Some economies recover faster than others, expert says

By MATEUSZ PERKOWSKI

Capital Press

Exports of U.S. farm machinery appear to be heading back up after dramatic declines in 2009.

At nearly $5 billion worth of machinery, exports to foreign countries have increased about 4 percent so far in 2010 compared to last year, according to the Association of Equipment Manufacturers.

Exports fell about 23 percent in 2009 after increasing about 26 percent during the prior year, according to AEM.

In light of the dismal export situation last year, the most recent data isn't very impressive, said Eli Lustgarten, an analyst with the Longbow investment research firm.

"These comparisons don't tell you a lot because last year was a pretty strange year," he said.

Even so, Lustgarten said he expects the trend line for exports to stay generally positive.

Export statistics by individual country further illustrate the volatility experienced by agricultural producers around the globe, said Charlie O'Brien, vice president of agricultural services for AEM.

"It's reflective of the world economy," he said. "Some countries are recovering faster than others."

Russia was once a major growth market for U.S. farm machinery, but the global recession and the decline in oil prices in 2009 drastically reduced that country's appetite for new equipment, O'Brien said.

Exports to Russia dropped more than 80 percent last year and haven't risen at all so far in 2010, according to AEM data. Recent wildfires in that country haven't helped boost confidence, he said.

"That's created a stress within the agricultural environment as well," O'Brien said.

On the other hand, exports of U.S. machinery to China have jumped 53 percent, according to AEM data. Demand for equipment in China did not even seem fazed in 2009, with exports rising 45 percent that year.

The relentless upswing underlines the Chinese government's focus on improved agriculture and nutrition, O'Brien said. "It really requires them to increase their grain production, livestock production and to utilize newer technology."

Brazil, a rising agricultural powerhouse, did see weakened demand for U.S. farm machinery last year, with exports to that country falling 45 percent.

However, exports to Brazil have rebounded so far in 2010, climbing 43 percent, according to AEM.

"They continue to grow their agricultural base," O'Brien said.

Most of the European market remains depressed in 2010, with exports to Germany, France and the United Kingdom falling 7 percent, 23 percent and 8 percent respectively, according to AEM.

Fortunately, Canada and Mexico -- major traditional consumers of U.S. equipment -- have resumed spending, with exports to those nations increasing 15 percent and 45 percent, respectively.

Canada's demand for U.S. machinery only fell slightly last year, with exports dropping about 1 percent, while Mexico saw a substantial 15 percent decline.

The resurgence of exports to Mexico may reflect better credit access in 2010 compared to the prior year, Lustgarten said.

"Every market in the globe was affected by financing issues," he said.