Agricultural Technology Trends in the BRIC Markets

With a kind of industrial revolution sweeping across the developing world’s fields, this report deals with the question, how this trend might influence agricultural machinery technology in the BRIC markets during the next years.

Since the world’s (technologically) leading makers of agricultural equipment are present in each of these markets, solutions offered are more dependent on market demand and the purchasing power of end customers than on actual technological capabilities. Meanwhile, customer structures and requirements in the BRIC states are as different as the countries themselves:

  • We expect considerable areas of land to be brought into production in Brazil and Russia during the next years, leading to a growing share of large-scale professional farms and an increasing demand for corresponding high-tech equipment.
  • The Indian agricultural sector seems stuck in its division into small, inefficient businesses.
  • Facing an unfavourably small amount of arable land per capita and a historically unique urbanization process at the same time, China is in a special situation. The central government is modernizing the country’s agricultural sector both by attracting foreign multinationals, but also by boosting the development of its domestic makers of agricultural equipment.


Brazil is the world’s largest exporter of sugar, coffee, orange juice, soybeans and poultry. The country ranks 3rd behind the U.S. and the European Union in overall farm exports. Still, it is one of the few places in the world where land can be put into production. From 2002 to 2012, it has converted 32.5 m acres from pasture to cropland and we expect them to bring an additional 49 m into production until 2022.

While the majority of old farms are small, the new ones in Bahia and Mato Grosso are large, with fleets up to 300 tractors and combines. They will provide a stable demand for large tractors (>185 hp), which are able to haul wider planters and other implements so that less manpower will be required.

Global players are manufacturing their state-of-the art combine harvesters in Brazil. The machines are on the same level as products from Northern America or Europe. The level of tractors produced within the country is not as advanced. However, world-class equipment is available via imports.

Due to the comparably high impact of weak infrastructure on production costs, Brazilian farmers focus more on cost and performance than their counterparts from early-industrialized countries, who are willing to invest more in the latest high-end solutions. A particular popular feature among John Deere’s imported 8R tractor series is for instance the function to adjust the horsepower level according to the current task of the tractor, which helps to reduce the fuel consumption. Nevertheless, systems like John Deere’s AutoTrac (the company’s autopilot system) or JDLink (its precision faming tool) are becoming more popular, too.


The agricultural sector in Russia is slowly recovering from the struggles of the transformation from a command economy to a market-oriented system in the early 1990ies, which let the agricultural sector shrink for over one decade. Despite favourable environmental conditions for agriculture in large parts of the country, the domestic agricultural machinery industry is relatively weak. Sales of foreign agricultural equipment makers have been growing faster than those of Russian machinery makers in recent years. According to our calculations, imported products have a market share of over 90 percent in tractors and 60 percent in combine harvesters.

Energy-efficiency and productivity are becoming more important, since the number of high-tech farms in Russia is rising. International manufacturers of agricultural equipment, such as John Deere, AGCO and CLAAS are selling their latest big tractors and combines with GPS tracking in Russia. Most of their existing broad-acre applications for North America in particular can be applied to Russia, as well. Depending on the region, equipment from the high-end segment can make up to 25 percent of total sales. To save costs, foreign manufacturers are expanding the range of products assembled in Russia and increasing the degree of local content – CLAAS for instance declared an ambitious mid-term goal of 50 percent for its factory in Krasnodar in Spring 2013.

To close the technological gap between the domestic tractor manufacturers and their international competitors, Minsk Tractor Works developed an own electromechanical drivetrain (EMD) for large tractors and a special-purpose software (SCS) for diagnosing, servicing and data analysis in collaboration with Ruselprom ElectricDrive in 2009. Recent efforts at Kharkov Tractor Plant, Belarus Tractor Works and Kirov Plant (in collaboration with the Russian Ministry of Industry) to bring this technology towards production maturity have not been completed, yet.


The professionalization of India’s agriculture is in line with the disappointing development of the country in general during the past 20 years. Its agriculture is still dominated by a large amount of small (<2 hectares), unproductive farms, which can neither afford nor would be able to raise the benefits of more advanced agricultural equipment and know-how. Trapped by political overregulation, a cast system conserving a backward socio-economic order and no foreign investment allowed in this sector, our outlook for the modernization of India’s agriculture is gloomy.

The supply of machines in the Indian market is correspondingly. According to our data, over 78 percent of the Indian tractor production applies to the segment of less than 37 kW. The most recent innovation of the domestic market leader Mahindra was a modest 39 hp tractor with a new turbo loader and an improved hydraulic system. Why invest in groundbreaking innovation, if there is no chance that the market will be rewarding it anytime soon?

Accordingly, global manufacturers such as John Deere are producing primarily small tractors (<75 kW) with a simpler or without any cabin and less sophisticated electronics compared to their Western tractors in India. These machines are not only being sold in the Indian market, but also increasingly exported overseas.


China is facing the tricky situation of an unfavourably small amount of arable land per capita and a historically unique urbanization process at the same time. The migration of hundreds of millions of rural workers towards China’s evolving megacities is reducing the agricultural workforce on the one hand, while the growing urban middle classes are developing more demanding diets on the other. To keep food prices on an acceptable level, the Chinese government is forced to increase the efficiency of the country’s agriculture.

In the past, the demand for agricultural machinery in China has been primarily determined by the vast amount of small-scale operations with limited access to capital and know-how. Even there has been a system of purchase subsidies introduced ten years ago, promoting the acquisition of a new tractor with up to 80 percent of the purchasing costs, the most popular products were cheap and simple tractors by local manufacturers.

With a growing number of large-scale modernization projects, in particular in the country’s Northern provinces (Heilongjiang, Inner Mongolia, Xinjiang), this situation is changing though. In Spring 2013 for example, the State Council initiated a pilot project in Heilongjiang, which is supposed to set the starting point for a comprehensive reform of the country’s agricultural industry. Major goals are to put additional land into production as well as to increase productivity. In particular, the large-scale cultivation of grain or other field crops are supposed to be promoted by fostering farmers to join forces and establish cooperatives. For the first time, farmers moving to cities will be able to transfer their land use rights to active farmers (the private acquisition of arable land in communal ownership will stay restricted, though). Furthermore, farmers shall get easier access to financial support, technological innovations and soil improvement measurements will be promoted stronger.

This will increase the demand for high-tech equipment on Western standards. Foreign companies such as AGCO, CNH and John Deere are already producing large power tractors and combines in the North of China – a consequence of the fact that besides a few exceptions, only equipment produced in China is eligible for purchase subsidies.

The machines made in China are adapted to the domestic technology platform: Components like drivelines, axles, steering units and electrics are partly being purchased from local suppliers. The localized equipment usually has a reduced set of functions and a lower price – John Deere’s motto in China is translated “keep up with the China beat”.

And the stream of foreign makers of agricultural equipment into China continues: Mid of July, German company CLAAS announced to take over Chinese combine maker Jinyee to stronger benefit from the opportunities in the Chinese market.

Does this mean that Chinese tractor manufacturers might lose their leading position in their domestic market anytime soon due to changing market requirements? Both the central government as well as the leading Chinese agricultural machinery makers YTO and Foton Lovol have ambitious development goals for the 12th Five Year Plan period (2011-2016) to close the existing technological gap:

  • Satellite-based auto pilot systems and precision farming software: Together with South China Agricultural University, YTO applied a RTK-DGPS system on an X-804 in 2010. Foton Lovol showed a prototype of its M904-D equipped with GPS navigation and automation system for automatic precision seeding and fertilizing in September 2012. However, due to a lack of market demand none made it towards serial production yet, according to both companies.
  • Power shift transmissions (PST): In 2011, YTO took over AGCO McCormick’s transmission factory in France. Their power shift transmissions will be deployed in three new tractor lines in the second half of 2013: The LA series (200-300 hp), LF series (90-200 hp) and LZ series with electro-hydraulic control technology. Whereas the LA and LZ series will first be introduced in the Northern provinces, the smaller LF series will be available all over the country.
  • Continuous variable transmissions (CVT): Based on the experiences from the development of the PST, YTO is currently working on a CVT, which is supposed to be introduced in a 400 hp tractor until 2015. Also Foton Lovol named the development of an own CVT among the major goals for the 12th 5 Year Plan period, didn’t specify this any further though.
  • Higher horse power: YTO declared to put particular emphasis on the development of tractors between 200-300 hp with government support. Foton Lovol now covers the range up to 320 hp and will also benefit from the increased purchase subsidies for tractors >150 hp.
  • Electrical tractors: YTO signed a cooperation agreement with General Electrics for the development of electrical tractors for garden and light agricultural operations in May 2012.

Chinese makers of agricultural machinery have the clear directive to seize the segment of tractors for small-scale and semi professional applications in South-East Asia, Africa and other BRICS. By 2015, YTO wants to sell the first Chinese tractors in Europe. Given their backwardness in particular with regard to aspects like engine vibration, noise, emissions, experience with power shift transmissions, tractor electronic control and load sensing hydraulic systems, this sounds like an ambitious goal. Our experience from other industries show that the ability of Chinese companies to successfully conquer the mid market segments should not be underestimated, though.

Georg Stieler is Managing Director of STM’s Shanghai office.