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Agco names France's President Macron as former tractor factory intern

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It helps to have friends in high places.

Which may offer some hope to farm machinery groups in the French market - a particularly key one, given the country's pre-eminence in European agriculture, but one which has been an underperformer this year, following the end of a tax benefit scheme which incentivised equipment investment.

For it appears that Emmanuel Macron, France's new president, has links to the industry, with his spell as an investment banker at Rothschild not his only foray outside what has been a largely public-sector focused career.

'Factory intern'

Mr Macron's dalliance with the farm machinery industry was revealed by Martin Richenhagen, the German-born chairman and chief executive of US-based farm machinery giant Agco, after the maker of Massey Ferguson, Fendt and Veltra tractors unveiled better-than-expected results for the April-to-June period.

"We do not know exactly what the politics of the new French administration will be," Mr Richenhagen told investors.

"But we are in good relationship with the president, because he is a former Massey Ferguson intern."

Mr Macron apparently had a stint "at our Beauvais factory", in northern France, which is Agco's largest tractor plant in Europe, manufacturing more than 900,000 Massey Ferguson tractors since it was opened in 1960 (17 years before Mr Macron was born).

French weakness

As to whether the president may be minded to reintroduce the tax concessions for such capital spending, well, Agco underlined the setback that the end of the benefit had been.

In the April-to-June quarter, industry sales "declined more significantly in France from high levels in the first half of 2016, which was stimulated by tax benefits.

"Growth in the UK, Spain and Italy offset most of the decline in the French market."

Earlier in the week, Richard Tobin, chief executive of CNH Industrial, the maker of Case and New Holland machinery said that "France is still weak.

"And I don't think that we're banking in any kind of dramatic recovery in the second half.

"I think the order book is slightly better, but those are off of very low comparatives," although with France looking at a better grains harvest this year than in 2016 "we would expect it to be better in 2018".

Dairy market conundrum

Agco also flagged the boost to European prospects as a whole from higher milk prices, noting that "profitability is improving for dairy producers".

While the Western European equipment market was expected to be "fairly flat" this year, this reflected "continued weakness" in orders from cereal producers offsetting "improving demand from the dairy and livestock sector".

However, even here Mr Richenhagen noted a snag ahead in terms of the overhang of the European Union's huge stocks of skim milk powder, of some 350,000 tonnes.

"This certainly is an issue," he said.

"And the question is, what will be the solution, because if you just wait for the normal market demand in that area, this could take years to get it basically winded down."

By Mike Verdin

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