CLEVELAND -- World demand for agricultural machinery and equipment is forecast to rise 4.8 percent per year through 2010 to $89 billion.

Fueling gains will be accelerating global economic activity, which will bolster farmers' income levels and enable them to purchase newer machinery and equipment, particularly in developing countries. These and other trends are presented in "World Agricultural Equipment," a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.

Strongest growth in agricultural equipment demand will be registered in developing countries, with China and India holding by far the best prospects. Other large developing nations with sizable agricultural sectors such as Brazil and Russia will also post healthy gains as a result of increasing mechanization of their agricultural sectors.

Besides benefitting from rising incomes, farmers in these regions will continue to strive to increase productivity through further automation and replacement of older equipment. Increasingly, draft animals such as horses and oxen used during various stages of the farming process will be replaced by agricultural equipment. Rising wages in many of these countries as well as large scale migration to urban areas will necessitate the replacement of human capital with fixed capital such as farm machinery.

Among developed regions and countries, Western Europe and the U.S. will both exhibit similar below-average gains through 2010 as a result of their having mature agricultural sectors. In addition, farmers in both these regions will be the most adversely impacted by continuing trends in favor of free trade and against protectionist measures such as subsidies for domestic producers and tariffs on imports.

Throughout the industrialized world, virtually all demand will be replacement-oriented in nature, as the farming sectors of most countries are not growing in terms of number of farms, acreage harvested and similar physical variables. Given the widespread diversity and often interrelation of applications, growth prospects for specific types of farm machinery -- tractors, combines, planting and fertilizing, plowing and cultivating, and haying machinery, etc. -- do not vary substantially when viewed at the global level.

SOURCE: Freedonia Group Inc. via Market Wire.