World demand for agricultural equipment is forecast to rise 3.8% per year through 2012 to $112 billion, according to World Agricultural Equipment, a recent study from The Freedonia Group Inc., Cleveland. Despite the economic downturn, gains will be paced by the accelerating mechanization of the agricultural sectors in large markets such as China and India. Farm sectors in these countries are still significantly unmechanized in comparison to those in more developed markets.

The rapid global rise in staple food crop prices and localized shortages in 2007 and early 2008 indicate a growing necessity for increasing farm productivity and efficiency in developing countries, according to the report. These and other trends are presented. The strongest growth in agricultural equipment demand will be registered in developing countries, with China and India holding the best prospects. Other large developing nations with sizable agricultural sectors such as Brazil, Indonesia, Russia, and Thailand will also post healthy gains as a result of increasing mechanization.

Besides benefitting from rising incomes, farmers in developing regions will continue to strive to increase productivity through further automation and replacement of older equipment and draft animals used during various stages of farming. The U.S. will experience gains that lag the world average due to decelerating growth in economic and agricultural sector output. Western Europe will post particularly poor growth, coming off a strong 2007 when demand (in dollars) was bolstered by a strong Euro and other factors, such as Germany's biofuel boom-related forage harvester purchases.

Throughout the industrialized world, demand will largely be replacement-oriented in nature, as the farming sectors of most countries are not growing in terms of number of farms, acreage harvested, and similar physical variables. Demand will also be aided by the development and growing use of nascent higher value “precision agriculture” products that make extensive use of modern technologies such as Global Positioning Satellite (GPS) systems and wireless sensors. For more information, visit www.freedoniagroup.com.