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Agribusiness equipment to the USA
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(Last updated: 22 May 2008)
Trends and opportunities
The market
The trend towards larger and fewer farms is expected to support growth of the higher horsepower sectors in the long-term, with technological improvements driving future sales. Among recent breakthroughs are monitors that measure yield per acre harvested and global positioning systems to track vehicle location and transmit data to different locations. Value in each sector should be increasingly driven by increases in unit prices rather than increases in volume sales.
The US market for agricultural machinery has increased and the leading sector in agricultural machinery is harvesting machinery (includes a variety of crop harvesting heads and combine tractors).
Tractors represent the second leading value sector, which includes compact and utility tractors used in small to medium sized farms, and for lawn and garden purposes.
E-commerce is changing the nature of business-to-business interaction as an ever-increasing number of small and large manufacturing firms implement e-business applications using the Internet. Australian exporters need a quality website. Distributors will expect potential new clients to have a web site featuring their product offerings.
Electronic data interchange has proved to be the most useful technology for the manufacturing industry as product registration and their transactions that were previously paper based, are now done electronically.
Opportunities
Sales of parts are expected to lead the rest of the industry in Internet sales, as competition is greater and the product is available from a wider range of suppliers. With customer emphasis on specialised construction equipment, customised sales and support applications are another area of potential growth.
Future growth is expected to be around new technologies. These include unique precision agricultural equipment products designed to maximise harvesting speed, data acquisition, monitoring, remote sensing, imagery, turnkey technology integration and related technology.
Growth opportunities also exist for unique no-till, minimum till and one-pass equipment products designed to conserve soil moisture, organic matter and reduce fuel consumption. |
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Tariffs, regulations and customs
The Australia-United States Free Trade Agreement (AUSFTA) came into force on 1 January 2005. The AUSFTA is a landmark agreement that gives Australian businesses expanded access to the world’s largest importer and investor. Significant export opportunities have been created through the reduction of tariffs, the increase of specific quotas, the easing of market restrictions and the streamlining of investment processes.
Tariffs and quotas can vary according to product and service, and change frequently. Tariffs can be between zero and 50 per cent or more.
Australian exporters should seek advice from US law firms for product liability issues.
Industry standards
To research the localised standards for manufacturing of all types of machinery and agriculture equipment, please visit the American National Standards Institute and US Standards Information Resource website. |
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Marketing your products and services
Market entry
Typically your market entry strategy into the US agribusiness equipment industry will require a solid business and marketing plan, which includes local presence plus warehousing. It is advisable to visit the market prior to finalising your plan. There are a variety of potential market entry strategies that can vary according to the product and service incorporating such elements:
- regulatory
- pricing
- competition
- positioning
- promotion
- after-sales service (very important in the agribusiness equipment industry)
Attendance at major trade shows in the USA is a very good initial step where industry contacts and distribution opportunities can be established. One of the main agribusiness equipment shows is the World Ag Expo in Tulare California, at which Austrade hosts an Australian Pavilion.
Marketing and promotion are extremely important in order for products to sell in the USA. Competition is strong and US buyers will consider a range of issues including:
- price
- quality and uniqueness of offering
- availability of supply at short notice
- high technology features
- availability of a product range
- promotional activities
- customer service and training
Second hand sales are also growing as a way for farmers to finance their upgrades.
Distribution channels
The continued preference of many customers to rent rather than purchase equipment continues to shape the distribution channels in this industry. The expansion of renting will continue, where the trend toward consolidation has been shaped by the users demand for flexibility, cost reduction and the latest technology, particularly in specialised equipment.
The main issues to be addressed regarding the distribution of Australian agribusiness equipment are:
- Price - the cost of shipping heavy equipment, mark-ups along the distribution chain, warehousing, etc, often increase the costs beyond the competition.
- Delivery - unless warehoused locally, delivery times are unacceptable if being sent from Australia.
- After-sales service - repair, replacement, maintenance issues to be handled locally, within a short time frame.
- Compatibility and warranty - is the product completely compatible and will it void the warranty of new equipment?
Buyers, whether they are distributors, dealers, rental companies, end users, etc, are generally hesitant to purchase directly and feel more comfortable working with someone who is from the industry and is available to handle any issues that might arise.
Australian companies will need a local representative/master distributor to make regular in-person contact and follow-up visits to potential, existing and new customers. This could be an employee sent from Australia or it could be someone hired locally. As a rule, it is unlikely that significant sales will be attained, or sustained over a long period of time without some sort of local presence. |
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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