The Index of Investment in Agricultural Machinery (Idima), which produces the Carle & Andrioli study based on imports of tractors, harvesters and seeders, in 2021 it presented an increase of 54% compared to the previous year; they accumulate three years of growth in agricultural investment: in 2019 it had grown 14% and in 2020 12%.
This increase occurred in a framework of: higher international prices and increased costs of agricultural production; increase in the planted area and productive yields; better financing conditions and greater use of investment promotion; increase in agricultural product and exports.
The agricultural area increased 5% in the 2020/21 harvest and a new increase of 10% is projected for 2021/22.
The yield per hectare of the year allowed for greater productivity in the last five years, according to the Agricultural Weighted Productivity Index (IPPA) also carried out by Carle & Andrioli, considering the yields of the main crops.
The favorable perspectives of agricultural prices allow us to estimate for 2022 greater activity and a dynamic behavior of investment in agricultural machinery, in total imported values and per hectare planted.
Investment in machinery
The analysis of the evolution in the last decade shows a path of growth and high values of agricultural investment until 2014, followed by significant falls in 2015 and 2016. The decline in the indicator was interrupted in 2017, fell again in 2018 and rose in the last triennium.
The 2021 agricultural investment index reaches the highest level of the last seven years and is located at the average of the last decade. It doubles the value of three years ago, without reaching all-time highs.
Investment in agricultural machinery in 2021 could have been higher since, according to sources in the sector, its importation slowed down in the last semester due to supply difficulties.
Composition and origins
in 2021 seeders, tractors and harvesters were imported for a total of US$ 149 million, with the following composition: tractors 46%, combine harvesters 30% and seeders and fertilizer spreaders 24%.
All the components of the index grew, being the equipment with the highest increase tractors (71%) and seeders (64%), while harvesters grew 29%.
The Idima considers the import of the main agricultural machinery in value, without including imported or national agricultural implements.
The three main origins of agricultural investment for the year were Brazil, the United States and the European Union. Agricultural equipment was also imported from Mexico, Argentina, India and China.
Investments in agricultural machinery in 2021 presented greater dynamism than the general investment performance of our economy, since according to information from national accounts, gross fixed capital formation increased 7% year-on-year in the first nine months of the year.
Agricultural investment continues to incorporate innovation and technology into the activity, which will contribute to achieving greater productive and environmental efficiency, the analysis indicated.
Per hectare planted
Another relevant indicator for agricultural activity is the annual investment value of machinery and equipment per cultivated hectare. In the 2010/14 period, maximum values were reached in the indicator, reaching below half of those levels in the following five-year period.
In 2021, the investment per hectare grew to US$85, higher than the US$52 of the previous year.
In this way, the investment replacement levels are slightly exceeded, since it is located somewhat above the estimated values per hectare of depreciation of the machines and is close to the average current US$ 99 of the five-year period with the highest agricultural investment (2010/ 14); the average for 2015/19 was US$45.
Prospects for a new breakthrough
The high prices of agricultural products in the last two harvests increased the areas planted and boosted investments in machinery and equipment, which grew for the third consecutive year.
In the new work of the Carle & Andrioli study, it is established that the trajectory of prices is key for the financial investment and productive decisions of the area to be cultivated.
With that as a frame, the current levels of international prices allow estimating for 2022 larger planted areas and continuation of the increase in investment in agricultural machinery, in total values as per cultivated hectare.
In addition, given the expectations of profitability, adequate financing conditions and the possibility of using tax incentives for agricultural investment will continue; the accountability law incorporated pastures and other improvements that promote the biological activity of the soil as an eligible investment, under the conditions regulated by the Executive Branch.
As challenges, the increase in production costs in dollars and the impact of the weather on yields are cited, as well as a potential threat of lower prices in commodities due to increases in interest rates and the strengthening of the dollar.
In the medium term, in addition to the evolution of the markets and the climate, the advances achieved with new international agreements will be relevant.
For agriculture, investment in new equipment and technology is key to increasing productivity, adjusting production costs and improving environmental performance.
In addition to technological innovation, agriculture has the opportunity to incorporate sustainability criteria in the financial system for the evaluation of credits and investments.
Next, the full report:
IDIMA 2021 by john samuel on Scribd
