Agricultural machinery sales are declining in Russia

According to the latest data, from January to April, the level of sales of agricultural machinery in the Russian Federation decreased by about a third.

According to analysts, in value terms, such sales fell by 32% in the first 4 months of this year. There are many reasons for this.

Firstly, the demand for such products is declining. This is due to the fact that agricultural producers who are buyers of agricultural machinery themselves have a shortage of working capital, not to mention investing in upgrading the fleet of machinery.

In turn, the reasons for this are the falling marginality of grain and other crop production due to low prices and high costs.

Secondly, the cost of production of machinery itself is growing. Thus, their marginality also suffers, and the fall in demand leads to the same shortage of funds.

As a result, companies have to think about cutting investment programs and even reducing the volume of machinery produced.

Thirdly, the high Central Bank rate, which is currently at record levels, significantly complicates the attraction of financing. This applies to both agricultural producers and companies that manufacture equipment.

In such conditions, only enterprises that have excess funds can carry out any investment programs.

And given the growth in cost prices and the fall in prices for the products of such enterprises today, there are very few of them.

So far, we are seeing a serious drop in indicators in all segments of equipment, experts note. This applies not only to agricultural, but also to road construction and trailers.

This further aggravates the situation for manufacturers, since switching to other segments is unlikely to help them.

One of the possible ways out of the situation is related to government support.

Experts expect that the government will allocate additional funds for the so-called 1432 program, which allows companies to sell their equipment at a discount (to increase demand for it from buyers), but at the same time partially compensates the seller for his costs.

The situation is so serious that Deputy Chairman of the State Duma Victoria Abramchenko asked Russian Prime Minister Mikhail Mishustin to pay attention to the current situation.

This may mean that the state will have to really intervene in what is happening in the near future.

But how strong such intervention will be and whether it will help solve all the accumulated problems is still unclear.