Argentina - Agricultural Machinery and Irrigation Equipment and Parts and ComponentsArgentina- Agricultural Machinery
Agricultural Equipment
Overview
Argentina has a long-established local industry of manufacturing farm machinery and implements. The sector is composed of approximately 730 companies and was one of the first industries to develop in the country due to agriculture’s predominant role in the economy. According to local statistics, domestic production of agricultural machinery and equipment accounts for around 80% of the total sector. Local content requirements of previous government administrations have led to the growth of local production of parts and components. This has caused multinationals to incorporate more than 50% local components into their manufactured equipment. Domestic production of seeders, sprayers, and tools is strong and competitive.
Government policies of the previous administration had a strong effect on Argentina’s farming sector. In 2008, the government began requiring agricultural exporters to pay a tax retention of 35%, thus reducing incentives for exports and reducing profitability. Coupled with increased input prices, and lower commodity prices, the farming sector in Argentina was in a precarious position.
In December 2015, the Macri administration took office and reversed many of the previous government’s policies toward the agricultural sector. The policy changes included the reduction of the export tax on soybeans and its byproducts by 5% and eliminating export taxes on all other agricultural commodities. The administration also eliminated export permits for grains and oilseeds. In September 2018, the government established a new export tax on all goods except goods included in the government’s “Exporta Simple” program through December 31, 2020.
The combination of policy changes and a new economic climate has spurred optimism and has encouraged the Argentine agricultural sector to invest in new equipment and technology. However, the high inflation rate, increased input costs, new export taxes, and logistical costs are a drag on the market for new agricultural machinery. Two thirds of Argentina’s exports are agricultural. The 2018 depreciation of the Argentine peso, coupled with a predicted strong harvest in 2019, should spur investment in ag technology and equipment.
Sub-Sector Best Prospects
Irrigation Equipment: The Argentine market for irrigation systems has been growing in recent years due to the increased amount of Argentine farmland dedicated to row crops. Currently, 5.6 million acres (representing around 7% of farmland) are under irrigation. The Argentine government has made efforts to increase existing irrigated areas by 28%.
Parts and Components: Annual sales in this subsector currently represent approximately 12% of the total market, with a large number of national products. Agricultural producers are gradually integrating technologies to help minimize use of agricultural inputs while maintaining high yields, causing them to rely on foreign suppliers for key components. There are opportunities for technologies ranging from precision agriculture to key electronic components for manufacturing domestic equipment.
Opportunities
Products offering savings cost are in great demand, as are those that increase and improve the quality of agricultural machinery. Information technology services and products for the agriculture sector are highly sought-after. There is a potential market for machinery regarding environmentally friendly engines that reduce air pollution, as well as other innovative products. Distribution agreements, joint ventures with domestic manufacturers, and licensing are potential options, but U.S. firms should choose their partners carefully given that protection of intellectual property is a continuing challenge for international firms defending their patented foreign designs.
In terms of importing used and remanufactured/reconditioned equipment, please contact Elizabet Simon, Industry Specialist. Prospects will have to be evaluated on a case-by-case basis due to import restrictions.
Web Resources
The best way to familiarize a potential local partner or buyer with a U.S. company’s product line is to exhibit in local trade shows, the largest one being Expoagro. The next edition is scheduled to take place in March 2019.
Advertising of specific products, parts, and equipment is normally done through web-based specialized publications:
Overview
Argentina has a long-established local industry of manufacturing farm machinery and implements. The sector is composed of approximately 730 companies and was one of the first industries to develop in the country due to agriculture’s predominant role in the economy. According to local statistics, domestic production of agricultural machinery and equipment accounts for around 80% of the total sector. Local content requirements of previous government administrations have led to the growth of local production of parts and components. This has caused multinationals to incorporate more than 50% local components into their manufactured equipment. Domestic production of seeders, sprayers, and tools is strong and competitive.
Government policies of the previous administration had a strong effect on Argentina’s farming sector. In 2008, the government began requiring agricultural exporters to pay a tax retention of 35%, thus reducing incentives for exports and reducing profitability. Coupled with increased input prices, and lower commodity prices, the farming sector in Argentina was in a precarious position.
In December 2015, the Macri administration took office and reversed many of the previous government’s policies toward the agricultural sector. The policy changes included the reduction of the export tax on soybeans and its byproducts by 5% and eliminating export taxes on all other agricultural commodities. The administration also eliminated export permits for grains and oilseeds. In September 2018, the government established a new export tax on all goods except goods included in the government’s “Exporta Simple” program through December 31, 2020.
The combination of policy changes and a new economic climate has spurred optimism and has encouraged the Argentine agricultural sector to invest in new equipment and technology. However, the high inflation rate, increased input costs, new export taxes, and logistical costs are a drag on the market for new agricultural machinery. Two thirds of Argentina’s exports are agricultural. The 2018 depreciation of the Argentine peso, coupled with a predicted strong harvest in 2019, should spur investment in ag technology and equipment.
Sub-Sector Best Prospects
Irrigation Equipment: The Argentine market for irrigation systems has been growing in recent years due to the increased amount of Argentine farmland dedicated to row crops. Currently, 5.6 million acres (representing around 7% of farmland) are under irrigation. The Argentine government has made efforts to increase existing irrigated areas by 28%.
Parts and Components: Annual sales in this subsector currently represent approximately 12% of the total market, with a large number of national products. Agricultural producers are gradually integrating technologies to help minimize use of agricultural inputs while maintaining high yields, causing them to rely on foreign suppliers for key components. There are opportunities for technologies ranging from precision agriculture to key electronic components for manufacturing domestic equipment.
Opportunities
Products offering savings cost are in great demand, as are those that increase and improve the quality of agricultural machinery. Information technology services and products for the agriculture sector are highly sought-after. There is a potential market for machinery regarding environmentally friendly engines that reduce air pollution, as well as other innovative products. Distribution agreements, joint ventures with domestic manufacturers, and licensing are potential options, but U.S. firms should choose their partners carefully given that protection of intellectual property is a continuing challenge for international firms defending their patented foreign designs.
In terms of importing used and remanufactured/reconditioned equipment, please contact Elizabet Simon, Industry Specialist. Prospects will have to be evaluated on a case-by-case basis due to import restrictions.
Web Resources
The best way to familiarize a potential local partner or buyer with a U.S. company’s product line is to exhibit in local trade shows, the largest one being Expoagro. The next edition is scheduled to take place in March 2019.
Advertising of specific products, parts, and equipment is normally done through web-based specialized publications:
- Agritotal - Revista Chacra (Spanish)
- Infortambo (Spanish)
- Via Rural (Spanish)
- Revista Super Campo (Spanish)