BEIJING (TheStreet) -- The flip side of China's ongoing urbanization program, which has been moving about 25 million rural dwellers into cities every year, is a big push for more labor-saving machines on farms and at food-processing factories.
That's good news for manufacturers of tractors, fruit-sorting machines, refrigeration systems and fertilizers, including several U.S. companies that in recent years have gotten into China by forming joint ventures with state-owned firms.
The Chinese government has been encouraging modernization of a nationwide agriculture industry that in many ways still relies on calloused hands more than gas-powered machines.
Only about 33% of the nation's corn and 69% of the rice crops are mechanically harvested every year, according to a recent Ministry of Agriculture report. And based on the monetary value of market-ready products, the ministry said, 72% of the nation's post-harvest processing tasks, such as fruit sorting and cabbage packing, are still done entirely by hand.
These percentages have been falling annually as farm cooperatives and processing companies buy more machines, often with help from government subsidy payments, and as more people leave the countryside to work in big cities. What the agriculture ministry calls the "national comprehensive mechanization" rate on the nation's farms rose to 55% in 2011 from 53% the year before.
These and other statistics point to tremendous potential for sales of agriculture equipment including tractors made in China by ventures linked to Deere & Co. (DE), Agco (AGCO), Japan's Kubota (KUBTY) and CNH Industrial (CNHI). U.S. engine maker Navistar (NAV) also has a hand in the Chinese farm machinery sector.