Agco's CEO Sees Higher Demand For Crops Lasting For Years
15 Ottobre 2010 - 2:47AM
Dow Jones News
Global demand for farm commodities will likely remain strong for
the next several years, fueling a prolonged run of elevated sales
of tractors and harvesting combines, Agco Corp. (AGCO) Chairman and
Chief Executive Martin Richenhagen said Thursday.
Richenhagen said most major farming regions of the world emerged
from last year's economic recession in good condition, with minimal
long-term damage from the credit crisis that devastated the housing
industry and other industrial sectors.
"It basically was not related at all to our industry," he said
about the underlying causes of recession. "Demand is strong.
Consumption is high and inventories are moderate. I'm fairly
optimistic farmers will have pretty good incomes for many years to
come."
Farmers' debt levels have remained low in recent years, as
farmers look to avoid a repeat of the farm credit crisis of the
1980s.
Georgia-based Agco is the world's third largest manufacturer of
farm tractors, behind Deere & Co. (DE) and CNH Global N.V
(CNH).
Although prices for corn, soybeans and other commodities remain
far below the record high prices seen in 2008, prices are
significantly above levels from earlier in the decade. Increasing
demand from developing nations, particularly China, and expanded
production of corn-based ethanol fuel in the U.S. have soaked up
the crop surpluses that held down prices for years.
Agco's strongest geographic market is in South America, where
the company is the sales leader in tractors. In an interview with
Dow Jones, Richenhagen said he does not anticipate any rollback in
Brazil's government-backed loan program for farm equipment
purchases under a new presidential administration. The low-interest
loans have been popular with farmers and have been a growth-engine
for equipment sales in Brazil.
Dilma Rousseff of the ruling Workers' Party and Social
Democratic challenger Jose Serra face each other in an Oct. 31
election.
"Whoever makes it will not change directions radically," said
Richenhagen, who was among the CEOs attending a meeting of the
Business Council in Chicago. Richenhagen has been chief executive
since 2004.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
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