The drop in domestic demand capacity, the lack of incentives for national production and the low profitability of agricultural producers deeply affected the agricultural machinery sector.
The latest data provided by INDEC showed that The manufacturing industry suffered a year-on-year collapse of 21.2% in March. The manufacturing of agricultural machinery is one of the sectors that explains the crisisaffected, according to representatives of the sector, by the collapse of the entire economy, the lack of incentives for local production and the low profitability of agricultural producers.
In the first quarter of 2024, the national industry was hit hard due to a lethal combo that included a lower capacity for domestic demand, obstacles to imports and, consequently, a generalized contraction that impacted economic activity in general, with numbers that had not been seen since the fall of convertibility in 2001/2002.
Of the five items with the greatest weight in the INDEC Industrial Production Index (IPI), the most affected in March were Basic metal industries and clothing, with drops of 34% and 21.3%respectively.
In the case of the basic metal industries, the main negative impact was that of steel industry that presented an annual decrease of 47.3%. The Argentine Steel Chamber explained that the poor performance was fundamentally caused by lower demand from sectors such as construction, automotive, and machinery and equipment manufacturers.
Precisely, The machinery and equipment segment had production almost 38% lower than that of the same month of 2023. In this case, the main negative impact was contributed by agricultural machinery, with activity that was reduced by almost half compared to last year.
Along the same lines, the Department of Economic Studies of the Association of Metallurgical Industrialists of the Argentine Republic (Adimra) reported that the agricultural machinery fell 15.2% year-on-year in April and 66.9% in the first quarter.
Sector leaders assured that this responded, on the one hand, to inconveniences in accessing imported components due to difficulties in payment to foreign suppliers, as well as to a contraction in domestic demand.
Besides, from the Argentine Chamber of Agricultural Machinery Manufacturers (Cafma) warned about possible reductions in working hours and non-renewal of contracts due to a scenario with very low sales and absence of an industrial policy by the Government of Javier Milei that provides an encouraging perspective for the coming months.
According to what the chamber maintains, agricultural producers today have low profitability and perceive the prices of agricultural machinery to be expensive. With a view to an exit from the crisis, At Cafma they propose that part of the withholdings be used to purchase products from the national industry.
Source: Ambito
