Region/Countries: Europe, Russia Industry: Agriculture / Timber, Manufacturing, Other Date: November 2020

Why this is important to Wisconsin businesses: Russia is highly dependent on imports in this category.

Agricultural machinery is one of the key segments of Russia’s machinery manufacturing complex; its share in the production of machinery and equipment is 18.8%. In 2018, sales of agricultural machinery in Russia amounted to ₽175 billion, 1.3% lower than a year earlier—but in 2019 it reversed for a positive trend. Despite a continuing lack of equipment among farmers, the actual effective demand from Russian agricultural producers remains low, and government support is still a critical factor for the Russian agricultural machinery market and industry.

At the same time, the Russian market remains highly dependent on imports, due to both the incomplete range of equipment produced in the country and to consumers’ preferences for foreign-made products based on quality and design criteria. At the end of 2018, imported agricultural machinery made up 40% of the market. The leading source of these imports is Belarus. Leading domestic brands include Rostselmash, Peterburgsky Traktorny Zavod (PTZ); CLAAS, John Deere and Case New Holland are all foreign brands that have their own localized assembly plants in Russia.

Official state statistics show that the peak of agricultural machinery production in Russia was achieved in 2017. However, it wasn’t possible to maintain positive dynamics in 2018, and the industry has since cut back production.

However, despite fluctuations in the physical volumes of agricultural machinery production, the total income volume from its sale continued to grow, even during periods of production decline, due to the rising prices for agricultural machinery.

In general, the volume of investment in the industry increased in the same years the industry logged an increase in production volume. This trend fits well with the reduction in investment volume in 2018, when the industry also saw a decrease in production volume. Investment in the production of agricultural machinery was ₽4.3 billion in 2016, ₽9.0 billion in 2017 and ₽5.3 billion in 2018.

The main types of agricultural machinery in Russia are tractors, harvesters and tillage equipment. In 2019, tractor ownership in Russia was 206,700, harvester ownership 69,600, plow ownership 56,900, cultivator ownership 82,600 and seeder ownership 74,800.

The largest enterprises belonging to the Russian agricultural machinery enterprise Rostselmash, which produces all kinds of agricultural equipment.

Among the largest manufacturers in Russia are foreign companies with facilities in the country: Eurotechnika, which currently produces 30 items of German Amazone machines for the cultivation of grain and oilseeds, and CLAAS, a subsidiary of the German CLAAS KGaAmbH company, located in Krasnodar, which manufactures self-propelled harvesters and tractors. According to the information of the Ministry of Agriculture of the Russian Federation, Eurotechnika and CLAAS are currently among the leading recipients of state subsidies to manufacturers of agricultural machinery.

The proximity factor is important to manufacturers and distributors of agricultural machinery due to lower transportation costs.

Wisconsin companies seeking to enter the Russian agricultural machinery market should consider:

  1. Working with a dealer in Russia. In this case, a foreign company doesn’t have representation or an office in Russia, but supplies its products directly to a dealer.
  2. Opening a representative office in Russia. The overwhelming majority of companies supplying agricultural machinery to the Russian market have offices in Russia, and they are most often located in significant agricultural regions (for example, in Krasnodar in the south).
  3. Localization of full-cycle production or assembly production in Russia. Advantages include proximity to the consumer, short delivery times and reduced transportation costs. This arrangement also makes it possible to apply for government support and participate in government programs of concessional lending or leasing.

A good first step for entering the Russian market is attending agricultural machinery exhibitions. The largest ones are:

  1. Agrosalon, held in Moscow in October
  2. YugAgro, held in Krasnodar in November
  3. Gold Autumn, held in Moscow in October
  4. Agricultural Week, held in Irkutsk in October