Agro machinery market attracts leading manufacturer

HARBIN - A major China granary attracts one world-leading agricultural machinery manufacturer as it anticipates another record-high autumn harvest.

The investment from American company John Deere, worth about 1.6 billion yuan ($253.6 million), has allowed for the full operation of the company's latest plant since Friday in Harbin, capital of northeast China's Heilongjiang province.

The investment comes as Heilongjiang expects to yield 62.5 million tons of grains in 2012, 7 million tons more than the previous year. This year's harvest will mark the ninth consecutive year of growth.

A higher level of agricultural mechanization is playing an important role in China's autumn harvest. In 2011, the country's comprehensive mechanization level for farming and harvesting reached 54.8 percent, up 22.5 percentage points from 2002, a Ministry of Agriculture official, Zong Jinyao, said at an unrelated forum.

Furthermore, the Chinese market is continuing to see growing demand for advanced agricultural equipment. Total sales jumped 18.58 percent year-on-year in the first three quarters of 2012, according to the latest figures available from the website of the China Machinery Industry Federation.

The huge growth potential in this field instantly caught the attention of John Deere. Its new Harbin plant, covering 400,000 square meters, combines R&D facilities and a full production line of almost all of its agricultural machinery models.

Samuel Allen, chief executive officer of John Deere, said, "Everyone in John Deere knows that China has a lot of potential."

In light of China's recent slowdown in economic growth and global uncertainties, the majority of companies are tending to be more conservative in their economic activities. However, Allen said that John Deere is quite optimistic about the Chinese market which has "tremendous opportunities."

"We do this for the long term, and we look at this over 20 to 30 years in the rise," he added.

The United Nation's Food and Agriculture Organization has said that the world needs to double its food output by 2050 to feed the growing population. Increasing agricultural productivity is necessary due to the decreasing amounts of arable land and water deficiencies in many countries, including China.

Traditional farming countries have also experienced large-scale population migration from rural areas to urban ones during the urbanization process, inevitably resulting in a dwindling farming labor force.

"Environment, innovative technologies and farming equipment solutions become critical enablers," Allen said.

He welcomes the Chinese government's plans to introduce more advanced agricultural equipment and experience to boost mechanization, which not only ensures that the market rules "stay equal for all," but also helps John Deere "better position" their strategy.

Over the next few years, John Deere will further expand its investment in China. Allen said the total amount could be huge, but he did not offer detailed numbers. "We emphasize those products with a lot of features in reliability to enable not only the large farms but also the small farms to continue their productivity," he said.

Heilongjiang Province accounted for one-tenth of the country's grain output in 2011, according to government statistics. It serves as the frontline of China's mechanization process and food security strategy.