German market keeps weakening slightly

The German market is currently experiencing hard times. Sales from stores with German sales partners fell by 14 percent to EUR 1.08 billion in both of the first quarters.

“The fall in milk prices needs its tribute. It is the only country in Europe that presents such high declines in income for the agricultural sector,” emphasizes Scherer. He went on, saying it is no wonder that this has a significant effect on the overall mood in agricultural business.

According to a VDMA customer survey, only 9 percent of German farmers are planning to invest in new machinery for the second half of the year.

France experiencing growth again for the time being

A positive development, at least partially, is that the export business accounted for around 72 percent of sales in the sector average. “After two years of recession, we are finally seeing noticeable growth in France again,” says Bernd Scherer. The most important foreign market for the German agricultural technology industry, with an annual export rate of more than EUR 1 billion, recorded a strong increase of about 25 percent in the first six months of the year.

It is not yet possible to say how long this development will last. “The first light on the horizon can also be seen in business with Russia, which is advancing a bit albeit from a very low level,” Scherer says. The British market especially is troubling the industry, where investments are still very reserved due to the Brexit vote.

VDMA predicts 5 percent decline in turnover

The VDMA business climate index, which is based on a representative survey of top managers in the European agricultural technology industry, fell further last month and even the incoming orders are currently as a record low. The VDMA Agricultural Machinery Association predicts a sales volume of EUR 7 billion for 2016, which corresponds to a further drop of 5 percent.