Exports of Russian AG machines more than doubled in Q1 2021 versus the same period in 2020; exports have reached US$ 53 million (3.9 billion rubles).
Rosspetsmash, the Russian Association of Manufacturers, notes that Russian OEMs showed record high figures for 2020, reaching US$ 214 million (15.9 billion rubles). For Q1 2021, Russian AG machines were shipped to 23 countries. Exports of AWD tractors are up by 2.8 times, and combines, by 46%. The exports to Germany have increased by five times, to Bulgaria by 65%, and to Poland by 49%.
Rosspetsmash says one important reason for export growth is the high prices for grain on the world market. AG businesses have gotten additional resources, which can be spent on fleet renewals. Besides this, many farmers postponed the purchase of machines because of the pandemic, and now we are seeing the realization of this postponed demand.
Another reason is that Russian OEMs are not having big problems with components supply because of the high localization level in Russian AG machinery. Also, Russian OEMs did not suspend operations in 2020 and 2021. State support measures also play a role in stabilizing demand.
However, according to some observers, one problem for the industry is the increases in metal prices. The price increases started last year. Metal products have increased in price by 50-80% for the year. Russian OEMs cannot maintain export growth if this issue is not resolved, say association representatives.
PSR Analysis: The growth picture for Ag Equipment production, caused by a number of favorable factors, could be interrupted by the increase in metal prices. Actually, it’s an old problem, which was discussed even five years ago. But now the government has started working out the measures, which are very unpleasant for local metallurgic companies. Among the measures are compulsory sales of metal under fixed prices, increased taxes, export restrictions among others. PSR
Maxim Sakov is Market Consultant-Russia Operations for Power Systems Research
