How to improve the Agricultural Machinery Industry under the "New normal"

General Secretary Xi pointed out that China's economic operation has entered a "new normal." What is the meaning of "new normal"? I think its connotation should be three aspects: first, the new normal. China's economic development has reached a shift period. Over the past few decades, China's economy has developed rapidly, the growth rate is close to double digits, and now it has entered a period of medium-to-high-speed development. The shift period provides room for China's next step of reform and adjustment. Second, new opportunities. After years of development, it is time to adjust the economic structure and industrial structure. In the past, we mainly relied on the consumption of resources and labor dividends to develop the economy. At present, the economic structure has shifted from incremental capacity expansion to the deep adjustment of stock with both advantages and increments, and the industry has been transformed into a high-end and sustainable economic model. Such changes have brought us new opportunities. Third, new development. In the past, our development was driven by investment, but now our new development is driven by innovation.

Based on the understanding of three aspects, let's talk about the development of China's agricultural machinery industry.

The "New normal" of Agricultural Machinery Industry

The first is the slowdown in growth. The decade before 2012 was the "golden decade" of China's agricultural machinery industry, with an average annual growth rate of about 20%. It began to decline in 2013, with a growth rate of 16.31%. It continued to decline in 2014, growing at a rate of only 9% by the end of October. Industrial value added also showed a downward trend. At present, the growth rate of the added value of the agricultural machinery industry is 8.5 percent, which is lower than the 10.3 percent growth value of the whole machinery industry and 4.3 percentage points lower than the growth value of agricultural machinery in the same period last year. The growth value of the agricultural machinery industry in 2013 was higher than that of the whole machinery industry, and has been lower than that of the whole machinery industry since 2014.

The second is the sharp decline in profit margins in the industry. A few years ago, the profit margin of the agricultural machinery industry grew very fast, even by about 20-30% in some years, falling to 9.6% last year, while the total profit growth this year has been negative, reaching about-4.99%. At the beginning of this century, the sales profit margin of the agricultural machinery industry was about 2%. After more than a decade of development, it has reached 6.9% in 2012, close to the average profit margin of 7% in the national machinery industry. Currently, the industry's profit margin is only 5.5%, down 1.4 percentage points from 2013. This is very disadvantageous to the sustainable development of the industry.

The third is a sharp decline in the output of major products. The output of large and medium-sized backbone enterprises fell by 16.92% from January to October 2014, and sales fell by 15.18%. Harvesting machinery is slightly better, the output of backbone enterprises has dropped by nearly 3.18%, and sales have increased slightly. The sales of wheat machines and rice machines have dropped sharply, and the growth of harvesting machinery sales is mainly driven by corn machines. According to the data, wheat machines have dropped by 10.8%, rice machines by 24.6%, while corn machine sales have increased by 33.5%. Other products, including agricultural machinery, animal husbandry products and agricultural by-product machinery, have all declined this year.

But on the whole, the development of the agricultural machinery industry has made steady progress, maintaining a growth rate of 9%. There are still bright spots in the market, such as the rapid growth of corn machine production and sales, which is a remarkable achievement. The high-horsepower tractor market has achieved some growth, especially the 120-130 horsepower tractor market has grown by more than 150%. This reflects that the product structure adjustment is being further deepened and results have been achieved.

From the perspective of industry structure, structural adjustment has also made considerable progress. At the 2014 China International Agricultural Machinery Exhibition, we can see that the quality level of agricultural machinery products has been greatly improved. High-horsepower tractors, large combine harvesters, green feed machines and other new products have also appeared in the market. The product structure is more perfect and reasonable.

In addition, the technological transformation of enterprises has been gradually strengthened. Although the total investment in the industry has dropped by more than ten percentage points from the growth rate of 25% in previous years, on the whole, due to the accumulation of investment in previous years, great progress has been made in technological transformation and equipment, especially in information construction in 2014. so that the quality of products has been significantly improved.

Therefore, from the above aspects, the current development trend of the agricultural machinery industry is in line with the "new normal" judgment. The growth rate has declined somewhat, but new progress has been made in structural adjustment, good results have been achieved, and new developments have been made.

"New opportunities" for Agricultural Machinery Industry

Generally speaking, due to the adjustment of economic structure and industrial structure, it has brought about changes and new demand, and this is our "new opportunity".

The first is the adjustment of the rural economic structure. The adjustment of agricultural economic structure, the construction of new economic system, the acceleration of large-scale production and the construction of socialized service system have brought opportunities.

The second is the adjustment of agricultural industrial structure. Under the primary premise of ensuring food security, agriculture, forestry, animal husbandry and sideline should also be developed in an all-round way. In addition to grain, meat, eggs, milk and other meat industry is also an important part of ensuring the safety of agricultural products, the market needs forest and fruit industry, animal husbandry, fishery, animal husbandry products processing machinery and other equipment.

The third is the adjustment of the labor force structure. With the accelerated development of the "four modernizations", the full replacement of manpower for agricultural machinery is no longer a distant future, but will become a reality. Therefore, the market needs more varieties of agricultural machinery and equipment, and there is a long way to go.