The global challenges of agricultural mechanization
The demand for food is expected to increase in the near future, at a global level, not only to meet the needs of a growing population, but also to satisfy the qualitative evolution of diets, especially in developing countries. The introduction of innovative technologies is an unavoidable step for all agricultural economies, and thus the growth rate of machinery demand is an important development indicator of the primary economy
In the twenty-first century, agriculture increasingly represents a crucial sector for the sustainable development of the planet. It is facing great challenges that test the global agricultural supply’s ability to meet the growing food demand. In this context, it is clear that agricultural mechanization, as an indispensable factor of production for all types of agriculture and the main vector of innovation, is a crucial element in responding to these challenges. So, what are the factors that determine the evolution of the global demand for food and agricultural production and that will guide the evolution of the role of agricultural mechanization in the coming years?
To answer this question, it is important to be clear about how the value of food consumption, despite the recent slowdown in the world economy, is constantly growing and will continue to rise in the coming years. In particular, according to the estimates of the main international institutions, this growth will affect both developed countries and emerging economies.
The reasons for this increase are essentially economic or demographic. On the one hand, the increasing economic wealth and the increase in the number of families belonging to a “Western” salary range, and on the other hand the growth of the global population and the urbanization process will lead to an increase in both quantity and quality (more meat, dairy products and products with high service content) of food demand.
Of course, a scenario of this type opens areas of development for the entire food chain - from the producers of technical tools to the processing and distribution companies - which is facing great opportunities for growth not only in the long run but even more in the short and medium term. However, such a growth of food demand can be satisfied on condition that the offer is able to keep pace, to avoid that, due to cyclical or structural production deficits, there be a recurrence of the market volatility recorded during the last fifteen years. To do this, the international agricultural production system must be able to increase production beyond those which today appear like limits to the development of the sector: 1) the effects of climate change; 2) limited natural resources; 3) the limited rate of increase of productivity.
Specifically, the data shows us how the number of disasters is constantly growing, and in addition to causing direct effects on populations and the environment, they have harmful effects on crops and, when they occur in major production areas, they can affect the performance of the International markets.
Beyond that, we are seeing a progressive reduction in natural resources - land and water - available for cultivation. It is therefore clear that we need to find the way to use these resources more efficiently, for example by managing to raise the average productivity level of the production factors.
To date, agricultural production has been able to meet the food demand due to particularly high average annual increases of productivity in some emerging economies. In the last recorded period (2001-2013), when Europe’s productivity grew at a rate of 1.5% per annum and 1.8% in North America, in Asia this value exceeded 2.6%, while in Africa it remained below 0.6%. Currently, the average growth value globally is 1.7%. According to the international institutions, if we are to achieve the goal of meeting food demand in 2050, the annual growth rate must be greater than or equal to 1.75%.
Increased productivity in agriculture essentially means producing more with less production inputs, but how can this goal be pursued? Certainly, an answer to this question can be derived from investments in managerial skills, in technical progress, economies of scale and better distribution of land. However, it is clear that agricultural mechanization represents one of the most effective tools in this respect, especially in those countries where there is great room for improvement and where we are witnessing a gradual decrease of the labour force in agriculture.
This must be one of the reasons that among the top 15 countries in the world for growth rate (2015/10) of the value of imports of agricultural tractors and machinery we find developing countries and transition economies, where in many cases there are no local manufacturers of machines for agriculture, but where the demand for agricultural machinery is growing. In further support to the above on the areas where agricultural productivity has increased the most, in this case too the Asian countries play a leading role followed by some African and Eastern European countries. It is a well-established trend, and in light of the prospects of increasing food demand, it will continue in the coming years.
According to a survey conducted in 2013, over the next ten years the demand for tractors and agricultural machines will continue to increase both in emerging economies and in developed countries.
The difference between these two macro-consumption segments lies in the level of mechanization which, on a scale from 1 to 12, ranges from a level 1 where manual labour is predominant to a level 12 where there is a strong presence of autonomous vehicles. While in developed countries, farms require agricultural tractors and machines with a more advanced technological level (a level between 10 and 12), in countries such as China and South Africa we can expect a demand for level 9 vehicles, while in India, for example, the demand will focus mostly on level 5 machines. Ultimately, already today we have many elements to understand how the global supply-demand balance is changing, as well as anticipate the change and develop a strategy that allows businesses to be ready to respond to the global challenges. In particular, one of the main challenges for those who build agricultural machines is to provide more and more efficient and accurate tools, which are able to increase production with less use of inputs and a lower environmental impact. In this light, precision farming is certainly a first response to these challenges, as it is able to increase productivity, with an increasingly sustainable approach and with a positive impact on farmer’s incomes, and hence on potential future investment.
