Eight major impacts of supply-side reform on the agricultural machinery industry

However, what is the supply side reform? Is it another saying that the industrial restructuring, the cost-effectiveness, the economic transformation, and the other words of "changing soup without changing the medicine"? Supply-side reforms are also related to our agricultural machinery industry? Let's let the agricultural machinery king give you a science popularization. The supply-side reform will have eight major impacts on the agricultural machinery industry.

I believe that many people will see the five words of "supply-side reform" and they will feel dizzy. This word is actually not so difficult to understand. What is the supply-side reform? Supply side reform should be read as such - supply side, reform. This is a word from economics. Everyone knows that the basic principle of economics is the principle of supply and demand. Simply put, the supply exceeds demand, the price drops, the supply is less than demand, and the price rises. To be simple, this is an old saying that things are rare. In the past, our country’s economy has experienced some difficulties. At this time, the government needs to carry out macroeconomic regulation and control (this word is familiar to everyone). What is the means of regulation? It is to stimulate demand. For example, to lower the interest rate, everyone will take the money out and buy it! Buy a house and buy a car to buy clothes. For example, if the deposit reserve ratio is lowered, the bank will have more money and the loan will be invested in the enterprise. For example, if the government issues money, the government can make some government investment. These are all from the demand side to find a way.

And the supply side? Is another concept. The supply-side reform was initially a concept from European and American countries. In the 1970s and 1980s, the United Kingdom and the United States fell into the eyes of economic stagflation. How is stagflation? Simply put, it is high price and high unemployment rate. The things are expensive, the people still have no money. There is no way to work. At that time, the United States and the United States, Mrs. Thatcher and President Reagan, withdrew from supply-side reforms, known as "Thatcherism" and "Reagan Economics." The main measures are three aspects – tax cuts, shrinking currencies and state-owned enterprise reforms. For an economy, supply mainly involves four aspects, labor, capital, innovation, and government behavior. This includes industrial restructuring, but it is not. Yang Weimin, deputy director of the China Finance Office, said that to promote economic restructuring, it is necessary to fight four “annihilation wars” – to resolve overcapacity, reduce corporate costs, digest real estate inventories, and prevent financial risks. Therefore, we conclude that future agricultural supply-side reforms will bring the following eight far-reaching effects to the agricultural machinery industry.

Eight major impacts of supply-side reform on agricultural machinery

1. To increase production capacity and quality, the direction of grain production will be adjusted.

As is known to all, last year, China’s grain market has seen an unfavorable situation of “three more than three”, with more output, more inventory, and more imports.

Some media refer to this situation as "happy troubles." However, is this really happy? Your food cannot be sold, and it is equivalent to rubbish in the hands of farmers, even if it is disposed of.

On the one hand, China's grain supply is too low, food is “low quality” and its added value is low; on the other hand, China's grain production costs are high and its competitiveness is low. Therefore, the direction of food development in the future is to go to production capacity and improve quality.

In the future, growing food is no longer a “guaranteed business”, and it is necessary to improve demand from survival needs. Supply-side reform means that the country will exert its strength from the food supply side. Some well-reputed, high-value-added agricultural products, such as Wuchang rice, will have a better and better market. The producers of these improved agricultural products also It is easier to obtain a series of support such as policies, taxes and taxes.

2. The three major staple foods are saturated, and the competition in the traditional market is fierce.

One of the main products of oversupply on the market last year was corn, but there was a shortage of soybeans. The reason was mainly that the mechanized chain of corn production had been opened up, and there was no proper solution for soybean harvest mechanization.

At present, the mechanization of the three major staple crops in China has been basically realized, and the wheat, corn and rice harvesting machinery will only be a “red sea” in the future. The real blue ocean, in the field of cash crop machinery.

Therefore, if you are a manufacturer of three main grain machinery for wheat, corn, and rice, or a farmer who manages three major staple foods and has a pile of wheat and corn harvesters at home, then you should consider transforming.

3. Economic crops and special crop machinery are booming.

Last year, the Ministry of Agriculture's main mechanization of the main crops, in addition to the three main staples, there are six crops of potato, cotton, rape, peanuts, soybeans and sugar cane. On these six crops, our machinery is still basically blank, and the market is still in its infancy.

With the advancement of supply-side reforms, there will be tremendous opportunities for development of the cultivation, harvesting and processing machinery of these six major crops in the future.

4. The company's cost reduction and profitability become the top priority.

What is the purpose of the company? Profit, profit, or profit.

Supply-side reform is to improve the operational efficiency and efficiency of enterprises. In the past, the state regulated the market from the demand side, such as increasing investment, building infrastructure, creating jobs, and improving consumer purchasing power. Reform from the supply side means improving the "precision" of the company's operations and improving the company's ability to control costs and earn profits.

This may mean that the country will no longer implement extensive support policies for enterprises in the future. For state-owned enterprises, it may further refine various types of audits and assessments. For private enterprises, it may be necessary to improve the operational capabilities of lean production and refined management.

This means that a large number of extensive enterprises and low-quality production capacity will be eliminated.

5. The subsidy policy is further optimized to eliminate backward production capacity.

In order to complete the agricultural supply side reform, agricultural machinery purchase subsidies are an important policy tool.

In order to adjust the supply side of the agricultural machinery, the purchase subsidy must reflect a clear policy orientation. For example, machinery in the three main staple areas should reduce or stop subsidies. For a really durable and efficient weak link mechanical product, the subsidy ratio should be increased. This will really stimulate farmers to buy and use these machinery, so that enterprises have the funds to return, improve technology, innovate products, and form a virtuous circle.

If it is a symbolic payment to the peasants, then it is not necessary. Wheat, corn, and rice harvesters are almost saturated, and some areas are oversaturated.

6. The agricultural machinery training market will develop rapidly.

As mentioned above, the four aspects of the supply side are labor, capital, innovation, and government behavior. Therefore, to raise the level of labor, the number is probably not feasible, and the way out can only appear to improve the quality of the labor force.

Therefore, for the training of family farms and professional farmers, there should be huge demand in the future. In order to carry out the supply-side reform of agriculture, the state must also work hard to improve the quantity and quality of current professional farmer training, guide the development of the training market, and provide a group of educational institutions and training instructors for vocational farmers to upgrade their skills.

7. The process of peasant specialization speeds up, and professional peasants become the main force of grain production.

One of the priorities for raising the level of supply on the agricultural side is the workforce. In terms of the current labor quality of Chinese agriculture, it is basically incompatible with this requirement. Chinese agriculture needs more professional farmers, knows the principle of cost-benefit and farmers who make budgets, do production plans, and farmers who understand the market.

Supply-side reform means that the level of professionalism of farmers must be accelerated.

8. If the country shrinks its monetary policy, it will be more difficult for agricultural machinery loans.

The core purpose of the supply-side reform is actually to increase efficiency, optimize and improve the competitiveness of the supply side, and encourage manufacturers to provide products with higher added value, better quality and better technical content, so that the supply of social products will be upstream. From the perspective of international policy, one of the means of supply-side reform is to tighten monetary policy.

In this sense, the possibility of obtaining loans and financing for enterprises and industries with low qualifications and poor profit models will be further reduced. If the project you are borrowing is to buy farm machinery, people may not give you a loan. So, first of all, you have to find the projects that you can operate and have high demand in the market along the rising direction of the supply side, so you can get the loan.

Supply-side reform is a long-term task. In the short term, the eight changes I mentioned may not be felt quickly. However, I believe that in the next three to five years, if the supply-side reforms are deepened and effective, I believe that these aspects will become more and more obvious to the agricultural machinery industry.