The global agricultural tractors market was valued at USD 60.31 billion in 2020 and is projected to register a CAGR of 4.4 %, over the forecast period (2021-2026).
During COVID-19, the sector has seen a sharp dip in the tractor business and the most affected business could be the dealership network due to the disruption of the supply chain also manufacturing units were not 100 % active. Due to the travel restrictions, production of goods delayed, as supply is being interrupted this had resulted in a sharp decrease in tractor sales during the pandemic.
China and India lead in the number of tractors sold across countries. China has around 60.0% of its farm activities mechanized. Beijing included agricultural machinery in its ‘Made in China 2025’ campaign in 2018. The program will help the country to produce most of its farm equipment domestically, which is expected to increase the sales of tractors in China.
The farm mechanization level in India was recorded at 40.0%-45.0%, in 2017. The penetration of farm equipment is slow, as almost 80.0% of small and marginal farmers own less than five hectares of land in the country. The agriculture sector in India has witnessed a substantial decline in the use of animal and human power in agriculture sector. A large number of these are driven by fossil fuel operated vehicles such as tractors, diesel engines. This has resulted in a shift from the traditional agriculture process to a more mechanised process. Though the level of mechanisation in India is lower as compared to other developing countries like china and Brazil it is certainly on growing phase. To increase the mechanization level, the Indian government is promoting ‘Balanced Farm Mechanization’, by providing subsidies on various equipment and supporting bulk buying through front-end agencies, which is expected to strengthen the tractors market during the forecast period.
Key Market Trends
Increasing Farm Mechanization in Developing Markets Driving Lower Engine Power Tractor Sales
With an engine volume of not more than 1,500 cc, these tractors occupy less space and can be used with greater flexibility. Ease of customization makes them more amenable to experimentation, and consequentially, manufacturers are willing to try new components and technologies in this segment before moving on to high-powered ones. These tractors are compact, with a mass of fewer than 4,000 lbs and use less than 40 PTO HP to run the attachments. Invariably, all these high-production, economical, and user-friendly compact tractors are being used by schools, parks, landscapers, cemeteries, and hobby farmers. Low horsepower tractors work well in soft soil conditions, such as river basins. The less than 20 HP tractors are mainly used for horticulture in India. In developing countries, the demand for lower HP tractors is high due to the low disposable income of farmers and high labor costs. Farmers prefer small and customized tractors for agricultural purposes, due to small farmland sizes. Moreover, lesser fuel consumption by small tractors helps to empower small and marginal farmers.The government of developin countires like India promoting farm mechanisation by subsidising purchase of equipment as well as supporting bulk buying through front-end agencies.
China and India Driving Market Growth in Asia-Pacific
China has started focusing on the adoption of automated farming machinery through the introduction of driverless tractors. Owing to it, YTO Group Corporation launched its first driverless tractor in 2017 and is planning to conduct mass production as per the market demand. In order to boost the domestic production of farm machinery, the Chinese government framed a new agricultural machinery subsidy policy for the purchase of agricultural machinery, including tractors. The types of subsidy equipment cover 45 items in 23 categories and 11 categories, including farming and land preparation machinery, planting and fertilizing machinery, and field management machinery. The buyers of tractors above 60 HP and above can enjoy a subsidy of CNY 150,000.
The availability of abundant and cheap labor in India has largely confined farm mechanization to tractors. The penetration of tractors in the country is higher in Northern India, particularly in Punjab, Uttar Pradesh, and Haryana. Tractors are the largest segment in the Indian agricultural equipment category. India’s tractor export market comprises African and ASEAN countries, and it exports an average of 60,000 tractors, annually.
Indias goverment is also putting efforts for mechanisation in agriculture the aim of the government is to increase the growth of agriculture sector through its Rashtriya Krishi Vikasa Yojana (RKVY). The Scheme is being implemented throughout India with 100 percent central assistance for increasing the level of farm mechanisation in India’s agriculture sector is a part of the scheme.
The agricultural tractors market is highly consolidated, with very few players cornering the majority of the market share. New product launches, partnerships, and acquisitions are the major strategies adopted by the leading companies in the market, globally. Along with innovations and expansions, investments in R&D and developing novel product portfolios are likely to be crucial strategies in the coming years.
Reasons to Purchase this report:
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support