from countries with a high level of agricultural development.
The thesis about the low utilization of domestic capacities at the level of 50% also does not stand up to criticism. It is obvious that domestic factories work in 1-2 shifts, and the possibility of multiple production growth is constrained by a shortage of resources, including labor. This is confirmed by the growth rate of the supply of domestic production equipment in recent years and the current shortage of machines on the market. There is no reason to believe that the situation will become significantly different in the medium term, due to the length of the investment cycle to increase production, which is confirmed by recent statistics.
Thus, the increase of the recycling fee in 2021 could lead to higher prices for agricultural machinery, both foreign and domestic brands, will create a shortage of supply in the market and the threat of supply disruption during the sowing campaign, and in the medium and long term will significantly reduce the rate of renewal of agricultural machinery in the country and will impact on the efficiency of the agricultural sector.