Agricultural Development and Mechanization in 2013 A Comparative Survey at a Global Level

This paper examines several rather broad questions: What are the world trend and evolution of agricultural mechanization? What are the factors driving the future demand for agricultural mechanization at global level? What would be the changes in the structure of domestic demand, imports and exports of agricultural machinery over the next 10 years? And what would be the future market penetration of selected high-tech innovative agricultural machinery? The findings of this paper are based upon a review of available industry data for agricultural mechanization and a survey targeting major Associations of Agricultural Machinery Manufacturers. The survey investigated questions related to: (i) General development tendencies likely to affect the future demand of agricultural mechanization; (ii) main field operations for the production of staple crops; (iii) Trade related to agricultural machinery – including implements, tractors and combines; (iv) the impact that selected issues (irrigation, organic production, and growth in the bio-fuel/bio-products markets) will have on the demand for agricultural mechanization; and (v) the technological trends for the sector over the next 10-20 years. 1. Challenges in Agriculture and the Role of Mechanization In the 21 st century, agriculture remains an essential sector for sustainable development but at the same time, is facing major challenges and risks. Indeed, while the natural resources that sustain agriculture are becoming increasingly scarce, degraded, and vulnerable to the effects of climate change, the world’s demand for food is expected to double within the next 50 years. In several poor countries, agriculture accounts for at least 40% of GDP and 80% of employment. And about 70 percent of the world’s poor live in rural areas and most depend on agriculture for their livelihoods (WDR, 2008). Furthermore, while the agricultural sector has been basically successful in meeting the world’s effective demand for food, still more than 800 million people continue to be food insecure, and the sector has left a sizable environmental footprint. To meet the projected demand for food under current circumstances (especially rising world population), agricultural production needs to increase by 60% over the next four decades. This means that every year 1 Bnt of cereals and 200 Mt of meat have to be produced additionally compared with 2005/07 levels (OECD-FAO Agricultural Outlook 2012). Added to this, the economic growth of emerging markets in Asia, Middle East and Latin America leads to higher living standards in combination with a change in diet (Msangi and Rosegrant, 2012). People adopt a western lifestyle which goes along with a higher consumption of meat and dairy products. Because the conversion efficiency of plant into animal matter is about 10%, a meat-based diet requires significantly more resources than a vegetarian diet (Godfray et al., 2010). As a consequence, rising feed requirement puts pressure on the agricultural markets as well as the expanding biofuel production, which is mainly based on food crops such as sugarcane, corn and vegetable oil. The production of ethanol and biodiesel is predicted to rise by 5% p. a. over the next ten years (OECD-FAO Agricultural Outlook 2012) and already pushed up world food prices. Considering these facts, agricultural production underlies an enormous growth requirement, even though the scope for arable land expansion is limited. The existing world arable land of 1.548 Mha is projected to increase by only 69 Mha by 2050. The situation gets even more critical with regard to water scarcity and land degradation (more than to 25%) in many countries. Also, the impact of climate change is expected to be important with little capacity to cope, especially in Sub-Saharan Africa. Therefore, managing the aggregate response of agriculture to rising challenges and risks will require sound policies and sustained investments, not business as usual (Rosegrant and others 2007).