1.

MARKET STUDY

The market study has two components i.e. the global and the local market. In both
global and local market the production, consumption and trade are analyzed in detail.
The global market shows the market share of the producers and traders (importer -
exporter). Hence, it identifies the major competitive countries of agricultural and
construction machinery implements producers and gives valuable information for
countries those need to join similar market. In case of local market, the study
incorporates, the situation of demand and supply, marketing arrangement, marketing
channel of the sector.

1.1. Global Agricultural and Construction Machinery Implements

Market
1.1.1. Global Agricultural Machinery Implements Market

By the 2017 the market demand for agricultural machinery implements is projected to
reach $122.9 billion. (Global Industry Analysts, Inc, 2011). The advent of sophisticated
and technologically advanced agricultural machinery and the increase of agricultural
produce demand induce the use of agricultural machineries. Population growth increase
demand for agriculture produce, which in turn, increase the demand for farm equipment.
Economic scenario, weather and demand are among varied factors which induce for the
growth of global agricultural machinery and equipments. Furthermore, increased
utilization of agricultural products in petroleum and pharmaceutical industry is also
contributing to increased demand for agricultural machinery.

Europe is the largest market for agricultural machinery worldwide, worth close to U.S. $23
billion in 2008, (Global Industry Analysts, Inc, 2011). Of the measured sales volumes, over a
third is recorded as being produced in the EU27, whilst a quarter is produced in North America.
China produces 10% and Latin America and India some 15% between them whilst Japan and
Eastern Europe have recently suffered production declines in the face of difficult markets so take
less than 5% each. Asia-Pacific is the fastest growing market and is forecast to emerge as the
largest market by the year 2015. The U.S. is the most advanced regional market with sales
forecast to exceed U.S. $21 billion in 2013. Among product segments, farm tractors is the largest
and the fastest growing market, and is forecast to reach close to U.S. $7 billion by the year 2015.

The market for agricultural machinery is concentrated with the top three players (companies)
being AGCO, John Deere and CNH Global. A high level of globalization complicates the
determination of the exact local content of agricultural machinery manufactured in the U.S. and
other nations. The top three companies are multi-national firms with assembly operations
worldwide, either through subsidiaries or joint ventures. (Global Industry Analysts, Inc, 2011)

Product-wise, Farm Tractors represent the largest segment in the global agricultural
implements and machinery market. Considered as the 'workhorse' of agriculture, tractors
are the most versatile of equipment used in farming.

Table 5.1: World Agricultural Equipment Demand

Source: Global Industry Analysts, Inc, 2011

1.1.1.1. World Agricultural Machinery Implements Trade

1.1.1.1.1. World Export of Agricultural Machinery Implements

The world exports of agricultural machinery implements (farm and threshing

machinery implements) have shown increasing trends. In the last five years period the
farm machinery implements export has been increasing by the CAGR of 11 %. The top
ten accounts more than half of the total world export and their share have grown from
66 % in 2007 to 76 % in 2017. Netherlands is the leading exporter of all top ten countries
followed by China; both exported 269,389 ton and 178,213 ton as of 2011 respectively. In
general term the export amount of the top ten countries is increasing by CAGR of 15 %.
Table 5.2: World Export of Agricultural Farm Machinery Implements

Countries 2008 2008 2009 2010 2011 CAGR

Netherlands 14,028 15,373 413,221 281,455 269,389 109%
China 63,498 86,108 74,221 129,367 178,213 29%
Italy 102,499 134,412 95,284 105,945 131,525 6%
USA 100,389 121,079 73,465 81,939 122,376 5%
Germany 91,710 123,425 81,996 79,567 108,689 4%
France 74,878 92,784 60,750 57,825 73,237 -1%
Canada 63,213 75,536 56,163 53,957 60,685 -1%
Brazil 37,295 45,931 22,845 28,366 39,090 1%
Spain 34,182 33,165 31,892 25,233 32,504 -1%
Poland 26,403 35,341 23,223 27,352 31,360 4%
Top Ten 608,095 763,154 933,060 871,006 1,047,068 15%
Share of top ten 66% 67% 77% 73% 76% 3%
World 918,518 1,147,282 1,215,912 1,185,155 1,379,436 11%

Source: ITC

The world export of agricultural machinery implements has shown increasing trends in
the last five years period it has been decreasing by the CAGR of 6 %. The top ten
accounts more than half of the total world export and their share have grown from 74 %
in 2007 to 77 % in 2017. USA is the leading exporter of all top ten countries followed by
Germany; both exported 421,758 ton and 343,677 ton as of 2011 respectively. In general
term the export amount of the top ten countries is increasing by CAGR of 7 %
Table 5.3: World Export of Agricultural Produce Threshers

Countries 2007 2008 2009 2010 2011 CAGR

USA 311,584 381,178 297,864 328,033 421,758 8%
Germany 309,332 386,649 253,139 263,177 343,677 3%
China 98,426 175,292 131,586 166,801 170,296 15%
Italy 130,432 176,865 121,698 126,246 141,594 2%
France 118,262 128,422 84,386 89,490 112,807 -1%
 Netherlands 28,364 27,178 207,976 646,302 111,782 41%
Belgium 82,092 113,102 107,778 65,885 100,818 5%
Hungary 66,352 82,322 57,461 50,596 68,045 1%
Poland 53,416 71,777 47,112 50,541 68,022 6%
Belarus 20,341 36,724 41,048 43,221 57,675 30%
Total Top Ten 1,218,601 1,579,509 1,350,048 1,830,292 1,596,474 7%
Share of top Ten 0.74 0.76 0.74 0.81 0.77
World 1,657,102 2,086,058 1,823,590 2,269,972 2,071,156 6%

Source: ITC

1.1.1.1.2. World Import of Agricultural Machinery Implements

The world Import of agricultural farm and produce thresher implements have shown increasing
trends in the last five years period. The agricultural farm machinery implement has been
increasing by the CAGR of 9 %. The top ten accounts more than half of the total world import
and their share have grown from 57 % in 2007 to 62 % in 2017. Netherlands is the leading
exporter of all top ten countries followed by France; both exported 185,544 ton and 92,963 ton as
of 2011 respectively. In general term the import amount of the top ten countries is increasing by
annual average growth rate of 12 %, while the others increase by 6 % per annum.
Table 5.4 World Import of Agricultural Farm Machinery Implements

Countries 2007 2008 2009 2010 2011 CAGR

Netherlands - - 142,984 116,823 185,544
France 84,591 112,423 71,308 67,908 92,963
USA 79,851 92,906 69,961 76,376 90,905
Germany 78,361 87,391 62,280 62,029 85,979
Russian Federation 74,244 104,687 32,514 45,564 76,460
United Kingdom 45,924 58,746 41,427 48,475 47,258
Canada 29,988 33,254 33,190 34,661 46,422
Ukraine 22,004 46,632 10,403 20,213 37,170
Poland 19,076 31,925 24,844 31,989 32,321
Denmark 26,551 39,349 20,542 20,941 28,795
Top ten 460,590 607,313 509,453 524,979 723,817 12%
Others 353,334 525,096 383,887 413,295 439,515 6%
Share of top ten 57% 54% 57% 56% 62%
World 813924 1132409 893340 938274 1163332 9%
Source: ITC
The world Import of thresher machinery implements has shown increasing trends in the last five
years period it has been decreasing by the CAGR of 2 %. The top ten accounts more than half of
the total world import and their share have grown from 58 % in 2007 to 64 % in 2017.
Netherlands is the leading exporter of all top ten countries followed by France; both exported
273,828 ton and 202,113 ton as of 2011 respectively. In general term the import amount of the
top ten countries is increasing by annual CAGR of 11 %, while the others increase by 4 % per
annum.

Table 5.5: world Import of agricultural producer threshers

Countries 2007 2008 2009 2010 2011 CAGR

Netherlands - - 71,945 131,105 273,828
France 189,346 201,302 150,082 153,157 202,113 2%
Germany 176,847 203,385 165,502 161,562 200,537 3%
Canada 110,055 125,792 116,992 148,769 173,525 12%
USA 146,050 158,977 119,911 132,958 156,148 2%
United Kingdom 78,901 96,720 74,943 72,922 81,268 1%
Belgium 53,777 67,201 60,435 50,215 73,472 8%
Ukraine 29,655 66,145 22,612 37,989 60,454 19%
Russian 72,505 100,429 30,774 41,532 59,920 -5%
Italy 34,639 48,204 40,059 50,979 55,703 13%
Top ten 891,775 1,068,155 853,255 981,188 1,336,968 11 %
Others 644,814 814,775 655,385 724,482 766,007 4%
Shares of top ten 58% 57% 57% 58% 64% 4%
1,705,67
World 1,536,589 1,882,930 1,508,640 2,102,975 2%
0
Source: ITC

1.1.2. Global Construction Machinery Implements Market

The global market for Construction Equipment is forecasted to reach 1.76 million units by the
year 2018, driven by continuous urbanization caused by population movement from the rural
areas to urban areas, particularly in the emerging markets. (Global Strategic Business Report,
2012)
The construction equipment industry is a noteworthy segment for most of the global economies
and includes diverse range of equipment, which finds usage across various industries such as
building construction, infrastructure projects and surface mining. Demand for construction
equipment is directly proportional to the need for construction and building activity. Therefore,
being a part of the global construction industry, the global construction equipment industry often
follows the trend patterns of the former, which is quite often impacted by several macro
economic factors. This scenario has been witnessed in the recent past when the global
construction industry came under the shadow of the global economic slowdown. During this
period, widespread pessimism and flagging business confidence negatively impacted spending in
the construction industry, thereby impacting the demand for construction equipment as well.

The renewed interest in the urban development activities such as construction works spanning
across industrial as well as residential and commercial sectors is expected to heighten demand
for construction equipment in the coming years. However, the crucial pull for growth is expected
to emanate from emerging markets such as Latin America as well as Asia-Pacific with large
scale construction activity in the infrastructure, oil refinery, ship building and power plant fronts.
In the Asia-Pacific region China, India, South Korea and Indonesia are key regions for the
construction equipment industry, with China leading the bandwagon and cornering a major
portion of the global demand for construction equipment. Japan, which witnessed one of the
worst natural disasters in recent history, is in reconstruction mode, and the market is expected to
witness high growth in the near future.

Segment-wise, pavers, mixers, and other associated products are forecast to register significant
gains, benefiting from infrastructure development activities in various regions across the world.
The relatively low price of certain equipment such as the small-sized towable concrete mixers,
are also likely to record significant gains in future. Loaders demand is also expected to increase
over the next few years. The excellent versatility of loaders would drive sales as spending on
construction activities continue to increase, particularly in rapidly growing developing nations.
The market is also expected to remain strong for various other kinds of construction machinery
including cranes, graders, excavators, draglines, rollers, off highway tractors and trucks and
individually sold attachments and parts.

As stated by the new market research report on, Construction Equipment, China represents the
largest regional market. Key factors driving industry growth include robust demand generated by
the construction industry and the ongoing construction of new infrastructure projects by the
Chinese government including gas pipelines, expressways and railways.
The global market for Construction Equipment is relatively consolidated with global players
accounting for significant shares in key markets. The Chinese market is highly competitive with
small and medium players targeting the low cost equipment market, while major Chinese players
and international players target the market for technologically advanced products, which
command a premium. Major players in the global marketplace include AB Volvo, Caterpillar
Inc., CNH Global, Dingsheng Tiangong Construction Machinery, Doosan Infracore, Deere &
Co., Hitachi Construction Machinery, Hanta Machinery Co. Ltd., JCB Ltd., Komatsu Ltd.,
Kubota Europe, Mitsubishi Heavy Industries, Shandong Shantui Construction Machinery Imp. &
Exp. Co. Ltd., Sumitomo Heavy Industries, TCM Corp., Terex Corp., and Xuzhou Construction
Machinery Group Co., Ltd.( Global Industry Analysts, Inc., (GIA) 2012)

1.1.2.1. World Construction Machinery Implements Trade

1.1.2.2. World Construction Machinery Implements Export

The world export of construction machinery implements has shown decreasing trends in the last
five years period it has been decreasing by the CAGR of 1 %. The top ten accounts more than
half of the total world export and their share have grown from 61 % in 2007 to 68 % in 2017.
China is the leading exporter of all top ten countries followed by Germany; both exported
453,172 ton and 237,334 ton as of 2011 respectively. In general term the export amount of the
top ten countries is increasing by CAGR of 3 %.
Table 5.6 World Building And Construction Machinery ( Including Brick And Block Maker ) (HS
Code 8474)

Countries 2007 2008 2009 2010 2011 AAGR

China 245,355 328,573 275,791 338,424 453,172 17%
 Germany 310,467 355,024 232,998 218,837 237,334 -6%
USA 187,911 180,197 129,071 163,665 206,911 2%
Italy 217,648 237,171 154,387 147,840 181,578 -4%
UK 190,249 226,200 110,593 147,105 157,715 -5%
Turkey 60,492 66,071 55,303 59,687 69,543 4%
France 85,908 95,099 68,287 60,057 58,677 -9%
Spain 44,729 54,156 48,644 50,054 53,055 4%
Republic of Korea 31,098 46,150 28,595 33,228 49,287 12%
South Africa 53,465 69,480 35,696 40,536 47,380 -3%
Top ten 1,427,322 1,658,121 1,139,365 1,259,433 1,514,652 1%
Share of top ten 61% 64% 64% 65% 68% 3%
World 2,325,181 2,602,033 1,781,314 1,936,152 2,230,673 -1%
Source: ITC

1.1.2.3. World Construction Machinery Implements Import

The world Import of construction machinery implements has shown increasing trends in the last
five years period it has been decreasing by the annual average rate of 2 %. The top ten accounts
less than half of the total world imports and their share have grown from 34 % in 2007 to 42 %
in 2017. Spain is the leading importer of all top ten countries followed by Russia; both exported
233,589 ton and 137,083 ton as of 2011 respectively. In general term the import amount of the
top ten countries is increasing by CAGR of 8 % per annum.

Table 5.7: World Import of Construction and Building Machinery Implements (HS Code 8474)

Countries 2007 2008 2009 2010 2011 CAGR

Spain 49,260 122,607 42,207 99,680 233,589 48%
Russia 147,628 210,794 138,503 132,392 137,083 -2%
USA 163,312 137,122 66,351 79,996 121,877 -7%
Australia 42,302 63,082 41,916 61,385 121,531 30%
China 76,301 83,388 81,476 86,822 106,938 9%
Germany 108,029 120,251 63,472 62,891 83,451 -6%
Canada 57,715 65,199 48,650 65,419 80,044 9%
France 85,586 106,335 56,492 60,539 73,016 -4%
Indonesia 32,428 43,819 32,844 56,479 69,209 21%
Algeria 37,519 48,748 45,944 40,005 63,645 14%
Total Top Ten 800,080 1,001,345 617,855 745,608 1,090,383 8%
 Share of Top Ten 34% 35% 32% 32% 42% 5%
World 2,358,736 2,838,522 1,921,377 2,357,963 2,600,050 2%
Source: ITC

1.2. African Agricultural and Construction Machinery Implements Market

Past mechanization efforts

Past efforts of various African governments and donors to accelerate the use of mechanization
inputs have produced mixed results. Compared with other regions, Africa has not had the large-
scale investment in agricultural infrastructure, such as irrigation, or other inputs needed to
intensify crop production. This is partly because Africa is fragmented into relatively small
farming regions and even countries, unlike countries such as Brazil, India and China, which are
large enough to create a critical mass for investment on a sub continental scale. Investment in
mechanization has been limited to large commercial farms or government schemes. In many
cases where governments established tractor-hire schemes to serve small-scale farmers, planning
was very short term and management was poorly trained and poorly supported. Such schemes,
although relatively few across the continent, failed miserably, denting the image of agricultural
mechanization in general. ( FAO, 2008)

Current machinery input status

Among European and North American farm machinery manufacturers traditionally responsible
for supplying equipment to Africa, two problems have reduced their interest in the continent.
First, the machines they produce are for Western large-scale and capital-intensive farming
markets, and these are increasingly sophisticated, large and expensive. Second, the African
market is perceived as declining relative to two decades ago, hence, not worthy of investing
marketing resources in. On the other hand, emerging economies, especially in Asia, are
producing machines more suited to Africa in terms of both specification and price. What is
needed is for the producers in Asia to adopt the marketing and technical support practices that
hitherto have made European manufacturers highly successful in worldwide machinery
marketing. ( FAO, 2008)
1.3. Market Destination and Segmentation of Agricultural and Construction
Machinery Implements

Both agricultural and construction machinery implements are for home consumption, to satisfy
strong demand of both machineries implements. Agricultural machinery implements is
commonly used by commercial and state owned farm like other African countries while the
construction machinery implements used in construction sector that are construction and building
of residential and commercial houses, infrastructure: road, real way, dam and other

1.4. Ethiopian Agricultural and Construction Machinery Implements

Market

Ethiopia, being one of the less developing nations there is extensive need for basic
material (food, water, shelter etc). The recent fastest growth signifies the improvement
of these basic requirements: food self-suffceinceny, residential house availing and
infrastructure development. Scientific and technologically advanced tools or
instruments are required to sustain the improvement and to boost productivity. Thus,
agricultural and construction machinery implements are parts of the tools needed for
increase of agricultural as well as construction material production.

1.4.1. Ethiopian Agricultural Machinery Implements Market

In Ethiopia, the farm mechanization is commonly practiced in commercial and state farm;
peasants cannot afford machineries for their farm. Hence, the demand for the farm machinery
implements is determined by the hectare of land under commercial and state farm. To come to
the total farm machinery implements requirement amount in Ethiopia, total hectare of land under
private investors or commercial farm and the state farm has to be summed up and multiplied by
the machine hour requirement per hectare for each activities. This study considers only
commercial farm under private investors that is covered by various crops: horticulture, Creels,
Pulse, Oilseeds, vegetables, fruits, palm oil, bio-fuel, cotton, sugar cane, fruit, coffee, and tea.
The total hectare of land under commercial farm that is with various types of crops is presented
in the table 5.8 below.

Table 5.8 : Total hectare of land under commercial farm that is with various types of crops

Crop 2008 2009 2010 2011 AGR

5%
Cereals 317660.82 370900 413210 363546
-14%
Pulse 40546.72 26068 32416.14 26090.36
28%
Oilseeds 243704.34 287244 370724.06 514851.52
-13%
Vegetables 44953.68 14636 17334.28 29236.64
0%
Fruits 5339.25 4886 5732.22 5266.91
11%
Coffee 54339.6 51673 56822.16 75048.83
-3%
Tea 4169.89 4165.17 4160.45 3801.19
-3%
Sugarcane 23465.66 20509 12166.04 21099.79
-1%
Cotton 42056.05 40528 34910.78 40336.71
other temporary -24%
crops 13043.64 4000 3853.08 5617.22
-17%
root crops 15668.56 2034 3077.38 8839.388
1093734.55 11%
Total 804948.21 826643.17 954406.59 8

The machine hour per hectare with the respect to crops type is presented in the table 5.9 below

Table 5.9: Machine hour per hectare for activities listed.

other
Operation temporar Vegeta Coffe Sugar
Activities Cereals pulses oilseeds y crops bles fruits e tea cane cotton Root crops
plough 3.4 2.8 1.84 2.68 6.70 6.7 7 7 2.01 2.75 6.70
disk 1.9 0.7 1 1.20 1.14 0.88 5 5 1.58 3.23 1.14
seeder/
planter 1 0.6 1.03 0.88 - 1.25
harvester 1.37 - 0.4 0.59 -
thresher 0.7 - - 0.23 -
trailer 1.35 1.2 1.125 1.23 3.00 7 22 13 3 3.5 3.00
 leveler
1.5 1.5 1.5 1.50 1.50 1.5 1.5 1.5 1.5 1.5 1.50

Multiplying the hectare of land gives the total machine hours required in every activity as
follows
Table 5.10: Total required machine hour per activities listed

Operation Activities 2008 2009 2010 2011

Plough
2,691,279.07 2,561,266.84 2,910,638.37 3,267,174.71
Disk harrow
1,430,263.99 1,480,722.24 1,648,246.85 1,836,319.35
Seeder/ planter
633,771.32 711,545.04 833,090.88 940,796.45
Harvester
540,372.81 625,390.60 716,660.64 707,312.79
thresher
225,406.09 260,563.33 290,146.05 255,792.88
Trailer
2,454,158.41 2,338,586.31 2,582,737.20 3,164,248.63
Leveler
1,207,422.32 1,239,964.76 1,431,609.89 1,640,601.84

Projection of hectare of land

The total hectare of land under commercial with respect to type of crops in the coming years is
expected to increase by the same growth rate which is registered in the past years

Table 5.11: projected hectares of land under commercial farm with respect to crops type

Type of
crop 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Cereals 381,723.30
400,809.47 420,849.94 441,892.44 463,987.06 487,186.41 511,545.73
Pules 31280.305 31280.305 31280.305 31280.305 31280.305 31280.305 31280.305
622,970.34 753,794.11 912,090.87 1,103,629.96 1,335,392.25 1,615,824.62 1,955,147.79
Oilsides
Vegitables 30698.472 37145.15112 44945.63286 54384.21575 65804.9011 79623.9303 96344.9556
fruits 5530.2555 5806.768275 6097.106689 6401.962023 6722.06012 7058.16313 7411.07129
Coffee 78801.2715 82741.33508 86878.40183 91222.32192 95783.438 100572.61 105601.24
Tea 3687.1543 3576.539671 3469.243481 3365.166176 3264.21119 3166.28486 3071.29631
Sugarcane 22576.7753 24157.14957 25848.15004 27657.52054 29593.547 31665.0953 33881.6519
 Cotton 39933.3429 39534.00947 39138.66938 38747.28268 38359.8099 37976.2118 37596.4496
other
temporar
y crops 6684.4918 7954.545242 9465.908838 11264.43152 13404.6735 15951.5615 18982.3582
root crops 13347.47588 20154.68858 30433.57975 45954.70543 69391.6052 104781.324 158219.799
Total 1246857.396 1421417.432 1620415.872 1847274.094 2105892.47 2400717.41 2736817.85

Multiplying the hectare of land gives the total machine hours required in every activity as
follows

Table 5.12: projected demand for agricultural machinery implements

Operation
Activities 2012 ( est.) 2013 2014 2015 2016 2017
Plough
3,570,607.06 3,999,157.75 4,516,209.04 5,146,517.48 5,923,555.13 6,893,152.29
Disk harrow
2,093,619.12 2,203,423.45 2,443,930.02 2,728,999.46 3,069,263.05 3,478,468.41
Seeder/
planter 1,066,847.88 1,223,771.41 1,410,296.26 1,632,462.43 1,897,568.53 2,214,435.43
Harvester
776,092.91 855,319.79 946,985.65 1,053,490.63 1,177,727.92 676,856.80
thresher
268,766.02 282,422.69 296,803.67 311,953.07 327,918.70 344,752.52
Trailer
3,441,997.80 3,707,815.42 4,064,385.75 4,485,762.39 4,989,242.01 5,598,107.25
Leveler
1,870,286.09 2,132,126.15 2,430,623.81 2,770,911.14 3,158,838.70 3,601,076.12

The second scenario

The second demand scenario is based on the tractor capacity. The farm implements are
determined based on the number of tractor available at farm which is the sum of locally
assembled and imported tractors. Locally only one factory, Nazareth Tractor Assembly, is
engaged in tractor assembling. The installed capacity of tractor assembly is presented based on
the horse power which ranges from 1,500 to 10,000 per annum. and the total production of it is
presented on table 5.13 below.
Table 5.13: Tractor Production
Tractor Actual Production Amount
Installed
Capacity 2009 2009 2010 2011 2012
8.15HP 10,000 - - - - 2016
 Walking
18-30HP 6,000 - - - - 1,300
40-90 HP 3,000 89 28 72 62 1,435
100-375 HP 1,500 48 22 72 49 115
Total 20,500 137 50 144 111 4,866

Source: Nazareth Tractor factory

Demand for Constriction Machinery Implements.

The construction machinery and implements demand is the driven demand of construction and
buildings sector. The construction and buildings have higher correlation with the income that the
increase income induces the demand for construction and building. The last recent year’s growth
in the construction and buildings sector confirms this fact. Hence, income elasticity uses to
estimate the demand for construction and buildings. In the last recent years the national income
has shown increasing trend as depicted in the table below.
Table 5.13 : national Income ( Millions Birr)
National Income 2007 2008 2009 2010 2011 AAGR
GDP 160,218 232,251 316,207 354,573 510,490 0.34

The five years compound average annual growth rate is 0.34 percent per annum.
The construction machinery: concert or mortar mixer and mixer for earth and stone have shown
increasing trend both increased with an average annual growth rate of 2.37 and 0.44 percent
respectively.

Table 5.13: Construction Machinery

Construction
machinery 2007 2008 2009 2010 2011 AGR
CONCRETE OR
MORTAR MIXERS 2,050 22,020 9,892 1,222 2,656 2.37

Mixer for earth .stone 2,107 257 54,958 1,065 9,174 0.44
 The income elasticity of demand which is percentage change in quantity for the percentage
change in income (∆ % GDP/∆% Q) also can be explained as ((LGDP/FGDP)^(1/n-1)-

1)^ ((LQ/FQ)^(1/n-1)-1)
Where ∆ - change
Q- Quantity
L- Last year
F- First year
n- number of years considred
Accordingly income elasticity of CONCRETE OR MORTAR MIXERS will be EI = 0.067/0.34 = 0.20 and
the income elasticity of construction and building machineries ( HS code 8474) will be EI = 0.15/0.34=
0.44 which implies that 1 million increase of income induces for 20 % increase demand for CONCRETE
OR MORTAR MIXERS and 44 % increase the demand for construction and building machineries under HS
code 8474 .
Accordingly the demand for the coming years is forecasted using the obtained income elasticity unit as
follows
Table 5.14 Projected demands for construction machinery implements
construction and
building 2012
machineries ( estm.) 2013 2014 2015 2016 2017
CONCRETE OR
MORTAR MIXERS 3,187.20 3,824.64 4,589.57 5,507.48 6,608.98 7,930.77

construction and
building
machineries
under HS code 71,951 103,609 149,198 214,845 309,376 445,502
8474

1.4.1.1. Supply of Agricultural and Construction Machinery Implements

The domestic supply of Agricultural Machinery Implements comes from domestic
production and import.

 Domestic Production

Domestically there are several factories which engaged in metallurgical operation but
only few of them engaged in production of agricultural and construction machinery
implements. Some of the factories which engaged in the production of these items are:
Selm Technical and vocational Collage, Adma Tractor Assembly, Defense metal and
metallurgical corporation, Roda PLC Kasma Engineering. However, their production
amount is very insignificant.

Table 5.15 The Production amount of selm Technical and vocational Collage is
presented below

Agricultural and construction

Machinery Implements 2009 2010 2011
Multi crop mechanical thresher 14 23 19
Maize Sheller 19 17 38
Hey baler /Manual 1 4 5
Electrical hollow block machine 16 14 12
Soil block press 13 11 19
Soil Mixer 2 2 3
Rice polisher 2 5 2
Concrete mixer 5 11 2

Import

The other source of supply in the country is import. Almost all agricultural and
construction machinery implements are import in the country.

Table 5.16 Import

2006 2007 2008 2009 2010 2011

CONCRETE OR MORTAR MIXERS 2050 22020 9892 1217 2644 1119
DISC HARROWS 178 278 61 287 305 314.5
HARROWS (EXCL. DISC HARROWS), 165 4189 8213 3936 973 3065
 SCARIFIERS, CULTIVATORS, WEEDERS
AND HOES
PLOUGHS 55 361 330 1434 381 5135
SEEDERS, PLANTERS AND
TRANSPLANTERS 73 7 2659 77 204 258
THRESHING MACHINERY FOR
AGRICULTURAL PRODUCE, NES 1 5 41 98 2784 104
Trailer 342 414 1862 50 90 51
Leveler 111 1489 7020 553 34 119

Mixer for earth .stone 2107 257 54,958 1,065 9,174 6,459

The supply of agricultural and construction machinery implements is the accumulated

amount of both domestic production and import after adjustment for deprecation.

Table 5.17: Existing Supply

Agricultural and
construction machinery 2007 2008 2009 2010 2011
implements

CONCRETE OR MORTAR
23824 30,857 28,376 27,627 25,433
MIXERS

DISC HARROWS 4768.84 12470.58 15197.11 14651.46 16272.78

PLOUGHS 409 690 2041 2177 7051

SEEDERS, PLANTERS
71 2722 2472 2379 2352
AND TRANSPLANTERS

THRESHING MACHINERY
FOR AGRICULTURAL 5.88 46.1744 117.6335 2865.517 2585.655
PRODUCE, NES

Trailer 715 2491 2242 2063 1867

Leveler 1587 8416 7959 7038 6313

Construction and building

44397.84 265849.1 238801.2 229112.1 251618.6
machinery
 Supply projection

Table 5.18 Supply Projection

Machinery
Implements 2012 2013 2014 2015 2016 2017
Plough 11391 15263 18722 21819 24597 27097
Disk 18690 20827 22718 24392 25876 27193
seeder/ planter 2395 2517 2731 3054 3507 4118
harvseter 517 601 706 836 995 1189
tresher 2322 2062 1834 1633 1456 1300
Trailer 2111 2326 2515 2681 2828 2956
Leveller 5675 5116 4624 4193 3815 3484
Concrt mixer 23580 22034.17335 20763.34575 19741.14659 18944.46949 18354
Mixer for stone and
earth 55660 59073 64599 72617 83614 98219

1.4.1.2. Demand Supply Gap for Agricultural Machinery Implements

a. Existing Estimated Demand-Supply Gap based on the machine requirement per

hectare

Table 5.19 : Existing Estimated Demand-Supply Gap based on the machine

requirement per hectare

Machinery 2008 2009 2010 2011

Implements
Plough
32,950.72 29,974.40 34,205.51 33,788.51
Disk
5,407.72 3,311.92 5,951.63 6,681.56
seeder/ planter
5,200.45 6,422.22 8,034.20 9,408.05
harvseter
6,559.18 7,453.36 8,560.92 8,391.75
tresher
2,771.40 3,139.41 761.31 611.76
Trailer
28,185.82 26,990.10 30,221.06 37,686.53
reveller
6,676.50 7,540.23 10,856.92 14,194.90
 Projected Demand-Supply Gap

Table 5.20 ¸ Projected Demand-Supply Gap based on the machine requirement per
hectare

Machinery
Implements 2012 2013 2014 2015 2016 2017
Plough
33,241.21 34,726.84 37,730.90 42,512.86 49,447.13 59,067.87
Disk
7,480.17 6,715.50 7,831.08 9,720.29 12,489.71 16,288.04
seeder/ planter
10,940.84 12,780.16 14,897.66 17,352.18 20,213.08 23,562.31
harvseter
9,184.46 10,090.39 11,131.19 12,332.88 13,726.76 7,271.41
tresher
1,037.45 1,467.81 1,876.07 2,266.52 2,643.03 3,009.17
Trailer
40,914.22 44,022.06 48,290.10 53,390.91 59,537.97 67,019.93
reveller
17,703.28 21,535.92 25,758.42 30,443.10 35,670.32 41,529.79

b. Existing Estimated Demand-Supply Gap based on installed capacity of tractor

production
Table 5.21 Estimated Demand-Supply Gap based on installed capacity of tractor
production

Machinery
Implements 2008 2009 2010 2011

Tractor 37,903.20 51,514.56 63,147.65 72,178.12

Plough
37,212.93 49,473.12 60,970.18 65,126.95
Harrow
25,432.62 36,317.45 48,496.19 55,905.69
seeder/ planter
35,181.51 49,042.47 60,768.21 69,826.21
harvseter
37,707.72 51,150.54 62,750.31 71,728.46
tresher
37,857.03 51,396.93 60,282.13 69,592.46
Trailer
 35,412.04 49,272.33 61,084.49 70,311.54
reveller
29,486.92 43,555.24 56,109.44 65,865.50

Projected Demand-Supply Gap

Table 5.22: Projected Demand-Supply Gap based on installed capacity of tractor

production

Machinery
Implements 2012 2013 2014 2015 2016
Tractor 83,488.49 103,607.58 135,534.06 183,713.88 254,630.99
Plough 72,097.11 88,344.95 116,812.35 161,895.27 230,033.68
Harrow 64,798.43 82,780.29 112,816.01 159,321.67 228,754.91
seeder/
planter 81,093.74 101,090.59 132,803.01 180,660.28 251,124.46
harvseter 82,971.79 103,006.47 134,827.93 182,878.13 253,636.15
tresher 81,166.37 101,545.10 133,700.08 182,080.98 253,175.04
Trailer 81,377.74 101,281.94 133,019.33 181,032.76 251,803.43
reveller 77,813.20 98,491.92 130,909.68 179,520.59 250,815.83

c. Existing Estimated Demand-Supply Gap based on actual tractor production

Table 5.23: Existing Demand-Supply Gap based on installed capacity of tractor

production

Machinery
Implements 2008 2009 2010 2011
Tractor 829 2149.2 3023.36 7775.688
Plough 139 108 846 725
Harrow -11642 -13048 -11628 -8497
seeder/ planter -1893 -323 644 5424
harvseter 633. 1,785. 2,626. 7,326.
52 18 02 03
thresher 783 2032 158 5190
Trailer -1662 -93 960 5909
reveler -7587 -5810 -4015 1463
 Projected demand Supply Gap

Table 5.23: Projected Demand-Supply Gap based on installed capacity of tractor

production

Machinery
Implements 2012 2013 2014 2015 2016
Tractor 17998.0104 33595.66812 58168.06797 97539.65394 161170.1984
Plough 6607 18333 39446 75721 136573
Harrow -692 12768 35450 73147 135294
seeder/
planter 15603 31079 55437 94486 157664
harvseter 17,481. 32,994. 57,461. 96,703. 160,175.
31 56 94 90 36
thresher 15676 31533 56334 95907 159714
Trailer 15887 31270 55653 94859 158343
reveler 12323 28480 53544 93346 157355

1.4.1.3. Demand Supply Gap for Construction Machinery

Table 5.23: Demand-Supply Gap for Construction Machinery

Constructio
n
Machinery
Implement 2017
s 2012 2013 2014 2015 2016
Constructio
n 52,867
Machinery 1,499 4,272 9,132 17,352 30,912
Concrete
Or Mortar 177107.9724
Mixer 2627.0496 8082.093792 19190.1418 41618.0546 86700.52419

There is increasing demand supply gap of agricultural and constriction machinery

implements

1.4.2. Market and Marketing Arrangement

The marketing of product is held at the different places according to the agreement of
the producer.

There are also order base and sub-contract agreement among the producers when one
of the factory win the bid of supplying and get in short of capacity to supply within the
given frame of time. Then the factories get sub-contract with other to supply parts of the
required amount.

According to the observation in the survey, the lion share of the sale held at the get of
the factory transportation is at the cost of buyer. When the producers deliver the
product to buyer locations they will add the transportation cost on the selling price of
the product.

1.4.3. Marketing Value Chain

The raw material is from both import local market the producer purchase it according
to the design specification of manufacturing the machinery implements and after
manufacturing the product directly deliver to the buyer ( location where it used ).
Agricultural and Construction machinery implements market is order based which
means production is based up on the order (terms of contract and/or specification) and
after the production it is transported to the buyers place or the place where it is to be
used. The neighboring countries are also considered as potential countries to export the
product and in this case the product directly exported to the countries.

Figure 5.1: Marketing Channel Diagram

Local Market Foreign market

Producer

Mechanized Agricultural farm &

Construction sector