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Dismal French harvest to cast shadow over tractor sales into 2017

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France's agricultural machinery market is defying broader European stability, thanks to the hangover from a dismal grains harvest - which may continue to bite next year.

CNH Industrial, the maker of Case and New Holland equipment, on Monday signalled a dent to demand in the French agriculture market, which had made for "unfavourable industry volume in the small grain sector" in Europe overall in the July-to-September quarter.

The setback "is France", said Rich Tobin the CNH Industrial chief executive, adding that the poor conditions in the country had been reflected in vehicle production too.

Combine output in the group's Europe, Middle East and Africa division "is largely flat… with the exception of France," Mr Tobin said, "France being down significantly".

'Harvest was so bad'

The comments chimed with those last week from rival Agco, the maker of Massey Ferguson and Fendt machinery, which said that its sales growth in Europe in the July-to-September quarter would have beaten the 1.7% it reported were it not for a contraction in French takings.

"Sales growth in Germany and the UK was partially offset by declines in France," Andy Beck, the Agco finance director, told investors, flagging the dent to French farm earnings from a rain-ravaged grains harvest, which saw soft wheat output collapse some 30%.

While farmers had received the fillip, announced in February, of a E500m cut to social security payments in an effort to boost their sagging finances, the impact had been offset by the poor harvest.

"The tax benefits that farmers have had this year are being minimised just by the fact that the harvest was so bad and their income levels are going to be down," Mr Beck said.

Outlook for 2017

Martin Richenhagen, Agco's German-born chief executive, added that the weakness in the French market may continue into 2017, defying expectations of a "flattish" performance for Europe as a whole.

"Some markets will do better, and some will be more difficult," he said.

"I talked about the overall blended view, and part of that view is that France will most probably go down and other markets will go up slightly."

By Mike Verdin

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