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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