Tater Titans

Plowing a Profitable Furrow

Grimme Source PR
Grimme's got the potatoes covered.
  • Why it matters

    Why it matters

    Farming equipment maker Grimme is the global leader for technology needed for growing, cultivation, harvesting and storage of potatoes, but the spud specialists are expecting things to be slightly less rosy in 2015.

  • Facts

    Facts

    • Grimme machines are exported to 120 countries. The company’s top-of-the-line potato harvesting machines cost about €550,000 ($674,025) each.
    • This year, the Lower Saxony-based company expects it will surpass last year’s sales of €400 million.
    • Germany’s agricultural engineering industry will see sales of €7.6 billion this year, a decline from 2013’s record of €8.4 billion.
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    Audio

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Few foods in the world are as versatile as the humble potato. Worldwide sales of the starchy veg are strong, and Grimme, the farming equipment maker from Lower Saxony in northwestern Germany, is making the most of the financial harvest.

The company is the global market leader for all the technology needed to grow, cultivate, harvest and store potatoes. German business news magazine Wirtschaftswoche ranked it fifth on its list of “hidden champions,” the small and mid-sized companies that form the backbone of the German economy.

Current owner, Franz Grimme, joined the business founded over 150 years ago by his great-grandfather in 1980.

“The farmer should have the technology at his disposal to ensure the potato remains undamaged, to make the work easier – and to help him earn money with it,” he said. “The potato is an extremely sensitive crop and must be dug up gently.”

The machines themselves are constantly getting bigger. They are already at the limit of the size that allows them to travel on normal roads.

Computers and electronic technology have a solid foothold in agriculture now too. Today’s machines are expensive and are of use only a few months a year, so when they fail to operate correctly, the farmer needs a quick fix.

Grimme provides that help remotely from their headquarters in Damme. As soon as a machine is fired up, a technician can correct a malfunction via satellite.

 

“With the large, self-driving machines, that is already the rule,” Mr. Grimme said. This electronic technology has its price. At the top end, potato harvesting machines cost about €550,000 ($674,025) each.

Grimme is investing about €12 million from now through 2016 in the construction of a production plant in China.

Of course, not all farmers need high-tech machines, and Grimme delivers simpler equipment too. “In the new markets, there is also a part that goes back a step,” Mr. Grimme said. “It is the split that has made us strong in the past.”

The Grimme firm makes about 5,000 potato machines per year, and over 80 percent are exported – more than the average 75 percent export rate in the German agricultural machinery sector.

According to the German engineering trade association, VDMA, the agricultural engineering industry, to which combine-harvester manufacturer Claas belongs, made record sales of €8.4 billion in 2013. This year, the association expects sales of €7.6 billion. The decline is attributed to weaker tractor sales.

In 2010, Grimme had €193 million in sales. This year’s total will surpass last year’s sales of €400 million. The leap is also due to its two acquisitions, Kleine, a beet technology manufacturer in the western state of North-Rhine Westphalia, and the Danish vegetable technology service Asa-Lift.

Worldwide, the group has 2,000 workers. The main competition is Dewulf, a company specializing in harvesting machines, but the Belgium company is much smaller, with just 130 workers and €44 million in sales.

Mr. Grimme is reserved about 2015. “In the face of the economic slowdown, farmers are more careful and investments are being mulled over for a longer time,” he said.

The global fall in potato prices will affect sales. And the sanctions against Russia are also having an effect – he expects a 50 percent decline in sales there.

“In contrast, we see positive developments in Africa, South America and Asia,” he said. Grimme is investing about €12 million from now through 2016 in the construction of a production plant in China.

Today, Grimme machines are delivered to 120 countries, and sales and service affiliates are being set up in important cultivation regions. The company Internorm (plastics technology), Grimme Solutions (engineering services for potato processors), Ricon, a distribution company for spare parts in root crop technology, and the potato technology manufacturer Spudnik in the United States also belong to the group.

The expansion of the business to harvesting technology for vegetables such as red beets, carrots and celery roots should increase its seasonal independence. But the beloved potato is and remains the firm’s core competency.

093 Grimme-NEU-01

 

Regine Palm works on the Handelsblatt companies and markets desk. To contact the author: palm@handelsblatt.com.

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