Forecast and Analysis of China's Harvester Machinery Market Trends in 2016
The Broader Context of the Harvester Market in 2016
First, subsoiling of land may increase demand for harvester machinery operations. In 2015, the state put forward a mandatory target to "carry out subsoiling operations on 200 million mu of farmland." Anyone familiar with subsoiling operations knows that after subsoiling farmland, the soil's water storage capacity will increase to a certain extent. If certain protective measures are then adopted, and barring extremely rare drought or flood disasters, soil moisture and nutrient content will improve to a certain degree over the following one to two years, and the prospects for crop harvests remain positive. Therefore, if no major natural disaster occurs, China's grain, oil crops and other crops should see a bumper harvest in 2016, and demand for harvester machinery operations will also grow to a certain extent.
Second, the "'National II' upgrading to 'National III'" has become an unstable factor in the harvester machinery market. Another focal point of the agricultural machinery industry in 2015 was the upgrading of agricultural machinery emission standards to "National III." From April 1, 2016, "National II" machines will no longer enjoy the national agricultural machinery purchase subsidy. In China's current agricultural machinery market environment, being unable to enjoy national subsidies almost means that products will not enter the purchasing consideration of most ordinary farmers. It is understood that by the National Agricultural Machinery Exhibition at the end of October 2015, even some manufacturers that had already launched complete machines equipped with "National III" engines had still not run in many of their new machines, and had even not yet carried out corresponding renovations to their production lines, so complete machines equipped with "National III" engines could not yet be mass-produced. Consequently, whether the stability performance of agricultural machinery products in 2016 can meet standards has also left most industry insiders "deeply worried." As one of the representative agricultural machinery products, harvester machinery certainly cannot escape people's doubts about it.
Third, land transfer and "moderate-scale operation" are boosting the development of harvester machinery. As urbanization continues to accelerate, a large number of young and middle-aged rural laborers are flowing to the cities. "Older-generation" farmers, affected by factors such as age and physical strength, will gradually withdraw from farmland, and some farmland has begun to lie idle. Therefore, the state vigorously supports the development of farmers' cooperative organizations. These cooperative organizations transfer idle farmland originally scattered among individual farming households into one place for "moderate-scale operation." Concentrated, contiguous large plots of farmland will be more suitable for mechanized production operations, invisibly boosting the development of harvester machinery.
Competition in the Harvester Machinery Market May Become Even Fiercer
First, "cross-regional operations" have become the "barometer" of competition in the harvester machinery market. Many harvester buyers regard machines as tools for making money. During the harvest season, they drive trailers, towing harvesters, and "roam" across major grain-producing regions. This is the "wheat crew," "rice crew," and "corn crew" unique to China -- the "army" of cross-regional operations. However, according to the investigation and analysis of Agricultural Machinery 360 Network, China's cross-regional operations have shown the following two characteristics in the past two years: first, the cross-regional operation teams are "downsizing"; second, the service radius of cross-regional operations is "shrinking." On the surface, this is the inevitable result of reduced income for agricultural machinery operators during cross-regional operations. On the other hand, it also shows that China's harvester machinery market ownership has already increased substantially. From this, it can be foreseen that competition in the harvester machinery market in 2016 will become even fiercer.
Second, the pain point of the harvester machinery industry during the "golden decade" -- poor stability. After the "golden decade" of China's agricultural machinery industry, the harvesters purchased by farmers in many places can already serve surrounding townships and cities, so the number of agricultural machinery operators still working across provinces has gradually decreased. What cannot be avoided is that many harvesters during the "golden decade" had less than satisfactory quality, and their service life was even less praiseworthy. It is understood that in recent years, some harvesters sold as second-hand agricultural machinery were sold off "with pain" by their owners just after being repaired and before faults appeared again or before being scrapped, because frequent breakdowns during operation made them very difficult to tolerate. In a short period, machines that cannot make money for harvester operators will certainly not have a good reputation. Once the scope of "negative" reputation reaches a certain level, it will certainly affect the sales of all agricultural machinery products of that brand, and elimination will be inevitable.
Third, high-standard farmland construction provides "a stage for displaying their talents" for harvester machinery. Before land transfer has reached a considerable degree and farmland has not yet reached "moderate scale," large harvesters may not yet be very suitable nationwide. This is precisely where existing small and medium-sized harvesters can shine. However, in the past one to two years, many provinces have begun to advocate the construction of high-standard farmland. For example, after 5 years, high-standard farmland in Anhui Province will account for 70 percent of cultivated land, and the infrastructure of farmland concentrated into contiguous large plots will be further improved. If mature harvester products suitable for such land conditions are not brought to market, they will undoubtedly be shuffled out.
R&D Directions of Harvester Manufacturers in 2016
From a market perspective, in 2015 China issued two documents with important influence on the agricultural machinery industry. One was the "Opinions on Carrying Out the Action to Promote Full Mechanization of Major Crop Production." Comparing the blueprint planned in the document with the current state of agricultural mechanization, it can be seen that there is still great room for development in the mechanized harvesting stage of many major crops. At the same time, besides major crops, there are still many other crops, and the development prospects for mechanized harvesting are also enormous. It is just that they have not yet attracted the attention of "leading-level" agricultural machinery enterprises for the time being. These segmented fields may become important battlegrounds for differentiated competition.
From a technical perspective, the second document with important influence on the agricultural machinery industry is the technology roadmap for the agricultural equipment field in "Made in China 2025." This technology roadmap sets clear requirements for harvester machinery:
Goal: By 2020, the mean time between failures of combine harvesters will increase to 60 hours; by 2025, intelligent harvester machinery will be put into use, and the mean time between failures of combine harvesters will reach 100 hours.
Product performance: large grain combine harvesters with a feed rate of 10 kg/s and above, high-traffic rice combine harvesters with a feed rate of 8 kg/s and above, as well as new corn kernel harvesters, cotton pickers, sugarcane harvesters, rapeseed harvesters, and forage harvesters. Hydrostatic drive, with navigation and positioning, fault diagnosis, and real-time collection and automatic monitoring of major parameters.
Key Components
1. Agricultural diesel engines: non-road National IV emissions, torque reserve of more than 35%, 3 or more power output interfaces, noise sound power level not higher than 114 decibels; electronic control systems and after-treatment systems independently supported domestically.
2. Steering drive axles for combine harvesters with a feed rate of 10 kg/s and above.
3. Measurement and control sensors for harvester machinery feed rate, cleaning and entrainment losses, header height, cylinder speed, yield flow, and grain moisture.
4. Navigation and positioning and object tracking devices for combine harvesters, with positioning accuracy not lower than centimeter level
Technology:
1. Agricultural machinery reliability technology: make breakthroughs in reliability test methods, detection and control technologies and other technologies for key combine harvester products, and realize the application of active reliability design technology for service environments.
2. Agricultural machinery sensing and control technology: make breakthroughs in sensing, monitoring and control, and data management technologies for animal behavior and environment and for agricultural machinery and their operating conditions, and realize the integrated development of mechanization, automation, informatization, and intelligence.
Application demonstration project: integrate technologies such as digital design of agricultural machinery, manufacturing process planning, and manufacturing process control, develop key assembly systems for combine harvester chassis and threshing and cleaning, and apply them in demonstrations at combine harvester enterprises.
Conclusion: The state has already laid out the development direction of the agricultural machinery industry. While seizing current production and manufacturing and channel stocking, agricultural machinery manufacturers must follow the direction set by the state and develop new products that meet future demand, so that enterprises can "walk steadily and walk far."