Ukraine war: Government incentives promotes farm machinery purchases

 

Since Russia invaded Ukraine on February 24, 2022, an estimated  110,000 agricultural machines have been stolen or destroyed, leaving the farms chronically short on workers, money, and essential farm equipment.

In addition to the massive financial loss and the brutal infrastructural destruction, growers have been resolutely battling low grain prices and drought, which have severely reduced yield this year.

However, an unusual 25% discount on locally made tractors and tools has encouraged them to invest in new equipment despite this situation.

This government-sponsored incentive has increased the demand for Ukrainian-made cultivators, drills, sprayers, and grain storage equipment.

Ukarain-made equipment

According to Ukraine writer Ihor Pavliuk, you can now purchase a "made-in-Ukrain" drill for €10,000–€20,000 [£8,400–£16,800] instead of €50,000 [£42,000] for something from the European Union (EU).

These companies have kept their prices extremely low in comparison to well-known brands, although their products have improved significantly over the last ten years with many of them being exported to the (EU).

Although dependability is frequently sacrificed, true loyalists and those on a limited budget might combine their inexpensive tools with Ukranian-made tractors.

Although they are of lower quality, they are readily accessible, and purchasing them helps to support domestic producers while also pushing them to advance their technology and build standards over time.

Affordability

Particularly in areas where there is no conflict, sales of equipment from Europe and North America have also somewhat recovered from the precipitous decline that followed the first Russian invasion.

A year of record farm machinery sales in 2021, when yields were high and crop prices were strong was immediately followed by the war; Ihor says. 

However, logistics were cut off virtually immediately; there was no gasoline or spare components, and demand stayed low until 2023.

In comparison to a normal year, combine sales were down by 59%, and tractor sales were down nearly 50%. Many growers were operating at a loss at the same time as grain prices fell two to three times lower in the UK and fertilizers and pesticide costs skyrocketed. 

Manufacturers and dealers have acknowledged that they must sell their products on favorable conditions, including low borrowing interest rates, significant discounts, and inexpensive service packages which has contributed to the current increase in sales.

Difficult year

However, since the sale of machinery is inextricably related to farm income, another market collapse may be on the horizon. 

Grain prices have increased, but the yield of spring crops was severely lowered by a months-long drought, and diesel has doubled to about £1 per liter.

According to Ihor, Ukrainian growers have already adapted to the hardship of war, therefore the suffering is only likely to be temporary.

He claims that the farms in the northern and eastern regions continue their fieldwork despite the dangers, while farmers in the western and central regions are operating normally despite their severe need for workers, many of whom have turned to the military.

This implies that they will require operational equipment. However, the sad truth is that having a lot of contemporary weapons is significantly more significant.