“In 2025 macroeconomic conditions will not change much. Grain prices remain low, we will have high interest rates and the expectation…”
Pedro Estevão Bastos de Oliveira is president of the Agricultural Machinery Chamber of the Brazilian Association of Machinery and Equipment Industry – Abimaq, director of institutional relations at Jacto, graduated in business administration from Univem-Marília.
Pedro Estevão, president of the Agricultural Machinery Chamber at Abimaq
AgriBrasilis – What is the reason for the sharp drop in sales of agricultural machinery?
Pedro Estevão – In 2024, the revenue of the Abimaq Agricultural Machinery Chamber fell by 20%. This drop is explained by four factors. The most important was the severe drought that affected the 2023/24 summer season in Brazil, reducing crop yields and profitability, which contracts investments.
The second factor that explains the drop in revenue was the decrease in the prices of agricultural commodities, mainly grains.
The third factor was the high interest rates for financed purchases. Despite the Harvest Plan (Brazilian Government Agricultural Financing Program) having lower interest rates, it only lasted 6 months.
The last factor was the planted area, which did not increase substantially. When this happens, we have no expansion market. The market is only for replacement of machines.
AgriBrasilis – Which categories of machines were most impacted?
Pedro Estevão – There is no specific category of machines that was most harmed. The impact is most visible when evaluating crops: machines for soybeans and corn had the biggest drops, precisely due to the lower price seen in the 2023/24 season. Highlight for soybean and corn harvesters, which showed decreases of 60%.
AgriBrasilis – What are your expectations for 2025?
Pedro Estevão – In 2025 macroeconomic conditions will not change much. Grain prices remain low, while we will have high interest rates and the expectation is of no increase in planted area. The difference is that we will have a good harvest and the weather has helped. Taking these factors into account, we expect an 8% increase in the sector’s revenue.
AgriBrasilis – When will it be necessary to renew the Brazilian agricultural machinery fleet?
Pedro Estevão – Part of the fleet is renewed every year, at a higher rate when profits are higher and at a lower rate when the aggregate profitability of the sector is lower. Currently, the machine fleet of medium and small-sized farmers is well out of date, especially when we talk about machines with embedded technology.
Large-sized farmers have a more modern fleet, but replacement of this segment is faster due to the intense annual use of the machines.
AgriBrasilis – How is the scenario of access to credit for purchasing machines?
Pedro Estevão – The main problem with credit is high interest rates. The financing lines for machines – Moderfrota, Moderfrota Pronamp and Pronaf – have interest rates of 11.5%, 10.5% and 5% respectively, which are reasonable interest rates in the current situation, but they only last six months. During the other six months, if the farmer chooses to finance the machine, the market interest rate is around 16%, which makes business difficult.
AgriBrasilis – How are the rise in the dollar and high interest rates impacting the sector?
Pedro Estevão – The rise in the dollar/real exchange rate is benign for the agricultural sector, despite increasing the cost of inputs. The sales price of commodities, which is the largest market for agricultural machinery, increases more than costs.
AgriBrasilis – What are the innovations in relation to embedded technology and precision agriculture?
Pedro Estevão – The market has been working towards having intelligent algorithms or artificial intelligence to improve real-time decisions in operations. The machines capture data from the operation itself, the environment and databases resident on or outside the machines, process the information and make decisions by changing operations in real time. This greatly improves the performance of the machines in terms of operations and also in agronomic and economic aspects.
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