Many older farmers will remember the days when Australia built its own tractors and harvesters and some may even have heard of one of our greatest investors Headlie Taylor who designed both our first combine harvester in 1914 and our first self propelled header the Sunshine W model 1924.
Post Second world War there were the tractor inventors including Bob Chamberlain who started with his 40K model in 1949, Upton who were responsible for building the world’s largest two wheel drive tractor a 350 hp monster, our own Merredin based Phillips Acremaster and the massive Baldwins with their ground breaking 600hp tractor. But by the 1990s the end of protective tariffs and growing international competition had run the local tractor and harvester manufacturers into the ground.
Today almost all the global brand names of the big farm machinery that we are familiar with originates out of either Europe or North America. Many of these global manufacturers still make the majority of their equipment in their country of origin but there is a steady move to establish plants in other parts of the world particularly in our competitor grain growing nations.
For instance we have AGCO (Gleaner, Allis, Deutz, White, Massey, Fendt, Chellenger, Valtra, Lavrerda) which set up its first manufacturing operation ourside of Europe and North America in Russia in 2014. John Deere set up in Argentina 2011, Brazil in 1996 and Russia 2010, CLAAS in Argentina 2013 and CNH in Argentina 2010, Brazil 2010, Russia 2010.
In fact it’s hard not to find a major manufacturer today who does not have factories in South America or Eastern Europe in fact its only China that seems to be left off the list in part because they have so many of their own brands of tractors and headers albeit of a smaller size than the big machinery we import.
But the green, red, yellow and black are not the only ag machinery companies that are busy globalizing their manufacturing operations. The Russians manufacturers have woken up and are back in the export game.
In fact they are the sleeping giant in this space with a large and growing ag machinery design and build sector that has been slowly building their capacity and credibility since the days of communism.
Australian farmers will be familiar with the ill-fated Belarus tractors being marketed here as cheap horsepower back in the 1979s and 80s, many which ended up retired with low hours due to poor reliability.
But post communism and a massive overhaul of their manufacturing systems the Russians have returned to Australia in 2017 with a local dealer in Victoria marketing the Kirovets and Rostselmash brands.
The Kirovets K-7 is a very Russian product in the sense that the machines are basic and mostly home grown but as a result well priced with the TMZ 420 hp model selling for $250,000 landed and the Mercedes 428hp at $285,000 about 60% of any tractor of equivalent power.
Rostselmash on the other hand is based in Rostov in the heart of the Russian wheat belt. Theirs are very much a high tech very modern machine using imported Mercedes or Cummins engines and global parts so they look and feel very modern and while cheaper than North American tractors are more expensive than the Kirovets, plus they come at a bigger size with the class 10 Torum 770 tracked machine running 650hp engines.
Rostelmash have also gone global having purchased Versatile back in 2007 and subsequently taken the design and set up a plant in Russia to make the 2375 (375 hp) model for the Black Sea market and in turn are now badging some of their own Russian headers as Versatile for the European and American market.
This is a clear signal of the emergence of the relatively unknown manufacturers of big ag equipment into the global market place. Another example have you heard of Sampo Rosenlew the big Finish manufacturer of high quality medium sized harvesters, they have just had a 35% stake taken by the giant Indian manufacturer Mahindra Mahindra which plans to take their machines global.
With both Mahindra and Versatile having well established service and supply chain networks into Australia is likely to see these manufacturers move to expand their network of dealers over time to market the Rostselmash and Sampo brands here.
Other big global manufacturers of large headers and tractors that are looking at Australia as a future market include Gomselmash from Russian who make harvesters and AGRICO from South Africa manufacturers of big Four Wheel Drive Tractors running Daimler engines. Adding to that are the long list of Argentinian self propelled sprayer manufacturers such as Caiman and PLA their biggest local manufacturer which John Deere recently purchased.
Then there are the Brazilians next door have all the big brand name global manufacturers producing locally and no lack of local designs including the Stara range of self propelled sprayers plus a large front wheel drive tractor which exports to 35 countries. With a local grain industry producing around 250 million tonnes a year, around 5 times Australia’s annual output and a population of over 200m they are rapidly emerging large agricultural machinery manufacturing country set to rival Russia.
Then there is the Chinese who many forget is the worlds largest grain producing country growing over 650 million tonnes a year. With over 100 tractor manufacturers they are rapidly increasing the size of the equipment they are producing with a recently launched a 440hp four Wheel Drive tractor from Xuzhou Kat being marketed for export at US$103,000 or there is the Zhonglian 100 kw header for US$40,000. To put the Chinese market in context there is currently around 2 million operating harvesters across the country so they have plenty of potential to drive efficiencies by aggregating farm sizes and move up in machinery size which will only add to global machinery competition.
Any new entrant into the global ag machinery sector is good for Australian farmers, as it will help drive down the cost of expensive machinery which is important for our long term competitive viability.
But no new entrant is going to stay in Australia if farmers are not prepared to have an open mind to buying unknown brands. What we need is for farmers to be prepared to move quickly to embrace other makes than the traditional red, green, yellow and the new black if the cost reliability and parts back up justifys the investment.
Our industry is built on being highly cost competitive and brutal in its decision making around efficiency, if Argentina, Brazil, Russia and the Black Sea are utilizing new cheaper big equipment to keep their costs down then our farmers will also need to be prepared to change colours if it will help them remain cost competitive.