January 10, 2011

Sales of Agricultural Equipment in Brazil up 23.8% in 2010

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

Sales of agricultural equipment in Brazil increased 23.8% in 2010 to 68,400 units which is the highest level since 1976. In anticipation of increased sales, manufactures ramped up production 34% in 2010 and turned out 88,700 units.

According to Milton Rego, vice president of the National Association of Automobile Manufactures (Anfavea), sales surged in 2010 due to incentives from the federal government. The main program involved low interest loans for farmers to purchase equipment. In addition to subsidized interest rates, the loans had an extended payoff period (ten years) and they included a two year grace period before the first payments were due. The program was originally scheduled to run for six months in 2010, but it turned out to be so popular that it was extended into 2011.

Other programs from the government were geared to help small family farmers with limited financial resources. Some of the programs for family farmers involved loans with zero interest. Many state programs were also geared to help small farmers as well. The subsidized credit programs were geared to help the manufacturing sector and the small family farm programs were the result of President Lula put special emphasis on helping small farmers.

The export of agricultural equipment from Brazil also increased in 2010 to 18,600 units, which represented an increase of 26.5% compared to 2009. While this was an improvement over 2009, it still fell short of the export volume obtained in 2008 when 30,200 units were exported. Exports in 2011 are expected to face tough competition due to the strength of the Brazilian currency, which makes exports from Brazil relatively expensive.

The main destinations for Brazilian agricultural equipment exports were Peru, Columbia, other Mercosul countries, and Africa.