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The big footprint of the ag equipment industry

The Association of Equipment Manufacturers (AEM) has released a study on the importance of machinery to the productivity of agriculture. The Economic Footprint of the Agricultural Equipment Industry assesses the progress of equipment and how it has enhanced productivity to this point; how big of an impact the industry has on our economy and what will be needed to meet the growing global demand in the future.

Charlie O’Brien is senior vice president with AEM, he cites his own family as an example of how mechanization has changed the productivity of the American farmer. His father talked about “putting the husking glove on and husking corn all day long.” At that time in the 1930’s, one farmer could husk about 100 bushels of corn by hand in a 9-hour day. “Today’s combines can do that in 7 minutes.” He notes that is a significant improvement in a very short period of time. Along that same line, the average farmer has gone from feeding 25 people in the 1960’s to 144 today. Because of that increased productivity, we need less than 2 percent of the population on the farm today to feed us.

The study also looks at the economic impact the agricultural equipment industry has on the United States. O’Brien says as the generations go by, there is less understanding of just how big the industry is. “In 2011, the agricultural equipment manufacturers had overall sales of about $31 billion.” But add to that the layers of business supplying the manufacturers as well as the sales, distribution, service and others downstream; “then we’re up to about $51 billion in economic impact.” He also notes while the industry did take a hit with the economic downturn in 2008, it was also one of the fastest to recover.

A big part of the economic footprint is jobs; 78,000 were directly employed in ag equipment manufacturing but there are another 118,000 working in upstream suppliers and 117,000 in the downstream businesses. “You are looking at almost 400,000 people employed by the sector. And these are high-paying jobs with the average salary at $67,000. “This is a highly-skilled industry and one that we want to attract very highly-skilled laborers to.” One of the challenges the industry faces is getting that labor force.

Looking ahead, the industry will play a key role in feeding a global population expected to hit 9 billion people by the middle of this century. O’Brien says plainly, “We have to be much more productive than we are today even as productive as we are today.” He says the equipment manufacturers are investing millions each year in research and development to make sure the tools farmers use “are in lockstep with what’s going on with developments on the inputs side.”

Part of that challenge is for the industry to not only meet the needs of the technologically-advanced farmers of North America and Europe but also the needs of those regions of the world which are still mainly dependent on hand-labor today. O’Brien says many companies are multi-national and are positioned to fill those needs and help bring those developing countries up-to-speed, “bringing the technology there as it is adopted.” He points to a number of North American companies which have already expanded into other parts of the world.

O’Brien says one of the biggest challenges the industry faces is the lack of understanding by those who make the rules, “legislation without full knowledge” is how he phrases it. That is one of the main reasons for this report which has been sent to every member of Congress, “and we are sitting down with each of them and going over the details.”

The Top Ten Takeaways of the report are available from the AEM website and the full report is available for purchase.

AUDIO: O’Brien talks about the study 18:30 mp3