2017 Central Document No. 1 boosts confidence in the agricultural machinery industry

[ China Agricultural Machinery Industry News ] Since the beginning of the new century, the 14th "No. 1 Document" for the guidance of the "Three Rural Issues" has been officially released on February 5. The full text of the "Opinions of the Central Committee of the Communist Party of China and the State Council on Deepening the Structural Reform of the Agricultural Supply Side and Accelerating the New Development of Agricultural and Rural Development" (referred to as "Central No. 1 Document") is about 13,000 words, divided into 6 parts and 33 parts. As an important part of the structural reform of the agricultural supply side, the agricultural machinery industry is duty-bound.

2017 Central Document No. 1 boosts confidence in the agricultural machinery industry
The reporter noted that the keywords "agricultural equipment" and "agricultural machinery" appeared again in this year's Central Document No. 1. This document has specific policy guidance for the production, use and sales of agricultural machinery, which is undoubtedly a great benefit to the agricultural machinery industry. In particular, it boosted the confidence of the downstream agricultural machinery industry.
Low position is heartbreaking
"How many corn harvester manufacturers will be left at the end of this year?" This is a question from Liu Wenhua, a commentator at Daejeon Farm. In recent years, the once-popular corn harvester industry is no longer in sight. The decline in production and sales for two consecutive years has made industry participants feel distressed. This piece of Red Sea has forced some companies to withdraw.
China Agricultural Machinery Industry Association released a brief report on the operation of the industry on the evening of February 7. The corn combine harvester showed a cliff-like decline in 2016. In 2016, the backbone enterprises produced 41,000 corn machines, down 43.54%, and sold 59,000 corn combine harvesters, down 13.78% year-on-year. The knapsack corn harvester basically exited the market.
The reporter was informed that the corn harvester market in 2016 is facing the impact of the triple adjustment of the agricultural machinery purchase subsidy policy, the reduction of corn planting area in the Bay of Sword Bay and the fall in corn prices, and the market pressure continues to increase. "Many manufacturers are facing survival problems." Wang Bo, general manager of Shandong Changlin Agricultural Equipment Co., Ltd. said bluntly in an interview with China Industry News.
Not only corn harvesters, but also the production and sales of other agricultural products have experienced different degrees of decline. According to the data provided by China Agricultural Machinery Industry Association to China Industrial News, in 2016, the total profit of agricultural machinery enterprises above designated size reached 25.524 billion yuan, an increase of 351 million yuan over the previous year, an increase of only 1.39%, which is lower than the growth rate of the national machinery industry. 4.15 percentage points. The growth rate of profit showed a weak situation.
From the perspective of specific products, although some products such as agricultural and sideline processing machinery have increased, the production and sales of major products such as tractors and harvesters have fallen sharply. Taking tractors as an example, in 2016, the number of tractors in the industry's backbone enterprises fell by 9.0%. Among them, the small four-wheel tractor dropped 15.58%, the walking tractor dropped 16.55%, and the large and medium drag dropped 7.25%.
“The break of the capital chain of individual enterprises cannot be sustained, and the agricultural machinery industry has encountered new problems in structural adjustment.” The relevant person in charge of the China Agricultural Machinery Industry Association told the reporter. Starlight agricultural machinery is also difficult to protect itself. The company’s recently announced performance pre-reduction announcement stated that the company’s net profit attributable to shareholders of listed companies fell sharply in 2016, shrinking by 40% to 60% compared with the same period last year.
China's agricultural machinery industry has entered a low level operation after continuous high-speed growth for many years and will become the norm. In the process, market demand and user structure will also shift. What followed was the occurrence of mergers and acquisitions, such as mergers and acquisitions in the industry. This is also the self-ecological evolution that many other industries have experienced or are experiencing. The changing market demand still exists, but the low-level operation is more testing the wisdom and routine of the players.
Document No. 1 boosts confidence
If the low-level operation puts pressure on the participants in the agricultural machinery industry, then the first document issued has brought hope to the industry. China Industry News reporter noted that this year's Central No. 1 document has many direct or indirect references to agricultural machinery, which not only boosted the confidence of the industry, but also pointed out the direction for the development of the agricultural machinery industry this year and even in the future.
The No. 1 Document of the Central Committee proposes to strengthen agricultural science and technology research and development. Among them, “accelerating the development of agricultural machinery and equipment suitable for hilly mountainous areas, facility agriculture, livestock and poultry aquaculture, and upgrading the independent research and development capabilities of agricultural machinery core components.” This is a must.
An interview with China Industry News reporter was informed that although many products have experienced market decline in recent years, China's agricultural machinery products are still insufficient, and they cannot fully meet production needs. At present, the variety of agricultural machinery products in China is about 3,500, which is only half of the total number of agricultural machinery in the world. There are still many blank spots in agricultural machinery products in hilly areas and economic crops. Based on this, agricultural machinery enterprises can formulate differentiated development strategies and avoid entering the Red Sea, where overcapacity is overcapacity such as tractors and harvesting machinery.
The No. 1 Document of the Central Government also proposed “improving the subsidy policy for agricultural machinery purchase”. In recent years, the central government has continuously increased the subsidies for the purchase of agricultural machinery, and the problems in the implementation of the policy have also been exposed. Although the relevant departments have been working hard to improve the implementation of the subsidy policy, but the directors of several provincial agricultural machinery bureaus including Heilongjiang, Jiangxi, and Guangxi have been jailed in recent years for the purchase of subsidies for agricultural machinery involved. Only the Jiangxi Agricultural Machinery System was exposed to 45 people at a time, involving 20 provincial-level and county-level agricultural machinery directors. At the same time, many well-known domestic and foreign agricultural machinery companies have also been suspended or cancelled subsidies.

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