Ukraine: agricultural machinery must ‘work as a system’

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The fourth edition of the FederUnacoma Think Tank dedicated to the Ukraine geopolitical emergency and the raw materials crisis took place last week in Bologna. According to the body, the commodity crisis could last for years, so it is necessary for agro-mechanical companies to develop long-term strategies, while being reactive to sudden situational changes.

Inflationary pressures on raw materials as well as on logistics are not only jeopardising the production capacity of the national agro-mechanical industry, but are also reducing the spending power of farms, which are being penalised above all by rising prices for energy and fertiliser (of which Russia is the world’s leading producer). In addition, the reduction in grain supplies from Eastern Europe is creating a strong imbalance between supply and demand, which is also reverberating on agricultural commodity prices, thus creating the conditions for a global food crisis.

“The military conflict between Russia and Ukraine has aggravated tensions on the commodities market, which had already manifested themselves last year with sharp price increases and supply chain disruptions, combined with further price increases in the logistics sector,” said FederUnacoma president Alessandro Malavolti. “In this context,” explained geopolitical expert Dario Fabbri, who spoke at the event, “countries must diversify their commodity supply channels whilst exploring the opportunities offered by other markets since it is highly likely that the sanctions against Russia will last for years.”

The production gap can be bridged by a new crop geography, by increasing arable land, and by investing in the latest agricultural machinery. However, the current situation does not appear favourable as rising production costs are reducing the spending power of farm incomes. In this context, agricultural machinery companies must be particularly reactive to situational changes, and they must also follow long-term strategies to mitigate their exposure to commodity volatility, the manufacturers’ forum said.

On these issues, some interesting signals came from the technical panels promoted at the end of the plenary session. The energy study group, coordinated by Andrea Zaghi of Elettricità Futura, reiterated the need to diversify energy sources and supplies, also by focusing on renewables. However, in order to exploit the sector’s full potential, incentives for storage systems must be strengthened, while at the same time providing for measures to reduce costs. The panels on ecological transition and climate change analysed the issue of global warming and stressed the opportunity of tapping into new levers of “green” development. The issue of industrial raw materials was also central. Italian manufacturers of agricultural machinery must focus on regionalising supplies, collaborating with close and reliable partners.

“We are facing a very unstable economic phase that could last for years. So now more than ever,” concluded Malavolti. “The Italian agricultural machinery industry needs to work as a system, to be competitive on new markets and to create sector synergies that could benefit both the sector as a whole and individual companies”.

 

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Saul Wordsworth is deputy editor of the iVT brand - which includes digital and print editions of a quarterly magazine and Off-Highway Annual, as well as ivtinternational.com. He is a keen cyclist and lives in north London.

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