Asian target market of tractors in Brazil

The good moment of Brazilian agribusiness, with grain production, record high prices for major commodities and good profitability of producers, have stoked the appetite of foreign manufacturers of agricultural machinery, keen to snap up a slice of a market in strong expansion in recent years: the low power tractors geared towards family agriculture.
Is the Indian Mahindra's case, which is in the process of validation of their production at the factory in two brothers (RS), to be able to participate in government programs as the more food and the Pro-tractor (State Government), that subsidize the purchase of machines for family farmers. Six months ago, the company announced investments of approximately r $ 100 million in the country. The goal is to assemble some 5,000 units annually in the coming years. National production should start to be sold in the same year.
With a global production of 250 thousand tractors per year, the Mahindra is the leader in this segment, says Eduard Roosli, CEO of Barr, who represents the company in Brazil. Entering the Brazil is part of the Group's expansion strategy, which also produces SUVs (trucks, jeeps and pickup trucks) for Latin America. "Our goal is to reach between 10 000 and 15 000 tractors per year in Brazil in the medium term," said Roosli.
The Korean LS Mtron is also eyeing this market of low-power tractors. The company launches today the cornerstone of its first factory in Brazil, in Garuva (SC).
The unit should be ready in July, with production forecast 5 thousand tractors per year, which must be marketed initially in the South and Southeast of the country. With investments of about $ 30 million, the company provides Bill $ 20 million this year by selling 600 units in the country. It will be the first factory outside the Asian continent-today there are units in South Korea and China.
The strategy is to sell products with advanced technologies at a competitive cost and with more precision than the competitors. The tractor Division of the group begins with a small 2%-3%-in the Brazilian market, but the goal is to reach about 14% by 2017, according to James Yoo, President of LS Mtron Brazil. "We can produce 20 thousand units in Brazil in ten years".
Although the initial focus is the market for tractors of 25 to 100 horse power, Yoo does not rule out the company's foray into the market for larger, more powerful machines, demanded by large farmers and businesses. To this end, the company is studying a partnership with a company that still does not act in Brazil.
About these foreign contributions, the National Association of Automotive vehicle manufacturers (Anfavea) believes that competition is healthy, since on equal terms, ponders Milton Rego, Vice President of the entity. For him, it is important to track the actual domestic production to avoid that companies restrict the assemble imported equipment in the country.
"The competition generates more investments, research and development and innovation, what cannot happen is importation", Rego says. Today imports of Anfavea member companies represent about 3% of the market-including the non-associated, this percentage does not reach 5%, according to Rego. The leader also claims that new brands on the market need to convince farmers that are reliable. The national tractor market today is estimated to be between 55 and 60 thousand units per year, with 45% up to 100 horses.
In addition to tractors, agricultural implements also comes attracting investment from foreign companies. Argentina Ombu predicts that this year or in 2014 begins production in its plant in Ijuí (Rio Grande do Sul). Should be made about 200 units per year. The initial investment was $ 6 million. From 2011, the production of grain embutidores (silos-bag) and grain carts is outsourced in Brazil. The company entered the country in 2010, with the marketing of their products through resale.