Review and forecasting about the market of maize harvesting machine

Among the harvester markets of wheat, paddy and maize of 2016, the most depressed should be market of maize harvesting machine. Market sales performance of maize harvesting machine is unpredictable, which amazes the whole industry greatly. 

Market decline of maize harvesting machine has been definitely settled, but what is not clear is how much it shall decline in 2016? The past 8 months’ sales data has been released, and most of people in the industry believe that market decline of maize harvesting machine in 2016 may exceed 30%, but I am not so pessimistic about that. Through reviewing past 8 months’ market trend, we shall analyze what the market will achieve in next 4 months. 

Negative factors hit and the needs break base line

In 2016, the market of maize harvesting machine is hit by multiple negative factors, which lead to poor sales performance. The market research shows that it has sold 36400 sets of maize harvesting machine up to the end of August, declining 22.57% year-on-year. The market decline reflects in monthly trend. From August 2015- August 2016, except for individual months, sales performance of most months always hovers around below zero line, and the months with decline margin exceeding two digits occupy vast majority. Although there are months with higher growth sales month-on-month, they are really rare in past 12 months. 

For substantially decline of maize harvesting machine market which is in growth period, which beyond many people’s expectation. But if analyze numerous negative factors carefully in 2016, we can find that the market decline is not caused by rigid demand but numerous accidental factors. 

Analyze from the policy factors faced by maize harvesting machine market in 2016, we can see that the influence on market is conspicuous in following aspects: 

Firstly, subsidy drive decreases. Firstly, agricultural machinery subsidy policies in some places are released late and some places will not implement subsidy any more for the switch between of Phase II and Phase III of national standard of motor vehicle pollutant emission in 2016, which directly lead to insufficient subsidies. Secondly, subsidy limit is reduced. Subsidy limit for a single set of maize harvesting machine is reduced 10% in 2016, which has a great influence on the purchase of consumers. Thirdly, the market subsidy focuses on wheat harvester, tractor and subsoiler, which weakens the subsidy drive of maize harvesting machine market. Fourthly, some regions apply subsidies of 2016 into agricultural machineries which sold but not offered subsidy in 2015, which increases the gap of subsidies in 2016. 

Secondly, Phase II and Phase III of national standard of motor vehicle pollutant emission switches and phenomenon of cash to buy is strong. It mainly reflects in following aspects: firstly, although switch between of Phase II and Phase III of national standard of motor vehicle pollutant emission starting from 2015 is implemented extending to December 1 this year, digest more than 20000 sets of inventory machine with Phase II of national standard of motor vehicle pollutant emission is a priority for most enterprises in the first half year, which forms irreconcilable contradiction with the situation that many users worry that the machine with Phase II of national standard of motor vehicle pollutant emission can’t get subsidy so that the user can’t buy and the seller can’t sell. Secondly, although some enterprises launch machine with Phase III of national standard of motor vehicle pollutant emission, the users still can’t buy for worrying about the stability of its performance, and this situation is outstanding in Huang-huai-hai region. Thirdly, after some enterprises without inventory launch machine with Phase III of national standard of motor vehicle pollutant emission, it needs some to reassure customers for higher price and customers’ lower cognition degree, which has greater influence on market. 

Thirdly, adjustment of national planting structure hits purchase confidence. In 2016, our country launches the policy of “replace food crop with forage crop” and “replace rice with soybean”, meanwhile reduces the cultivated area of maize in Liandaowan region. This policy shakes the investment confidence of many potential customers in maize harvesting machine and drives them to change investment orientation, which creates larger influence on maize harvesting machine in 2016. Take Liaoning market for example, at the end of September when corn harvest, there is a phenomenon of purchasing machine temporarily for insufficient maize harvesting machines. 

Except that policy negative factors hit market sales, natural factors within market has also changed slightly, and it is expressed in following specific aspects.

Firstly, recession in rigid demand. After continuous run at high level since 2012, rigid demand of maize harvesting machine in hot spot regions decreases, such as markets in Heilongjiang, Shandong, etc., and the market shows the sign of saturation.

Secondly, decline of customer’s investment income hits the investment confidence of potential consumers. In recent years, with the running of maize harvesting machine of our country at higher level, social inventory increases sharply and yield of corn inter-district homework decreases, which leads to a lack of confidence. From the machine-type sold in first half year of 2015, sales ratio of 2-row small-scale maize harvesting machine is increased, which shows that the consumer orientation of some users shifts to self-use-oriented purchase from investment-oriented. 

Finally, the purchasing power decreases. In 2015, the price of wheat, paddy and maize price greatly decreases and farmers’ income decrease, which has great influence on farmers’ purchasing power. 

Worse, negative factors at the third level are disturbed by accidental events, distinctly expressed in following two aspects. 

On the one hand, natural disaster reduces corn harvest area. A long and narrow zone along Liaoning, Inner Mongolia, Jilin and Heilongjiang suffers from drought, and no kernels or seeds are gathered in many districts and even some places harvest corn as green feed. Such situation causes the needs reduction of maize harvesting machine and promotes the rapid growth of feed silage maize harvester market. 

On the other hand, with great inventory pressure, the enterprise is in a hurry to sell, which directly causes fierce market competition, highlighted in price war of 2016. Consumer has bigger and bigger choice space, and market discipline of buying when price rises rather than falls happens again in the market of maize harvesting machine. They intent to buy at lower prices, and the whole market presents a thick atmosphere of waiting on their cash, forming a stalemated phenomenon such as boiling a frog with warm water in the market of maize harvesting machine. 

Except that the superposition of above multiple negative factors causes strong resistance for market rise, deep-level factors are shown as the transformation of market needs, and two “window period” superimpose. 

On one hand, our country’s maize harvesting machine market is in the eve of transformation from stripper to grain harvester, and many enterprises sees this kinds of transformation. Although grain harvester is developed and launched, it has not complete transformation yet for numerous factors such as poor performance stability, high price, small promotion efforts, untimely drying after harvest, thus window period of product demand in market of maize harvesting machine is formed. And such situation is more prominent in regional markets of Heilongjiang and Shandong where realizing corn mechanical-harvest. 

On the other hand, maize harvesting machine market in hilly and mountain area has not started yet. Most enterprises focus on hot markets in northeast and Huang-huai-hai region, and the machine-type launched by them is also applied into these regions while neglect the development of machine-type applied in hilly and mountain area. 

Although some small-scale enterprises develop and launch small-scale crawler-type maize harvesting machine, it can’t fill the market blank for factors of product performance, popularization, sales, etc, thus another window period is formed in the developing history of maize harvesting machine market-regional window period. Superposition of two window periods becomes the one of main reasons for market downturn from 2015 to now.

The market has not end yet and decline range is expected to be narrowed

The first 8 months, larger decline range in market of maize harvesting machine makes many people judge that the whole year’s decline range may exceed 30%, but we judge that the whole year’s sales volume may be about 65000 sets with decline range among 15%～20%. 

Firstly, key factors resulting in the decline of maize harvesting machine market of 2016 are policy and accidental factors, not entirely rigid demand. Because among three major food crops in our country, maize has the largest cultivated area but the lowest mechanical harvest level, just 64.18% in 2015, it determines that endogenous rigid demand is still strong. 

Secondly, decline of maize harvesting machine market of 2016 results from the reduction of cultivated area and the influence of “replacing food crop with forage crop”， hitting the confidence of consumers, rather than saturation of maize harvesting machine market. 

Thirdly, sales volume in the first 8 months is not a real reflection of whole year’s sales. It particularly represented that the atmosphere of waiting on cash hanging over market, and vibration and shovel-ready is the biggest feature in past 8 months. In later 4 months, the whole market shall be driven by double motive forces of rigid demand and updating demand, especially the market of September and October is still worth waiting. 

Finally, markets starting in the first 8 months are mainly in Huang-huai-hai region, and there are still larger needs space in northeastern region. As the high and cold region, corn harvest season can even be pushed to early November in northeastern region, and its market contribution rate can't be taken lightly.