Production fell by an average of around 50% in the first half of the year. No rebound in activity is expected in the remainder of 2024.
The partner companies of AFAT (Argentine Association of Tractor and other agricultural and industrial equipment manufacturers) says they are facing a 50% drop in production on average compared to last yearThis retraction is mainly due to the fall in sales of agricultural machinery. In this context, they warn that companies could move forward with layoffs, termination of temporary employment contracts and even the shutdown of production plants.
“The accumulated The first 6 months of the year showed a 20% drop in combine harvester registrations compared to 2023, and a 30% drop in tractor registrations. With these values, we believe that it is unlikely that the entire market will be able to recover in the remainder of the year; therefore, we estimate that we will be, on average, between 25% and 30% below what it was the previous year.” said Sergio Fernández, president of the Association.
This market downturn has a direct impact on the operation of industrial plants, which have an installed production capacity far exceeding local demand. For example, patents for combine harvesters represent 13% of the production capacity of AFAT member companies, those for tractors 33%, and patents for sprayers reach 59% of the potential of these companies.
“The consequences of this worrying situation include the rescheduling of production processes, the reduction of working hours, the suspension of staff and/or non-renewal of temporary contracts, as well as dismissals,” warned Fernández.
For example, The multinational company John Deere, which has its factory located in the town of Granadero Baigorria, province of Santa Fe, has in recent weeks moved forward with layoffs and non-renewal of employment contracts.o. Meanwhile, its workers began to carry out rotating strikes due to the lack of progress on a collective bargaining agreement, on their part. Since the conflict was not resolved, the Ministry of Labor of Santa Fe ordered mandatory conciliation for a period of seven days starting this week.
The truth is that John Deere’s case is far from being isolated, as other smaller companies are cutting back on working hours while considering what steps to take in the face of a sharp drop in sales.
The alarm light comes on If we take into account the age of the machinery fleet, which is bordering on obsolescence, with 70-80% of tractors over 15 years old and 70-80% of harvesters over 10 years old. “Renewing this park and incorporating all the technology available globally is a necessity for a country whose foreign exchange earnings depend on the agro-industrial sector for 60-70%. As we know, The age of the equipment causes a decrease in productivity, “Overcosts in fertilization and spraying, waste during sowing and harvesting, and lower efficiencies in general,” explain companies in the sector.
“Argentina has enormous productive potential, enough to feed 400 million people, producers and contractors who are among the most innovative in the region, trained technicians and professionals, but we do not have the necessary conditions to continue on the path of growth and productive development. At AFAT we always highlight the need to have a framework of political-economic predictability, financing in line with the volume of the sector, and with competitive rates, and also the review of the tax burden, which is overwhelming today.. For our part, we renew our commitment every day to continue working for the growth of the country,” Sergio Fernández summarized.
Source: Ambito
