The year 2022 was quite successful for agricultural machinery importers. The total revenue of top 25 dealers in the sector grew by 30% year-on-year, exceeding 1.36 billion levs. Only two companies (Interagri Bulgaria and Nikom LT) reported a drop in sales the previous year. At the same time, single- digit growth could be seen in only one of the companies (KBBG), while two others reported three-digit sales spikes - Valinst and Spasov Agri Tech. They are also the fastest growing companies, with the revenues of Valinst rising by 121%, and Spasov Agri Tech's by 103% year over year.
All other importers and traders in the top 25 report a double-digit jump in revenue in 2022, with the largest increase being at NIK Smart Machines and Stoychevi 57-62.
Profits
All companies in top 25 operated at a profit, with eight of them reporting growth of more than 100% in 2022. The top 3 companies in terms of profitability were Satnet, NIK Smart Machines and Valinst. The top three sales leaders remain unchanged from 2021: Megatron, Agrotron 2007 and Titan Machinery Bulgaria have the biggest sales turnovers.
The statistical data from the Ministry of Agriculture also shows an upward trend in new agricultural machinery registrations in 2022, with one exception - there is a decrease in telescopic and front-end loaders.
"2022 was a difficult year, but with a positive trend towards its end," said Daniel Minev, chairman of the Bulgarian Association of Agricultural Equipment Dealers - BATA AGRO, and manager of Interagri Bulgaria.
According to Krasimir Minev, commercial director of Zlatex, 2022 was "complex for the agricultural machinery market with factors such as COVID-19, difficult supplies of machines and parts, and technological innovations".
Elisaveta Markova, manager of Varex, also defines 2022 as "very successful". "After the period of lack of machinery due to the pandemic, there was a kind of revival in the market and farmers made the already planned purchases of equipment. The interest rates for financing the purchases were also very favorable," she summarizes.
In general, company managers are optimistic that investments in agricultural machinery will develop steadily and smoothly, although 2023 is full of challenges.
What was the year 2022 for the agricultural machinery market in the country?
- The year 2022 was difficult but with a positive trend towards its end. At the beginning 2022, many suppliers experienced severe shortages of equipment stocks, but gradually recovery of supply chains worldwide began, although not everywhere and not in all products.
What were the biggest challenges for the machines suppliers during the years of pandemic, inflation and war?
- The difficulties are caused by complex factors, ultimately boiling down to a few sizable and clearly visible effects such as a significant increase and instability of equipment prices, inability to guarantee delivery times, lack of components and spare parts. To work as a supplier in such unpredictable conditions is a huge challenge and it has not been encountered in the past decades when we were facing the opposite - stable prices, market glut and difficult implementation.
What do companies in the sector count as success?
- I consider it a success that we managed to ensure the continuity of agricultural production - one of the most important pillars of the Bulgarian economy. Farmers saw representatives of the equipment brands as reliable partners, both from the point of view of satisfying their investment intentions, and in terms of quality after-sales service.
How are sales going this year? What is the trend and what are the targets?
- In general, the trend has been quite negative so far this year. The agricultural business is extremely difficult as a result of many factors, among them the severe drought that lasted from the post-sowing period in late 2022 until April this year. The lack of snow and the very warm winter, the sudden warming in summer to extremely high temperatures in the span of days literally wiped out the corn fields and created conditions for extremely low sunflower yields. Last but not least - the low purchase prices of produce dictated by the commodity exchange prices and also by the unregulated import of production. Knowing all this, it is unrealistic to expect that sales of equipment will grow. If we look at the statistics for the registration of new machines this year, according to the data of the Ministry of Agriculture and Food, for the first half of the year, there is a drop of over 15% for wheeled tractors and nearly 6% for combine harvesters. Expectations are that this decline will deepen and exceed 20% by the end of the year.
What are your predictions for the development of the agricultural machinery market in the country?
- Despite the negative factors, I am optimistic that investments in technology will evolve steadily and smoothly in a positive direction. The vast majority of equipment in the country is still 15-20 years old and heavily depreciated. On this subject, there is a lot of speculation that with European funds the state of the machinery has improved. According to data from the Ministry of Agriculture and Food, over 45,000 tractors and over 8,000 combine harvesters operate in Bulgarian agriculture. Everyone can make a basic calculation for themselves as to how old these machines are, considering that on an annual basis about 1500 tractors and about 200 combine harvesters are registered. The normal service life of a machine is 10 years. This means that in order to talk about a real renewal of the equipment, it is necessary to renew at least 4,500 tractors and 800 combine harvesters on an annual basis. This is clearly not happening, so any baseless statements that, you see, the technique was renewed with European subsidies, is nothing but populism. Agriculture is an integral part of the livelihood of the Bulgarian people and I remain optimistic about the future of the sector.
What was the year 2022 for the agricultural machinery market in the country?
In 2022, there was a revival of the agricultural machinery market. An increase in sales was reported compared to 2021. A strong reason for the sale of more tractors, combine harvesters, telehandlers and trailed machines was the low cost of agricultural production and higher purchase prices of the crops.
A growing interest in new technological solutions was observed. This includes the widespread use of ISOBUS control systems, precise guidance of machines with GPS navigation, recording and transfer of data from the machine to stationary or mobile devices and other automated systems for managing fuels, detergents, fertilizers, etc. More and more farmers turned to sustainable ecological solutions and energy-saving machines and technologies.
The war in Ukraine, as well as the drought that affected some regions of Bulgaria, had a negative impact on the market for agricultural machinery.
In summary, 2022 was a complex year for the agricultural machinery market with factors such as COVID-19, difficult supplies of machines and parts, and at the same time technological innovations that shaped the trends in the sector.
What were the biggest difficulties for agricultural machinery suppliers hit by lockdowns, inflation and war?
Several serious challenges in recent years invariably tested the skills of suppliers of agricultural machinery in Bulgaria, and not only here. The COVID-19 pandemic had completely disrupted supply chains, slowing and in many cases halting the production of tractors, harvesters, equipment and spare parts. This problem was solved by careful analysis and sales of stocks in warehouses and bases and by intensified correspondence with equipment manufacturers. The latter unfortunately could not help much. Restrictions on movement and in-person meetings further slowed down the normal trading rhythm.
Inflation increased the prices of raw materials and production costs, raising the prices of machinery for farmers. And the stress caused mistrust in the machinery distributor-farmer relationship. High prices and lack of supply led to requests to manufacturers for 2-3 years ahead.
The war in Ukraine brought additional instability both for us and for the whole of Europe. Resource security has been violated. Fertilizer prices rose 5-6 times. Fuels, especially diesel, rose sharply in price. The sale of agricultural produce was done with different degrees of success. Our customers and partners, the farmers, wondered whether to sell or not, and often sold at a loss. The cost of all agricultural crops, animal products, milk, vegetables, fruits and others grew.
How did you overcome these difficulties?
We completed some resource diversification. We also manage prices and costs. In these conditions, we have prepared the lowest possible prices for the farmers. We also have strengthened financial consultations together with banks and leasing companies. We constantly review our costs and pricing models to adjust for inflation.
What do companies in the sector count as success?
Despite the unusually difficult conditions in these few years, new equipment was delivered to Bulgarian farmers. Demand for spare parts and service was also relatively well met. The danger of collapse in sales was overcome. After the initial shock, customers' confidence in their suppliers was restored. New models of tractors, harvesters, implements entered the market and leading technologies and innovations were introduced in Bulgarian agriculture.
What was 2022 for the agricultural machinery market in the country?
- The short answer is: very successful. This is also reflected in the registrations with the Control and Technical Inspectorate at the Ministry of Agriculture. Understandably, after the period of lack of machines due to the pandemic, there was a kind of revival in the market and farmers made the planned purchases of equipment. Purchase finance rates were also very favorable. Practice shows that the most successful are the farmers who apply new technologies, and they require the corresponding new machines - high-performance and economical.
What are the biggest challenges for agricultural machinery suppliers in the years of pandemic, inflation and war and how do you overcome them?
All these circumstances, and to the greatest extent the pandemic, disrupted the rhythm of machine manufacture. Planned deliveries were delayed or cancelled, which reflected on the business in the sector quite negatively. A large number of machine manufacturers postponed deliveries to a year ahead. This has brought confusion and instability to the market, price levels have gone up and when you add the rise in the prices of fuels and fertilizers and inflationary processes in general, our sector has definitely been through quite a tough time. Gradually, the rhythm of deliveries was restored in 2022, and accordingly sales recorded high growth. I have to say that only our Turkish partners kept the delivery dates. The explanation is that they produce all the components and are not dependent on external sub-suppliers.
The war in Ukraine has additional negative effects on the supply of machines, raw materials and components. On the other hand, our customers experience serious difficulties in the sale of their output. I will not go into details, but what is happening shows how vulnerable we are to a change in the market situation caused by external factors. Agriculture is a strategic sector and the long-term sustainable development program must include measures to protect Bulgarian farmers unconditionally.
What do companies in the sector count as success?
- We notice a positive trend in increasing farmers' interest in intelligent agriculture. They keep themselves informed and have quite a wealth of knowledge in agronomy and everything to do with increasing efficiency in the work in the field, on the farm, in the garden, in the whole food chain. There are all prerequisites from the point of view of technical and technological security for the farmers' production to be successful, if nature is also favorable. We offer machines that meet the needs of modern agriculture. You understand that our connection with farmers is direct and their successes lead to ours as well. We share all their successes and failures.
How are sales evolving this year? What are the trends?
- As I mentioned, the deliveries of machines are already back to normal, but the market of machines is closely related to the sales of the output of agricultural producers. Unfortunately, there is currently stagnation in the market for their produce for various reasons. Another circumstance has also brought great uncertainty to the agricultural machinery market - the admission announced in early spring under the technological modernization program, part of the National Recovery and Resilience Plan. The cabinet changed the date for receiving the documents several times and it is still not clear if this program will work out and when. Equipment prices are changing and next year's deliveries will be made at higher prices. Many manufacturers also change the models of the equipment.
The year 2022 was quite successful for agricultural machinery importers. The total revenue of top 25 dealers in the sector grew by 30% year-on-year, exceeding 1.36 billion levs. Only two companies (Interagri Bulgaria and Nikom LT) reported a drop in sales the previous year. At the same time, single- digit growth could be seen in only one of the companies (KBBG), while two others reported three-digit sales spikes - Valinst and Spasov Agri Tech. They are also the fastest growing companies, with the revenues of Valinst rising by 121%, and Spasov Agri Tech's by 103% year over year.
All other importers and traders in the top 25 report a double-digit jump in revenue in 2022, with the largest increase being at NIK Smart Machines and Stoychevi 57-62.
