Demand surges for agricultural machinery

Wang Yong, general manager of Beijing's Hengyuntong Mechanics Corp, never thought the market for corn harvesting machinery would grow so fast in such a short time.

The 47-year-old Beijing businessmen, who started in the agricultural machinery manufacturing business 12 years ago, found the emerging market in 2009.

The output of his company was only 200 units in 2009 but reached 1,200 units last year. This year's sales reached 2,400 units and some customers are even booking the products in advance.

Surging labor costs and the nation's high agricultural subsidies are the main driving forces behind the prosperous market, Wang said.

Governments at all levels are providing machinery purchase subsidies to farmers to boost agricultural mechanization, experts from the China Agricultural Machinery Distribution Association said.

Industry insiders said that mechanized wheat harvesting now exceeds 90 percent, while mechanized rice harvesting is at over 60 percent. The mechanized corn harvesting rate is at about 30 percent.

"The corn rate is low compared with the other two grains. But it's an amazing figure if we take into account the fact that the figure was only 3 percent three years ago," said Dang Dongmin, deputy director of the information department at the China Association of Agricultural Machinery Manufacturers.

China's corn production in recent years has been on the rise. Data from the Ministry of Agriculture show the output hit a record high of 192 million metric tons last year. The increase of corn production was accompanied by the introduction of modern agricultural machinery.

Yu Huihuai — a farmer from Shenyang, a central city in Liaoning province — is now running an agricultural machinery cooperation service with 400 agricultural machines ranging from planters to combine harvesters. Yu provides services for 1,333 hectares of land and thousands of local farmers.

"Nobody wants to harvest rice and corn by hand if they can use my service. This is more effective and convenient," Yu said.

The adoption of agricultural machinery can save up to $31.7 per acre of rice harvesting, according to Yu.

The central government launched the agricultural machinery purchase subsidies to improve farm efficiency in 2004.

Farmers can receive around 30 percent of the whole costs in addition to extra preferential policies from local governments. For example, Northeast China's Heilongjiang and Jilin provinces provide up to 30 percent in subsidies.

One of Wang's main products, the 4650H corn harvester, costs about $50,403, with central government's subsidies reaching $13,156.

Agricultural machinery giants from around the world, such as John Deere and New Holland, are flocking to the market.

Melissa Zhang, marketing communications manager at John Deere (China) Investment Co Ltd, said the company's sales in China have seen "continuous and steady growth" in the last three years, with an annual growth rate of over 20 percent.