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Higher costs of raw materials are hurting China's farm machinery industry. While sales are increasing, the efficiency of the machines is not meeting the industry's standards. Here's more.

Higher costs in raw materials are affecting Chinese farm machinery manufacturers. Since mid-2010, prices of raw materials like rubber, iron, and steel have shot up, hurting the industry significantly.

While the yearly sales quantity has gone up, the efficiency of the machines is failing to meet industry standards.

According to an executive from Shandong Juming Machinery, higher production costs has worsened the situation.

[Gao Tao, Deputy Manager of Shandong Juming Machinery Co.]:
"Though compared with the same period last year, our sales volume has increased 135 percent, the efficiency has failed to meet the expected target due to rising cost of raw materials, labor, and logistics."

According to the China Farm Machinery Industry Association, the Chinese regime has more than 10,000 farm machines manufacturers—next to the United States.

Manufacturers are reluctant to increase the prices of farm machines to reflect higher production costs because they don't want a price hike to dampen current brisk sales.

But, absorbing the extra costs is a short-term band-aid, when many farm machine industries are hit hard by soaring production costs.