Views: 1 Author: PEAK Publish Time: 2023-10-20 Origin: Nongjitong
I really like two sentences. The first sentence is: The dust of the times falls on everyone's head like a mountain; The second sentence is: A drop of water from the times is a vast ocean for individual enterprises. The previous sentence talked about external risks, while the latter sentence talked about external opportunities. It can be seen that opportunities and risks are twin brothers, organic in danger, and dangerous in opportunities. Enterprises consciously prevent risks while seizing opportunities. However, enterprises cannot avoid seeking opportunities because of external risks. Zhang Ruimin said, "There are no successful enterprises, only enterprises of the times." He said that the success of enterprises largely owes to the times, Great times can breed great enterprises, and almost all major enterprises around the world have seized one or several major eras and industrial cycles. The great multinational companies such as John Deere and Kesner Netherlands, as well as domestic companies such as Yituo Group, Weichai Lovol, and Ward, have all emerged in one or more industrial cycles.
So, during the period when the popularization of agricultural mechanization in China is about to end, do domestic agricultural machinery enterprises still have great opportunities? The answer is yes, because there are great opportunities in every period, cycle, and era. However, opportunities may appear in different forms, some are visible, some are hidden behind risks, and some require clearing layers of fog to see the true face of opportunities.
So, what are the major opportunities in the domestic agricultural machinery industry that are capable of changing their destiny and helping enterprises become world-class enterprises? Some experts believe that there are policy opportunities based on grain, quantitative agriculture, import substitution, and industrial chain output opportunities.
1、 Opportunities for the "Grain as the Key" Policy
The opportunity of the national macro strategic agricultural policy of "taking grain as the key link" emerged after the outbreak of the COVID-19 in 2020. The Russia Ukraine war strengthened the country's general policy. Of course, this statement is rarely seen in various national agricultural policies and documents, but the general direction of the national agricultural policy is "taking grain as the key link".
Research by institutions has found that since the reform and opening up, especially with the acceleration of urbanization, on the one hand, excellent farmland has been heavily occupied by cities and infrastructure, and on the other hand, the planting area of grain crops has shrunk and the planting area of high-yield economic crops has increased. As shown in the above figure, by 2020, the proportion of non grain crop planting area in China has reached 35%, Under the influence of the so-called idea of food surplus, the Ministry of Agriculture issued the "Guiding Opinions on the Adjustment of Corn Structure in the" Sickle Bend "Region in 2016, proposing to reduce the corn area in the" Sickle Bend "region by more than 50 million mu by 2020, and plan to reduce it by more than 10 million mu that year. Due to the" bullwhip effect "of policies, various regions will increase their efforts to complete the reduction task layer by layer, The result is that the national corn planting area has been reduced by far more than 50 million acres, and in 2018, there was a phenomenon where the corn produced that year was not enough for that year.
While the area of corn is reduced, the area of rice is also being reduced. In 2018, the Ministry of Agriculture issued the 2018 Key Points for Planting Industry Work, one of which mentioned that "we should continue to reduce ineffective supply and strive to reduce the area of rice by more than 10 million mu", also because the actual area of rice is reduced by far more than 10 million mu due to the "bullwhip effect".
In fact, there is no problem of food surplus in China at all. If it is a surplus of grain, it is still reasonable. The total production exceeds the total demand, and there is a lot of room for grain industrialization. As long as several large ethanol processing factories in Northeast China are opened, the so-called surplus grain in China cannot fill these industrial giants. After 2018, China began to import a large amount of corn.
The COVID-19 and the Russia Ukraine war have changed a lot, including the country's agricultural policy and food policy. After 2020, "taking food as the key link" has actually become the main keynote of the country's agricultural policy. The food rations are absolutely safe, and the food supply is basically self-sufficient. In order to achieve this goal, the country has launched a series of supporting policies and a series of major moves from top to bottom, including restoring the function of basic farmland, returning forests to farmland, returning fruits to farmland, Local policies such as returning grass to grain.
So why is' grain oriented 'a great opportunity for agricultural machinery enterprises? There are three reasons:
Firstly, the principle of "focusing on grain" has suppressed the occupation of farmland, ensuring the area of farmland. 1.8 billion hectares of farmland is a red line, and as long as there is sufficient area, the basic demand for agricultural machinery can be guaranteed. The larger the planting area of agricultural products, the more demand for agricultural machinery is. This is a very basic and simple principle and common sense.
Secondly, the "grain oriented" policy has adjusted the proportion structure of crop planting. As long as the planting area of grain crops, especially the main grain crops, increases, the demand for agricultural machinery will increase. As long as the planting area of non grain crops, especially economic crops, fruits and vegetables, flowers and seedlings, increases, the demand for agricultural machinery will significantly decrease.
The reality is the same. The author has inspected two vineyards: the first one is a 600 mu vineyard. The agricultural machinery used is a 50 horsepower orchard tractor, three tube pulling spray machines, and the second one is a facility integrating water and fertilizer; The second one is a 100 mu vineyard. It uses two small and micro tillage machines, and a backpack spray machine. It doesn't even have an orchard tractor or a large plant protection machine. If it is a 600 mu main grain crop, there must be 1-2 tractors with more than 150 horsepower, five or six supporting agricultural machinery, and even a 6-8 kg grain combine harvester.
Thirdly, the principle of "focusing on grain" has promoted the improvement of agricultural scale. All grain crops are easy to achieve scale, while non grain crops are difficult to achieve scale, or if scale is large, it will lead to uneconomical scale. Only a moderately large planting scale can use agricultural machinery, and a sufficiently large planting scale must use agricultural machinery throughout the entire process, otherwise there will be a sharp increase in costs.
The "grain oriented" agricultural policy is expected to last for about 10 years, during which the demand for quantity and quality of agricultural machinery can be guaranteed. This is why the agricultural machinery industry has entered a saturation period, but after 2020, the sales of large categories of agricultural machinery such as tractors and combine harvesters have exceeded historical highs for three consecutive years.
2、 Quantitative and total agricultural opportunities
Quantitative agricultural opportunities, in simple terms, refer to the leading direction of national agricultural policies, namely the total grain yield and mu yield. At present, the pursuit of mu yield and total grain yield is overwhelming at this stage, and the country still adopts a quantitative and total agricultural policy.
On a large scale, in the past two years and the following few years, the country's total grain production target will be over 1.3 trillion kilograms, and in 2023, a new plan of adding 100 billion kilograms of grain has been proposed, all of which point to total and quantity oriented agricultural policies.
On the small side, on September 26th, the Ministry of Agriculture and Rural Affairs held an on-site observation and deployment meeting for major crops such as grain and oil to increase their yield on a large scale, as well as for various types of work in autumn and winter. The meeting pointed out that since the beginning of this year, the Ministry of Agriculture and Rural Affairs has made increasing the yield on a large scale the top project in grain production. In order to improve the yield, the Ministry of Agriculture and Rural Affairs has mainly promoted dense planting technology, and formulated and implemented a comprehensive plan for the integration and assembly of "five good" fields, varieties, methods, opportunities, and systems, Promote efficient and intelligent agricultural machinery, and continue to tilt funding projects such as subsidies for the purchase and application of agricultural machinery towards increasing unit yield on a large scale. Real gold and silver will increase investment efforts; Implement techniques such as deep tillage, deep loosening, and suitable deep precision sowing.
The policy of quantity based and total quantity based agriculture is to ensure sufficient planting area, scale production, and increase output per unit area. The carrier of quantity based and total quantity based agriculture must be the three main grain crops of wheat, corn, and rice. Therefore, quantity based and total quantity based agriculture must be single crop planting, moderate scale and large-scale planting, and high yield and efficiency agriculture, And these characteristics are all favorable for the demand for agricultural machinery.
On the one hand, it is a guarantee of the total demand for agricultural machinery, and even an increase in demand. On the other hand, large-scale planting will promote the upgrading of agricultural machinery demand, and the demand for larger and more expensive agricultural machinery will increase. On the other hand, high yield dense planting will bring about changes in demand. Machines and tools that adapt to the new planting mode need to be developed. Therefore, quantity and total agriculture are beneficial to the agricultural machinery industry as a whole, especially for tractors The agricultural machinery required for staple crops such as combine harvesters is the biggest advantage, while conversely speaking, it is a disadvantage for characteristic agricultural machinery and machinery.
3、 Import substitution opportunities
The rice bowl of the Chinese people needs to hold the grain they grow themselves. To ensure the stability of their rice bowl, it is necessary to solve the key bottleneck technology. Some key technologies in agricultural machinery have not been conquered or fully understood domestically, and 80% of basic agricultural machinery products can be produced domestically. However, some high-efficiency and high-value agricultural machinery still needs to be imported from European and American countries domestically, For example, grain combine harvesters with a feeding capacity of 15 kilograms or more, silage combine harvesters with a cutting width of 5 meters or more, large diameter bundling machines with 6 ropes, power shift tractors, CVT tractors, air suction seeders, air blown seeders, packaged cotton harvesters, as well as some key core components such as clutches, axles, transmission boxes, hydraulic components, electronic control systems, bearings, seed metering devices, etc.
Import substitution opportunities refer to finding domestically produced products that are similar to or can be replaced by imported products. With the support of national policies and the efforts of domestic enterprises, many domestic agricultural machinery brands' products have achieved quality comparable to imported products, and some domestic brand products have even begun to seize the market that originally belonged to imported products.
The performance and quality of these domestic brand products are gradually accepted by domestic consumers, and they perform better in certain aspects, thus becoming affordable substitutes for imported products. The emergence of import substitution opportunities has enabled domestic agricultural machinery buyers to obtain similar or better products at lower prices, reducing consumption costs.
In the future, import substitution will be an obvious positive opportunity. On the one hand, the country will strongly support the upgrading of the national agricultural machinery industry. On the other hand, the country will encourage and support the substitution of domestic agricultural machinery for imports, especially in key core technologies, core components, and large mainframe products. In some large-scale project procurement, there may be a conscious inclination towards domestic agricultural machinery, In fact, the development of agricultural machinery such as power shifting has not been successful in China, not because we have not mastered core technologies, but because the market is not accepting it, domestic products have not been verified in the use process, and therefore cannot be commercialized.
4、 Industry chain output opportunities
The concept of industrial chain output or industrial output is completely different from international trade and foreign trade exports. The latter is an unstable trading relationship of hammer buying and selling, while the former is a long-term, stable, and sustainable business behavior of establishing factories and exporting a complete industrial foundation to overseas countries.
There are three forces that will accelerate the export of domestic agricultural machinery industry: one is that the state supports and guides enterprises and industries to go global, such as the countries and regions involved in the the Belt and Road strategy; the other is the crowding out effect of competition. China is the most competitive agricultural machinery market in the world, and there is no one. A large number of enterprises are clustered in a market with limited demand. The crowding out effect is obvious, or they will be eliminated, Either they are squeezed out of the Chinese market and seek development overseas. With the diminishing marginal benefits of subsidy policies and the withdrawal of policies themselves, many companies that are nostalgic for the domestic subsidy market will turn to seek overseas market expansion. Thirdly, the sudden creation of alternative opportunities in the Eastern European and Central Asian markets by the Russia Ukraine war.
China's agricultural machinery industry has the strength to export its entire industrial chain overseas. Following the export pattern of agricultural machinery industries in Europe, America, Japan, and South Korea, Chinese agricultural machinery enterprises will export in four modes: second-hand agricultural machinery, agricultural machinery parts, complete machines, and industrial chain. For example, starting with second-hand agricultural machinery, establishing a maintenance system for second-hand agricultural machinery parts, and then exporting new machines, After the number of new machines is large enough, establish a factory and bring out a supporting system.
Only the output of the industrial chain can truly achieve localization and localization. National and local governments should encourage and support domestic agricultural machinery enterprises to go global, especially in the form of complete industrial chain output.
Conclusion: There are different opportunities in different eras, and opportunities from different eras will appear in different faces and forms. Enterprises are products of the times, and what enterprises need to do is resonate with the times. In the context of the times, seize industrial opportunities to quickly grow and strengthen, and the dividends of agricultural machinery purchase subsidy policies have been exhausted. Currently, new opportunities and era dividends have emerged.
