Commodities Prices Up Long-Term: Agco CEO

The rise in commodities prices will be long-term, due to the growing world population and a change in diet from grains to protein in emerging countries, Martin Richenhagen, chairman and CEO of farm equipment producer Agco told CNBC Thursday.

“What are the fundamentals, the growing world population, already 160 people [being born] while we speak every minute,” said Richenhagen. “We have changing diets toward more protein in emerging markets.

“All that together creates in the future, a very strong demand for farmed goods.”

Richenhagen said that countries with a meat-heavy diet need six times more in imports than they do when they eat mostly grains.

Agco’s equipment is distributed through more than 2,700 dealers in over 140 countries. Among its brands are Challenger, Fendt, Massey Ferguson and Valtra.

Over the next five years, Richenhagen expects solid growth for the company in emerging markets. Since 1960, Agco has been in a joint venture with Massey Ferguson in India and now the company ranks Number 2 in that market, he said.

“We are investing in China, and I think China will be a major market for us in five years, maybe sooner,” he added. “We will use China as a manufacturer for certain low-cost components. Fendt in Germany is already using components made in China.”