Five Key Insights from Agritechnica Trade Fair – A Full House in Hanover

Record crowds in Germany and exhibit halls full of new products suggest the agricultural equipment industry has a bright future

Lincoln International’s industrials team was well represented at this year’s Agritechnica trade fair in Hanover, Germany. The firm’s presence at Agritechnica has become a regular fixture with the opportunity for one-on-one meetings with senior executives, culminating with our private dinner offering a frank exchange of views on the state of the agricultural market and its future.

This year Agritechnica set a record with 470,000 visitors from 149 countries and more than 2,800 global exhibitors. With postponements due to the pandemic, the fair has not been held since 2019 and we witnessed a strong demand for companies to meet, share views and explore growth strategies. Further, the Lincoln team walked away with five key impressions from our discussions and have highlighted them below:

Summary

Lincoln International attended the Agritechnica trade fair in Hanover, Germany.

Outlook for 2024+

Cautious outlook by many with flat to down volume expectations for 2024.
Deere’s recent outlook supports this with a view that large ag units are forecasted to be down 10-15% in North America and down 10% in Europe.
The ag industry is coming off several strong years and moving to the mid-cycle stage.
Supply chains improved but still concerns linger with goals to de-risk suppliers / delivery times and consider reshoring.
Labor shortages and energy prices remain important constraints.

Innovation and New Product Development

There was an abundance of new products shown at Agritechnica with a lot of attention paid to implement producers offering autonomous vehicles (Lemken, Amazone, Kuhn) and further examples of electrification of machinery (smaller tractors).
Innovation examples from Nexat, with a cutting-edge holistic crop production machine, new combine drive technology from Case New Holland and new software offerings for robotic use (AgXeed) are among those that won awards at Agritechnica.

Technology Everywhere

It is difficult not to observe the numerous examples of technology on the larger machines and implements and most executives shared views they are weighing the “acceptance factor” by the customer.
The large OEMs have now staked out the broader technology battleground with the recent news of AGCO JV with Trimble’s Ag assets, CNH acquiring Raven and Deere’s continued investment in a broader technology portfolio including Blue River, Bear Flag and several others. This will be a critical development for the ag OEMs in the coming years, having made large, billion-dollar investments to add this technology.
Mid-range companies are seeking solutions but may lack the financial capabilities to add such technologies to their machinery. Many continue to seek solutions that may include partnering with others for a more compatible solution such as the 365 FarmNet platform.

Relevance to the Customer

Manufacturers have a renewed focus on the customer with the goal of offering the right solution. New products that offer better value, higher productivity and perform well in robust conditions are paramount to the farmer / user. One OEM noted they are trying to gain more intelligence at the local farm level to enable the right solution for each country and crop style.
In addition to having the proper equipment solution, manufacturers want to provide the right service solution for the customer including parts offering, software and repair and will invest further to have this capability.
Component manufacturers are also investing heavily in technology to have their components (hydraulics, sensors, drive trains, etc.) connected to the enterprise with reliability and new performance features.

Growth from M&A

Technology acquisitions and joint ventures / alliances are very much on the minds of the larger OEMs and short-line producers.
Long-time family-owned enterprises continue to consider diversification either by product or move to newer geographies but remain cautious.
The global landscape has many potential target partners as witnessed by the diverse 2,800 exhibitors, but interest rate concerns, inflation and ongoing global conflicts have given pause to chief executive officers and private owners. With the strong participation witnessed at Agritechnica, Lincoln expects conditions to improve in 2024 with more targets seeking access to partners, distribution and fresh capital.