Future Of Agricultural Future Of Agricultural Machinery in the United Machinery in the United

States States

UNACOMA UNACOMA General AssemblyGeneral Assembly

21 June 200721 June 2007

Charlie O’Brien

Vice President – Agricultural Services

Agriculture Equipment IndustryAgriculture Equipment Industry

60,000 employed in equipment mfg.60,000 employed in equipment mfg. $20.1 billion in revenue$20.1 billion in revenue

Total economic impact:Total economic impact:• 250,000 jobs250,000 jobs• $82.0 billion in revenue$82.0 billion in revenue

Source: U.S. Agriculture Equipment: Powering Jobs and Dollars, Global Insight, March 2007Source: U.S. Agriculture Equipment: Powering Jobs and Dollars, Global Insight, March 2007

Current Trends Influencing Current Trends Influencing Agricultural Machinery Agricultural Machinery

BusinessBusiness

Number of Farms in USNumber of Farms in US

US relies on approximately 100,000 larger

farms for most of its food and fiber production

Agricultural TrendsAgricultural Trends

Less than 2% of the U.S. population today works Less than 2% of the U.S. population today works in agriculture.in agriculture.

It is estimated that at the turn of the 20It is estimated that at the turn of the 20 thth century, century, one farmer in the U.S. could feed 25 people, one farmer in the U.S. could feed 25 people, where today, that ratio is 1:130 (in a modern where today, that ratio is 1:130 (in a modern grain farm, a single farmer can produce cereal to grain farm, a single farmer can produce cereal to feed over a thousand people). feed over a thousand people).

With continuing advances in agricultural With continuing advances in agricultural machinery, the role of the farmer will become machinery, the role of the farmer will become increasingly specialized and rare.increasingly specialized and rare.

Automation continues to be criticalAutomation continues to be critical

Farm Equipment Continues Farm Equipment Continues to Increase In Size and Technical to Increase In Size and Technical

UtilizationUtilization

Biggest Agricultural Influence - Biggest Agricultural Influence - 20072007

Energy NeedsEnergy Needs

9.5 Million Bls per day -2025

U.S. Flex Fuel VehiclesU.S. Flex Fuel Vehicles Could Exceed 22 Million by 2015 Could Exceed 22 Million by 2015

(1) Currently 6.0 million flex fuel vehicles (FFVs; assumed growth of 1.4 million in 2007, 1.6 million in 2008, 1.8 million in 2009 and 2.0 million per year after 2010 (2010 and beyond data according to public statements made by Ford, GM and Chrysler).(2) Calculated assuming 600 gallons of E85 used each year per FFV. (Source: EI A projects 500 gallons of gasoline per year per vehicle assumes 20% mileage loss compared to conventional).

Source: Renewable Fuel Association

By 2025, America’s farms, forests By 2025, America’s farms, forests and ranches can annually produce:and ranches can annually produce:

86 billion gallons of ethanol86 billion gallons of ethanol

1.1 billion gallons of biodiesel1.1 billion gallons of biodiesel

932 billion kwh of electricity932 billion kwh of electricity

15.45 quads of energy from biomass15.45 quads of energy from biomass

Source: USDA

2007 Corn Outlook2007 Corn Outlook

Corn 87 Million acres Corn 87 Million acres will be planted in will be planted in 20072007

Highest planted acres Highest planted acres of corn since 1946of corn since 1946

Production expected Production expected to fall short of to fall short of demand pulling demand pulling stocks of corn lowerstocks of corn lower

8.7 million acres8.7 million acres

Prices expected at Prices expected at $3.60/bushel up $.40$3.60/bushel up $.402.15 billion bushels 2.15 billion bushels used for ethanol used for ethanol production in 06 production in 06 compared to 3.2 compared to 3.2 billion in 07, a 50% billion in 07, a 50% increase increase

Compared to 2006Corn Facts

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

Year

Mill

ion

tons

Soybeans Corn Grain Wood Residue Straw Stover Switchgrass

AE ScenarioAE Scenario

Ethanol ProductionEthanol Production

New Machinery ChallengesNew Machinery Challenges

Greater corn yieldsGreater corn yields More biomassMore biomass

New Crop typesNew Crop types

Equipment and BiofuelsEquipment and Biofuels

PlantingPlantingTillage/Chemical ApplicationTillage/Chemical ApplicationHarvesting Harvesting

Equipment and BiofuelsEquipment and Biofuels

Hay/Forage HarvestingHay/Forage Harvesting ForestryForestry

Meeting the ChallengeMeeting the ChallengeResearch, Research, ResearchResearch, Research, Research

“One Pass” over the field will be critical because of energy expense

The FutureThe Future

New Machinery Types meeting ethanol New Machinery Types meeting ethanol demand.demand.

Biodiesel and alternative fuelsBiodiesel and alternative fuels Further Commercialization of GPSFurther Commercialization of GPS ISOBUSISOBUS Further efficiency gainsFurther efficiency gains

Thank YouThank You