Less than 2 months away from 2023, the sky of the agricultural machinery industry seems to be covered with haze.
A few years ago, when the national second was promoted to the national third, the author, in view of the unfavorable situation at the time, was going to write an article about the darkest moment of the agricultural machinery industry, but I did not finish it and put it aside. Looking back, this year may be the best year of the next decade.”
Judging from the current situation, I prefer to use this title for the agricultural machinery industry next year (or the first half of next year). In the coming 2023, perhaps only agricultural machinery enterprises will be less affected, but agricultural machinery cannot support the huge agricultural machinery industry and agricultural machinery industry chain. No. For an industry that relies on scale to support, it is difficult to pin hopes on sub-fields with a mere billions of dollars.
The reason for reminding agricultural machinery enterprises that next year will be the worst in recent years and to plan for the worst is that, in addition to the current global economic recession caused by the Russian-Ukrainian war, the all-round impact of the century epidemic on the economy, domestic The sharp decline in economic locomotive industries such as real estate has dragged down economic development, and the Sino-US trade war has posed threats to supply chains and industrial chains in related fields. There are also the following unfavorable factors that directly hit the industry.
country quadruple hit
The first factor that bears the brunt of course is the implementation of the National IV emission policy in the agricultural machinery industry . 
First, the implementation of National IV has greatly increased the manufacturing cost of enterprises and the purchase cost of farmers. A friend of an agricultural machinery company said that only the National IV diesel engine will increase the price of the main engine by 12%-15%. Specifically, for a tractor with 50-100 horsepower, the cost will increase by 6,000-15,000 yuan; for 100-200 horsepower, the cost will increase by 22,000 yuan; for a tractor with more than 200 horsepower, the cost will increase by 25,000-30,000 yuan.
You must know that in the past, when a tractor with more than 200 horsepower was subsidized for 112,000 yuan, the subsidy was removed. In some years, the highest price of buying a domestic tractor was less than 150,000 yuan, and some even only 20,000 or 30,000 yuan. This means that in the next year when the National Fourth is implemented, farmers will pay double the price of a tractor with more than 200 horsepower. Such high prices can only stop farmers for a period of time.
The second is to greatly increase the use cost of farmers. National IV requires higher-quality diesel. We know that the quality of oil in rural areas is much worse than that in big cities. A friend told me that once in the countryside, it took almost half the time to refuel than in the county seat. Poor-quality oil products will cause far greater damage to the National IV diesel engine than in the past National Second and National Three eras. Just like a person, who used to eat grains and pharyngeal vegetables can be passed away, but now it is golden branches and jade leaves, and needs to be milled and finely floured every day, and the cost will naturally rise a lot. In addition, the National Fourth tractor has to consume a certain proportion of urea. Normally, one liter of urea costs 3 yuan. The operator works on 30 to 40 acres of land a day, and the cost is not small. On the one hand, it increases the operator’s cost and profit pressure, and also This raises the cost of using machines for farmers, and ultimately requires users to pay the bill. On the whole, farmers have become the ultimate payers of the rising cost of agricultural machinery environmental protection.
Third, the implementation of National IV has greatly increased farmers’ post-maintenance pressure and maintenance costs, and also pushed up the service costs of manufacturers and distributors. National IV emission standard diesel engines have high requirements on the internal quality and maintenance skills of maintenance personnel. They not only require maintenance personnel to master mechanical knowledge, but also require maintenance personnel to understand the principles of electronic control, use professional maintenance tools, and even be familiar with computer software. Can search and analyze The reason for the failure of the national four diesel engine and can come up with the correct way to deal with it. For example, if the electronic control system fails, the maintenance personnel need to have profound professional knowledge, rich experience and superb skills. National Fourth diesel engine maintenance personnel must be highly skilled personnel. Domestic factories are still relatively lacking in this area. If large-scale mechanical failures occur during the busy agricultural season, not only the pressure on agricultural machinery enterprises will increase sharply, but also the national food security will be affected.
In fact, when agricultural machinery is upgraded to National IV, what we see is only the explicit cost. The huge expenditure on product research and development and equipment process upgrade incurred by engine companies and host companies in this process has not been included in it. In order to switch to National IV in a timely manner, engine companies start preparations three or four years in advance. For domestic mainstream agricultural machinery engine companies such as Yuchai, Dongfanghong, and Quanchai, to upgrade to National IV, tens of millions of funds are needed casually. spent. In order to be promoted to National IV, engine companies have to carry out a substantial transformation of the production process in recent years, and some companies have new production lines underway, and the investment needs to reach 100 million yuan! In addition, there is a particularly large expenditure – the cost of new product certification for diesel engine companies. The emission certification of a product will cost more than 200,000 yuan. For example, a diesel engine factory has more than a dozen new products in China, and the certification alone will cost more than 30 million yuan. Last year, the annual profit of this diesel engine company was more than 100 million yuan. “It is not an exaggeration to say that the diesel engine certification body is stealing money,” said the business person.
Of course, regardless of engine manufacturers or agricultural machinery host companies, the final cost of all these increases will fall on the end users of agricultural machinery, farmers. For farmers, National IV not only pays 10,000 or 20,000 yuan more when purchasing, but more importantly, the cost pressure extends to the entire product life cycle, in addition to spending more fuel costs and urea (during the operating season, the cost of urea per day is Expenses such as an increase of tens of yuan), as well as the inconvenience caused by maintenance – the extension of failure maintenance time, the shortening of effective operation time, and the extension of investment recovery time.
It is said that the end of this year is really not a suitable window period for the implementation of the National Fourth. After all, the national economy is in a difficult time, and the negative impact on the agricultural and rural economy and farmers’ income cannot be underestimated. Environmental protection is important, but food security and stable economic development are more important now.
It can be said that the “smooth” implementation of the National IV may become a fatal factor to hit the domestic agricultural machinery industry. Some of us say that the agricultural engine business is ready. Anyone with a bit of common sense knows that the product testing stage is one thing, and the real large-scale application stage is another. Most people in the agricultural machinery industry are anxious: Can the stability and reliability of the National IV engine be reliable next year? 
With such a high price of the National Fourth Agricultural Machinery, many small and medium-sized enterprises must try their best to escape the supervision for survival. The power of regulation is limited, after all. In this situation, due to the high cost of violations by large enterprises and foreign companies, the agricultural machinery market system will be disrupted, resulting in the phenomenon of “bad money drives good money” . From a larger political point of view, it will affect the transformation and upgrading of my country’s agricultural machinery industry and agricultural mechanization.
Due to the implementation of National IV, the situation of agricultural machinery industry is extremely pessimistic next year, especially in the first half of the year, which has become the consensus of the industry. Several people from agricultural machinery companies told me that “the first half of next year can be a holiday.” Of course, only the few companies and institutions other than farmers who have profited from emission upgrades are delighted, and those who advocate the benefits of China IV upgrade are undoubtedly representatives of them.
Multiple bears
In addition to the heavy losses caused by the National IV pair, this year’s expectations of a decline in the income of agricultural machinery operators and rising costs, the reduction of the subsidy rate for machine purchases in various places will have a psychological impact on potential machine buyers and a reduction in leverage, as well as the uncertainty of the new crown epidemic next year. It constitutes an important negative for the agricultural machinery market next year.
The Russian-Ukrainian war that started at the beginning of the year pushed up commodity prices, and the rise in oil prices led to a sharp rise in energy costs such as raw material costs and electricity prices, and corporate expenses increased. Despite the intervention and care of the relevant state departments, the price of diesel oil still reached more than 8 yuan a liter, a lot higher than in previous years. Although grain prices have been high for grain farmers, the cost of agricultural materials, machine operation costs and opportunity costs have all risen, which has a certain impact on the purchase and use of machines.
The decline in the income of agricultural machinery operators will also affect the purchasing confidence next year. For example, in the field of cross-regional machine harvesting of wheat, a survey by well-known companies this year showed that the average income of machine operators this year fell by about 10% compared with last year. The reason is that the social ownership of harvesters has increased over the years, and it is the turn of the operators to harvest the wheat “more monks and less porridge”. According to media reports, Master Cheng, who has 13 years of cross-regional harvesting experience, took other harvesting teams in the village to go out to many places this year. Old users are more willing to choose their machines to harvest wheat, but in the end, they did not earn more money after the trip. Some industry experts believe that due to the improvement of agricultural machinery technology, the decline in prices, and the implementation of the subsidy policy for the purchase of agricultural machinery, the number of agricultural machinery in various regions has continued to increase, and the cross-regional operation of agricultural machinery has been shrinking . 
According to the “2022 “Three Autumn” Mechanized Operation Service Price and Cost Trend Survey Report released by the Agricultural Mechanization Department of the Ministry of Agriculture and Rural Affairs on September 19, it is expected that the “Three Autumn” diesel price this year will be 8 yuan/L, a year-on-year increase of 23.27% ; The number of samples expected to increase the labor cost of the machine operator accounts for 89.02% of the total number of samples. The continuous increase in labor costs and the lack of a machine with a high level of mechanized operation are the main factors leading to the increase in the labor cost of the machine operator. The price of raw materials for spare parts and logistics costs Growth is the main factor behind the increase in the purchase price of agricultural machinery spare parts. The rising cost of mobile phones, the cost of using machines for grain farmers, and the cost of agricultural materials such as fertilizers, pesticides, and agricultural films will all have a negative impact on potential purchases.
The baton of the agricultural machinery market-the adjustment of the subsidy policy for purchasing machinery in many places has also lowered the expectations of the agricultural machinery market next year. This year, the subsidy rate of tractors and harvesters, the leading products of agricultural machinery, has fallen sharply, and the leverage has become smaller. For example, Hebei Province, which is a major agricultural machinery province, will drop from 38,800 yuan last year to 26,900 yuan in 2022, with 180-200 horsepower wheel tractors. Wheel tractor has dropped from 51,200 yuan last year to 35,800 yuan, with a reduction rate of 30.67% and 30.08% respectively! The reduction rate is very obvious. You may say that if in the past 100,000 yuan could only be distributed to 3 people, now it can be distributed to 5 people, which can stimulate more people to buy agricultural machinery, but the theory and practice are not the same, and farmers who purchase machinery are limited to a certain On the one hand, there will not necessarily be more new people to buy machines; on the other hand, there are new agricultural machinery operators every year, and at the same time, there are also those who quit agricultural machinery operators. The acceleration of industrialization, the increase of opportunities for earning money brought about by social and economic development, the replacement of the quantity generated by the continuous increase in the power of agricultural machinery itself (now one is worth several), plus the saturation of agricultural machinery products in many fields, the current professional engaged in The number of agricultural machinery workers is smaller than in previous years, and more concentrated in professional institutions such as cooperatives. In addition, even potential new entrants (purchasing machines), seeing that there were so many subsidies for purchasing agricultural machinery in the past, but now that the subsidies are so small, they gave up the idea before purchasing. 
In addition, the agricultural machinery market is closely related to the income of grain farmers, the income of machine operators, and the agricultural planting area. This year, southern my country suffered the strongest high temperature attack in 60 years, and the high temperature and drought directly affected the grain output. According to data released by the National Bureau of Statistics on August 25, in July alone, the high temperature caused direct economic losses of 2.73 billion yuan to China, affecting 5.5 million people and 25,495.2 million mu of land, of which five were affected by the drought. The grain output of one city in the province accounted for about 1/4 of my country’s grain output last year.
The amount of social ownership is increasing, and the pressure of survival in the Red Sea market is further increased. This is true for both host companies and farmers. The aforementioned decline in the income of cross-regional operators and a sharp drop in the operating radius is due to the large number of machines. Statistics show that at the end of 1990, there were only 39,000 grain combine harvesters in my country. With the rise of cross-regional harvesting in the 1990s, the number increased to 263,000 at the end of 2000. Since then, the agricultural machinery purchase subsidy policy implemented by the state in 2004 has rapidly boosted the popularity of harvesters, which increased to 992,000 at the end of 2010 and 2.195 million at the end of 2020. In the past 30 years, the number of grain combine harvesters in my country has increased by 55 times. Not only the total amount has increased, but the number of grain combine harvesters in various places has also increased rapidly. In 2020, the three provinces with the largest grain output in my country, Heilongjiang, Henan and Shandong, have increased grain combine harvesters by 11,000 units and 6,000 units respectively compared with 2019. units and 7,000 units. With the increase of machines and the improvement of machine operation efficiency, it used to take 20 to 30 days for the main wheat producing areas to harvest from south to north, but now it is easily finished in less than two weeks. That nervousness.
Not only the demand market is a red ocean, but the job market is also a red ocean. The survey released by the Department of Agricultural Mechanization on September 19 also showed that 45.17% of the respondents clearly stated that they would not carry out cross-regional operations for the autumn harvest, and 20.28% of the respondents expressed that they were not sure whether to participate in cross-regional operations. The income of terminal machine owners declines, which adversely affects the decline in front-end purchase demand, and the entire industry chain becomes more depressed.
Distribution of samples of cross-regional job intentions 
The competition environment has become more intense. This year, many small enterprises have been shuffled out. It is said that there are 40 or 50 less tractors in Weifang this year . The competition among large enterprises has intensified, and the market has increasingly evolved into the competition of powerful enterprises. However, the collision between powerful enterprises is obviously different from the intensity of competition between them and small and micro enterprises. In order to sell more of their own products, they may end up in a price war situation and accelerate the further “involution” of the industry.
Positive response
There is still more than a month before next year, but now the agricultural machinery industry is already looking down on next year. Although the performance of very few leading agricultural machinery companies in the first half of this year was decent, and it does not mean that they will be severely hit next year, even if they can maintain normal development, the industry as a whole will be affected. At the same time, the development of the industry cannot rely on such a few companies. The entire industry supply chain, marketing chain, employment of industry personnel, and taxation to the country will be affected more obviously during this difficult period of economic development.
Of course, in the face of difficulties and challenges, it is definitely not advisable to escape, and each enterprise must actively respond to it, which is also an important aspect of entrepreneurship. Businesses are like people, how can there be smooth sailing, no setbacks and no setbacks? Business seas are sinister and long-lived companies are the ones that have gone through rounds of hard baptisms and won.
In this case, agricultural machinery enterprises should actively explore their own way of survival. One is to be full of confidence. Confidence is more precious than gold. In particular, the confidence of shareholders and the confidence of business leaders is particularly important. No matter how bad the market is, there will be companies that survive. The confidence of business leaders is very important to employees, and everyone will understand this truth. For employees, it is also necessary to twist into a rope, work hard and serve the enterprise well. When the company is not prosperous, some employees have to find a new job. When the economy is down and the industry is difficult, it is better to work hard in the current company and make the company prosperous, so as to avoid the trouble of finding a job again in the face of unemployment. Passively looking for a job again will affect social security, income, and mood.
The second is to be patient. This is especially important for corporate investors. There is no industry that is easy to make money, and there is no industry that can make quick money. Since you have chosen the field of agricultural machinery, you must be full of long-termism and not short-term. We should not be chaotic in the face of difficulties. Macroscopic and mesoscopic difficulties are the same for every enterprise. Enterprises can show their skills and come up with unique tricks at the micro-level management level, so as to adapt to changes without change. , to confront external uncertainties with more certainty, such as improving financial strength, improving cash flow capacity, using information technology and other means to reduce costs and improve the average productivity of employees.
The third is to be full of love . Agricultural machinery enterprises should treat employees and partners well, let employees spontaneously love the enterprise, form a strong team wisdom and competitiveness, and sincerely twist with partners to form a strategic ecological alliance, so that the entire enterprise ecological chain and value chain are full of together. The strength of unity is great, which is much better than that of a company fighting alone.
The fourth is to be more attentive. To do a good job in segmenting the market, the competition of mainframes is more intense under the situation of National IV, while the survival status of some rigid demand fields such as the field of agricultural machinery should be relatively calm. Even companies that only produce tractors should carefully study and judge the severity of the impact of the National IV on different horsepower segments, and then produce products in a certain horsepower segment (several) that are more competitive according to their own resource endowments. When the situation is bad, it is more important to find a way to survive first.
The fifth is to be full of perseverance. It is the constant law of market competition that we must persevere with perseverance and diligently make refined products, and constantly improve our brand advantages and product premium capabilities. For example, Weichai Lovol’s wheeled wheat machine, World’s crawler machine, Shunbang’s feed crushing baler, Jiufang Taihe’s stem and ear harvester, Jilin Kangda’s no-till planter, Zhengzhou Zhonglian’s Peanut machines, Hebei Shenghe’s rotary tillers and field returning machines, Leiken’s turning plows, AGCO’s balers, etc., are all existing examples. Companies need to learn to create explosive products. Some companies can do everything, but they can’t do anything. This kind of business method seems to be inadvisable. At least when people think of you, they can make people have brand associations of certain types of products: “Oh, his so-and-so product is doing well!”
The sixth is to be full of self-motivation . Seek benefits from management, improve the ability to refine management, scientifically do a good job in the inventory and delivery of raw materials and products, and adopt various more advanced management techniques to improve the management level. Whether it is the competition of enterprise products, or the competition of services or brands, it is actually the competitiveness of management in the end. With good management, an enterprise will have a brand with good products, good service and good service. This is also the conclusion that foreign companies have come to after analyzing China’s agricultural machinery industry. Some of our companies focus on marketing orientation and focus on sales more than products. It cannot be said that this is wrong. Different companies or companies have their own priorities at different stages of development, but in the end, they still need to make up for their shortcomings and improve their comprehensive management. Operational capability.
Finally, it needs to be pointed out that in the future, the optimists have always been optimistic and never want to sing the agricultural machinery industry. In fact, there must be many industries that are not as good as our agricultural machinery industry, and the construction machinery industry, which is also affected by the fourth country, will definitely not be better than the agricultural machinery industry next year. Better – only worse! ( Some people in the field of construction machinery have already said that the inventory of only one excavator brand will reach about 80,000 units, and it will only be enough to cope with the inventory next year. ) In writing this article, I just want to remind everyone to put aside their illusions and not think that they are very supportive. If you can (there are very few people who think that they are quite capable, and they say that it is better to come early in the fourth day of the country), make various preparations in advance. It’s not a bad thing to think of the situation as bad.
Of course, the morale should not be low, but more encouragement. After all, after the National IV adaptation period, the rain and the wind blow away, the fallen companies fall, and a new batch of companies may emerge. No matter how bad the industry is, the industry is still there, but when it comes to recovery The beneficiary may be another group of people or enterprises, which is also the cruelty of business. my country’s agricultural machinery industry will continue to develop, even if it will rely more on foreign brands of agricultural machinery products. Therefore, even if the industry enters the middle of winter next year, the agricultural machinery colleagues with resilience and fighting spirit must move forward more bravely.
Source: Agricultural Machinery Website
Author: Zhu Lihao
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