Analysis of the Current State of China's Agricultural Machinery Distribution Industry
China's agricultural machinery distribution industry has developed rapidly over the past decade, with the total output value of the agricultural machinery industry growing from 7.3 billion yuan in 2003 to 310 billion yuan in 2012, an average annual compound growth rate of 17.1%. Through analysis of the current state of China's agricultural machinery distribution industry, it is learned that China's agricultural machinery manufacturing scale has now leapt to second in the world, second only to the United States. As farmers' purchasing power increases, the rural labor force decreases, and the concept of family farms is put forward, the agricultural machinery industry will continue to maintain a relatively high growth rate, and in the next five to ten years the industry's average annual demand growth rate may remain at 10-20%.
In 2014, riding the spring breeze of agricultural modernization policies, the agricultural machinery distribution industry once again basked in warm sunshine. The foundation of agricultural modernization is agricultural mechanization, and the prerequisite for agricultural mechanization is the sound, sustained and rapid development of the agricultural machinery distribution industry.
In January this year, Xinhua News Agency released the "Several Opinions of the Central Committee of the Communist Party of China and the State Council on Comprehensively Deepening Rural Reform and Accelerating the Advancement of Agricultural Modernization" (hereinafter referred to as the "Opinions"), which clearly stated that spending on "agriculture, rural areas and farmers" should be increased, subsidies for the purchase of agricultural machinery should be strengthened, subsidy methods should be improved, and the pilot program for subsidies for scrapping and renewing agricultural machinery should continue to be promoted.
Based on this, a number of industry figures interpreted that the level of agricultural machinery purchase subsidies in 2014 would exceed the 21.75 billion yuan of 2013, and was expected to reach a scale of 23 billion yuan, driving agricultural machinery market sales of more than 75 billion yuan.
In fact, the current level of development of China's agricultural machinery industry lags far behind that of developed countries. In 2013, China's comprehensive mechanization level for plowing, sowing and harvesting was only 59%, with the plain mechanization level estimated at around 70%, reaching the intermediate stage of agricultural mechanization development, while the agricultural mechanization level in hilly and mountainous areas was still less than 40% in some provinces. In countries such as Europe, the United States and Japan, the agricultural mechanization level has already reached 90%. Zhu Lihao, editor-in-chief of the magazine "Agricultural Machinery Quality and Supervision", pointed out that the gap with developed countries means that China's agricultural mechanization development still has huge room for improvement, and the agricultural machinery industry as well as the agricultural machinery distribution industry are fully-fledged sunrise industries.
The Third Plenary Session of the 18th Central Committee deliberated and passed the "Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform", pointing out that a new type of agricultural operating system should be built more quickly and farmers should be granted more property rights.
At the same time, the "new land reform policy" that has been hotly hyped by the market echoes this. Since 2012, new rural economic entities represented by family farms and agricultural cooperatives have sprung up across the country like bamboo shoots after rain. By the end of December 2013, the number of farmer cooperatives, including specialized cooperatives and joint-stock cooperatives, registered in accordance with the law nationwide reached 982,400. It can be foreseen that as land transfer accelerates, organized customers will become the mainstream customer group in agriculture in the future.
This will bring about fundamental changes in the demand of the agricultural machinery market, and this change will greatly benefit the agricultural machinery distribution industry. The change is not limited to agricultural machinery products themselves -- rigid demand for new agricultural machinery products that are "high-end, impressive and upscale" will gradually increase; the pace of upgrading and replacement of agricultural machinery products will also accelerate. More importantly, customer demand will extend from the products themselves toward more diversified services. For example, from farm planning and construction, from seedling raising to plowing, sowing and harvesting, and even drying, storage and distribution, from machine tool maintenance to the complete set of training in management, operation and maintenance, organized customers need full-process solutions. And such diversified demand has created entirely new opportunities for the development of leading enterprises in the large-scale and chain-based agricultural machinery distribution sector.
The plan to build 800 million mu of high-standard farmland benefits agricultural machinery distribution
In addition, the Central Rural Work Conference held at the end of last year clearly emphasized the need to ensure food and food safety and to promote agricultural modernization. Some experts have already stated that promoting land transfer and realizing large-scale agricultural operation concerns national food security and farmers' rights and interests, and will be the focus of agricultural reform work in the coming years. China is a country with a large population, and solving the problem of feeding the people is more important than Mount Tai, and realizing agricultural modernization will be the key to solving the food problem.
On December 9 last year, the "National Overall Plan for the Construction of High-Standard Farmland" issued by the National Development and Reform Commission attracted the attention of people in the agricultural machinery industry. The "Plan" proposed that "by 2020, 800 million mu of concentrated and contiguous high-standard farmland that gives stable yields despite drought or excessive rain should be built."
According to the introduction, the construction of high-standard farmland will help improve farmland drainage and irrigation capacity, the application of agricultural science and technology, and the level of agricultural mechanization. It will have an important impact on related industries. As the high-standard farmland plan is gradually implemented, agricultural machinery distribution enterprises, as a participating link, will clearly benefit.