Western production in Russia creates jobs and generates added value

However, innovative agricultural machinery production in Russia creates sustainable jobs, allows companies to train employees and generates added value. “So it is all the more incomprehensible that the Russian government pursues such a strong protectionist policy”, stresses Mikhail Mizin, VDMA expert on Russia. “In fact, such a policy prevents growth and hurts the country's economy”, says Mizin. By all means it is clear that an artificial market distortion like this primarily harms efficiency and labor productivity in the Russian agricultural sector. According to Mizin, for VDMA open markets are thus a crucial means for a flourishing future of Russian agriculture.

Demand for Western machinery inherently very high

“Especially large scale farms and agricultural holdings need the power of reliable state-of-the-art technology”, Mizin points out. In 2012, the competition between world agricultural machinery leaders became very intense and emotionally charged. Nevertheless, Russian and Belorussian manufacturers have still huge potential providing local technology to smaller farmers.

The sales volume of Western brands in the customs union countries was constantly growing in the first half of 2012 as compared to the same period of 2011, while Russian and Belorussian agricultural machinery producers reported a decline in their sales due to a decrease in demand and an increase in stocks.

Market development in the pre-crisis period up until 2008 revealed that Western brands commanded a market share of 30 percent, while annual domestic demand for combine harvesters was estimated at 10.000 till 12.000 units. However, in 2009 and 2010 their market share declined to 15 percent due to the imposition of safeguard tariff measures and restricted access to subsidized loans. In 2011 and 2012, Western makes saw an increase in their sales volume driven up by increased grain crop prices and restored domestic purchasing capacity.

Source: VDMA