Rome 30-31 May 2008

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Rome 30-31 May 2008

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Europe

Mr. Federico Corradini,

President CEMA European Committee of

Agricultural Machinery Manufacturers Associations

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Agriculture in the EU-27

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Population (2006) 494.8 million

GDP index (2006) EU27=100 100

GDP/capita index (2006) EU27=100 100

Agriculture of GDP (2004) 2.2%

Agriculture Gross Value (billion € 2006)

326

Share of agriculture in employment 6% (2005)

Agricultural land (mill. ha) 172 (2005)

Number of farms (mill.) 14.2 (2005)

Average farm size (ha) 12.1 (2005)

Demographics and farming Low birth rates Aging population, abandon farming, high technology

Main Products Typical regional and territorial products


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• Agricultural holdings with agricultural area < 5 ha : 10.34 million

• Agricultural holdings with agricultural area > = 50 ha : 690.000

(2005)


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Total farm labor force: 12.7 million AWUs

(2005)


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• Agricultural holders < 35 years old : 956.000

• Agricultural holders > = 65 years old : 4.72 million

Demographics and farming

Low birth rates Aging population, abandon farming, high technology


(2005)

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Agricultural contractors:

Key players in European agriculture


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Extensive integration with food industry


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Value of agricultural production• 2005 : €327 billion• 2006 : €326 billion • 2007 : €351 billion

Main contributors• Livestock • Fruits and vegetables• Commodities


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• Share of total Agriculture added value produced in the EU-15: 85%

• Share of Agriculture on total EU-27 added value: 1,9%• Share of Agriculture on total EU-12 added value: 8,5%

• Share of Agriculture on total EU-27 labour force: 6%• Share of Agriculture on total EU-12 labour force: 20%


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Organic land area in Europe:

3.9% of total utilised agricultural area


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A new mission for farmers:

• Environmental protection • Forestry preservation and promotion • Rural population inflows • Protection of animal health and welfare


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Agricultural holdings with another gainful activity than agricultural production

2003 : 6,2%

2005 : 12%


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The Agri-food trade balance

EU-27

• The world's largest importer and exporter of agricultural products

• About 20% share in total world exports


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In 2006, trade in agricultural raw productsand food accounted for some 5%

of the total EU-27 trade in goods with extra-EU-27 countries.

The Agri-food trade balanceAgriculture in the EU-27

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• A declining deficit: from €4.3 billion to €3.0 billion

• EU-27 global trade deficit for primary agricultural products: €17 billion

• EU-27 global trade surplus for processed food products: €14 billion

The Agri-food trade balanceAgriculture in the EU-27

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Structural factors:• Gradual rise in global food demand • New markets, such as bio-fuels• A slow down in yield productivity in the EU • Significant restructuring towards greater

competitiveness • Agricultural markets

Agricultural prices on the riseAgriculture in the EU-27

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Short-term factors:• Series of adverse climatic conditions • Behavior of some exporting countries • Impact of investment funds on commodity

markets


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Will it last?


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Main markets perspectivesAgriculture in the EU-27

Slightly expanding cereal markets and emerging bioethanol marketsDevelopment of cereal markets in the EU, 1995-2014 (mio t)

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EU to remain net importer of beef

EU production, consumption, trade and intervention stocks (mio t c.w.e.)

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Growth rates for pig meat production and consumption are expected to be lower than in the 90s

EU production, consumption and trade (mio t c.w.e.)

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EU poultry consumption to grow at a faster rate thanproduction over the medium term

EU production, consumption and trade (mio t c.w.e.)

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EU cheese market keeps its steady growth over themedium term driven by EU-12 demand

EU production, consumption and trade (mio t)

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EU milk production constrained by quota with decliningdairy herd size

EU milk production, deliveries to dairies, dairy cows

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After a sharp expansion after 1992, farm incomehas been stagnating over many years

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Relatively favourable medium-term perspectives foragricultural income, notably in the New Member States

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Main uncertainties:• Potential implications of a (multilateral) trade

agreement• Future development of world markets• Economic and policy environment• Climate change, technological developments,

biofuels, sanitary conditions• Cost increase for chemical, fuel and

machinery

Farm income perspectivesAgriculture in the EU-27

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Agricultural mechanization in EU-27

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Total in Use Tractors - EU27

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

Aust

ria

Belg

ium

Bulg

aria

Cyp

rus

Cze

ch R

epub

lic

Den

mar

k

Esto

nia

Finl

and

Fran

ce

Ger

man

y

Gre

ece

Hun

gary

Irela

nd Italy

Latv

ia

Lith

uani

a

Luxe

mbo

urg

Mal

ta

Net

herla

nds

Pola

nd

Portu

gal

Rom

ania

Slov

akia

Slov

enia

Spai

n

Swed

en

Uni

ted

King

dom


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The demand for new equipment is mainlydue to the necessity of having and

exploiting new kinds of machines andtechnologies


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A new double role:

• High quality levels and increased added value for smaller and specialized/niche products farms

• Production costs reduction for larger farms


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Values in Million Euro, including tractors

Agricultural Machinery - EU-27 2004 2005 2006

EU-15* 18091,4 18774,4 19764,1 5%EU-12* 1155,4 1331,9 1568,5 18%EU-27* 19246,8 20106,2 21332,6 6%EU-15* 4637,5 5115 5797,2 13%EU-12* 727,6 887,1 1089,1 23%EU-27* 3793,4 4027,9 4491,6 12%EU-15* 2130,5 2413,5 2565,7 6%EU-12* 1261,9 1624,1 2004,9 23%EU-27* 1720,1 2038 2119,9 4%EU-15* 15364,5 15699,8 16601,9 6%EU-12* 1728,3 2124,4 2536,2 19%EU-27* 17092,7 17824,2 19138,0 7%

* Excluding intra-trade EU-12 Entry 2004 and 2007 Sources: Eurostat, VDMA, CEMA

Market

Production

Exports

Imports

% 2006/2005

The role and economic weight of the domestic mechanization industry


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0

5000

10000

15000

20000

25000

2004 2005 2006

Agricultural Machinery in EU-27

Imports

Exports

Market

Production



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Tractor Registration (Units)

EUROPE 2007

EUROPE 2006

% change

Austria 7558 7926 -4,64%Belgium 3472 3738 -7,12%Denmark 3961 3447 14,91%Finland 4245 4171 1,77%France 37778 36024 4,87%Germany 28470 29011 -1,86%Greece 2999 2757 8,78%Iceland 368 361 1,94%Ireland 5029 4221 19,14%Italy 26836 29665 -9,54%Luxembourg 224 180 24,44%Netherlands 4678 4119 13,57%Norway 4187 4371 -4,21%Portugal 4199 3885 8,08%Slovenia 2084 2100 -0,76%Spain 17261 16668 3,56%Sweden 4634 4408 5,13%Switzerland 1974 2362 -16,43%UK 17089 14941 14,38%

AGRICULTURAL TRACTORS 166005 163435 1,57%



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Evolution for the demand of the agricultural machines

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Tractor Europe TIV evolution and medium term projection

EU-15: Austria, Belgium, Denmark, Finland,France, GermanyGreece, Ireland, Italy, Luxembourg, Netherlands,Portugal, Spain , Sweden, UK

EU-25: EU-15 + Cyprus,

Czech Republic, Estonia,Lituania, Latvia, Hungary, Malta, Poland, Slovakia, Slovenia

EU-27: EU-25+ Bulgaria &

Romania

Forecast

Source: Systematics Shipments Exchange

155700 143300 157000 154800 159450 149700 158200 167600 186000 182000 179100 177200 17500 173500

Evolution of the demand for agricultural machinesAgricultural mechanization in EU-27

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Forecast


EU 15/25/27 contribution to EU Tractor TIV


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Source: Eurostat


Europe Tractor TIV evolution and projection per HP Segment


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Forecast

8150 7270 9600 9150 7700 8700 8720 8880 10500 10400 9900 9700 9550 9500


Combines Europe TIV evolution and medium term projection


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Forecast


EU 15/25/27 contribution to EU Combines TIV


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Forecast


Other H&H Europe TIV evolution and medium term projection


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European agriculturelegislative framework

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Current main objectives:• Multifunctionality of agriculture • Rural development• Reduction in the financial resources

destined for the CAP through 2013.

The role of the CAPEuropean agriculture legislative framework

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The single farm payment independent of production level (decoupling):

the main instrument to make farmers more competitive and market-oriented


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Support payments linked to:• The respect of environmental and food safety, • Animal and plant health and animal welfare

standards, • The requirement to maintain farmland in good

agricultural and environmental condition.


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May 20th 2008

Some new adjustments have been proposed.

• Abolishing set-aside rules • Phasing out milk quotas by 1% per year• Simplifying the link between subsidies and environmental,

animal welfare and food quality standards• More flexible support for sectors with special problems• Moving some direct aid into rural development• Ending market intervention in certain areas


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• Spain : program aimed at the renewal of the agricultural fleet for the period 2006-2008.

• Italy: agricultural machinery “scrapping” adopted in 1998/1999 and 2001/2002.

• Germany: variable regional programs • Eastern Europe countries rely mainly on EU support

Local support policiesEuropean agriculture legislative framework

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0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

0.55

0.60

0 1 5 6 7 8 9 10

NOx [g/kWh]

PM

[g/

kWh]

EU Stage-3A (2008)US Tier-3 (2008)

EU

Sta

ge

-4

(20

14

)U

S T

ier-

4 (

20

14

)

2 3 4

EU Stage-3B > 130 kW (2011)US Tier-4 > 130 kW (2011)

EU Stage-2 (2004)US Tier-2 (2004)(P< 74kW)

EU Stage-1 (1997)US Tier-1 (2000)

EU Stage-3B < 130 kW (2012)US Tier-4 < 130 kW (2012)

EU Stage-2 (2002/3))US Tier-2 (2001/3))(> 74kW)

Emission Limits: Off-Highway > 56 kW

The role of technical legislationEuropean agriculture legislative framework

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Off road emission legislationTechnical review key issues:

• To exempt some categories of specialized tractors from the application of the next Tier levels

• To have adequate flexibility levels to ease the production launch process at the new emission stage introduction


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Operator’s safety • A stringent demand coming

from all the involved bodies• Frame Directive about tractors • Machine Directive


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Roading requirementsActivitiy to harmonize legislation and standardization related to:

• Higher road speed • New braking requirements


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Research and Innovation for agricultural mechanization

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The market trend is oriented towards:

• Specialized high technology equipment

• Specific usages and cultivations optimization

• Greater dimensions and more power

• New machines for niche production and multifunctional activities

Research and Innovation

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High competition in the market to offer equipment with high level of

• Safety

• Efficiency

• Comfort

• Versatility


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Comfort and ease of driving• Even lower noise levels• Vibrations level reduction. • Auto-guidance systems (GPS)• More servo-assisted controls• Continuously variable transmissions (CVT)• Standard ISOBUS for tractor-implement

communication


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Efficiency and productivity improvement• Precision farming• Telematics: wireless vehicle-to-vehicle

communication. • Field and road functions programming: • Fuel consumption reduction


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Opportunities linked to renewable energy sources

• Harvesting equipment’s special features to minimize transportation costs or to allow cutting and processing of fast-growing trees

• Mechanization for the management of the forest biomasses for energetic uses

• Production of biogas from animal manure.


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Bio-fuels• All the engine and fuel system components

can work with standardized biodiesel, blended at different percentage till 100%.

• Researches on possible usage of 100% pure vegetable oil as a fuel.


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Specialization of agricultural equipment• Electronics entering all agricultural sectors• Robotics will be the next step


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Conclusions

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Factors influencing European Agriculture’s evolution process :

The more and more important contribution that the new state members will have in the European agricultural GVA due to their higher growth rate versus the EU 15, has to be underlined.

Conclusions

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• The CAP reform

• Food global demand for quantity and European request for high quality

• Growing non food demand for bioenergy

• Growing social attention to the other important functions of agriculture

Conclusions

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• The increase of agricultural prices will continue on the medium term, but not at exceptional levels recently observed

• The agricultural income is expected to maintain the gain of recent years and will grow on the new Member States.

• The total arable area will take advantage from the new approach in set aside.

• Farm average size will keep increasing while the total holdings number will decline.

Conclusions

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New product demand in agricultural mechanization driven by:

• Operators’ safe and friendly working environment

• More powerful and big equipment

• New specialized and dedicated machinery

• Specialized machinery and dedicated implements for non-food production

• Replacement of old equipments

Conclusions

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Agricultural machinery sale trends in the medium term period:

• Sustained by the income perspective and new

product demand • Stable or decline in terms of volume for tractors

and combines

Conclusions

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Conclusions

The Agricultural Machinery Industry’s

Commitment

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The Agricultural Machinery Industry’s

Commitment

The European Farmers’ success.

Conclusions

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Thank you

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Rome 30-31 May 2008

Rome 30-31 May 2008

Documents

total eu

share of agriculture

share of total agriculture

agricultural holdings

eu significant restructuring

agricultural holders

agricultural land

agricultural contractors