Russia’s largest combine harvester manufacturer halts production due to plummeting demand

The largest producer of agricultural machinery in Russia, Rostselmash, has announced a suspension of production due to falling demand.

The company will stop production from June and forcibly send all its employees on vacation to reduce costs, Reuters reports.

Usually, the corporate vacation season at the enterprises of the association falls on August-September, the agency notes.

“This measure is forced and is due to the current economic situation in the agricultural sector. Farmers do not have the funds to purchase the equipment they need, which leads to a significant decline in the market,” the company said in a statement.

Demand for agricultural machinery in Russia is falling due to expensive loans, due to the high discount rate of the central bank. In addition, Russian agricultural producers are facing difficulties due to high export duties, as well as rising prices for fuel and fertilizers, which makes agriculture unprofitable in many regions of Russia.

According to Rostselmash, sales of Russian agricultural machinery manufacturers fell by 76% for combine harvesters, by 49% for forage harvesters and by 48% for tractors compared to the same period in 2021.

As reported, Rostselmash has laid off about 2,000 employees since last fall.

In recent years, the leading Russian agricultural machinery manufacturer has been a beneficiary of the boom in Russian agriculture. Thanks to cheap loans for Russian farmers, it has also successfully squeezed out foreign competitors, but the Russian government has curtailed most of the preferential lending programs in this area due to the increase in spending on the war in Ukraine.

Tags: Russia, machinery