Brazil Agricultural Tractor Machinery Market is projected to grow at a CAGR of 3.9% during the forecast period (2020-2025). Agribusiness is one of the main activities in Brazil and contributes significantly to the Brazilian economy. This has led to even greater investments and developments in the market of agricultural machinery and implements in the country. Rising real wage of farm labor coupled with the growing land consolidation has created demand for the agriculture mechanization. This in turn impact the tractor sales towards a positve growth.
The recent trade war between the United States and China has promoted many U.S based companies such as AGCO Corporation to expand their operarations in Brazil to manufacture low-horse power tractors in order to avoid 25% tariff put on Chinese products. This, in turn, has driven the market growth for tractors in the country.
Key Market Trends
Farm Labor Shortage Resulting in Farm Mechanization
Farming has traditionally been a highly-labor intensive method in Brazil agriculture. But the continually rising real wage of farm labor has had a positive impact on the demand for tractors in the region, as farmers are increasingly adopting agricultural mechanization including tractors as a substitute for manual labor. According to the World Bank database, the employment in agriculture out of total employment in Brazil stood at 9.27% in 2019, as opposed to 10.18% in 2016. Moreover, the average hourly real wage for nonsupervisory hired farm workers has been increased over the last few years, which has further instigated the demand for tractors in the country.
Rising Land Consolidation Leading To Mechanization
According to Brazilian Department of Agricultures, around 70% of the farmers own 500 acres or more in the country. Manual ploughing, harvesting and other operations are found to be unfeasible and time consuming. This has led farmers to opt tractors and machineries to address many challenges such as cost, accuracy, and labour shortage. As a result, the purchase of tractors has shown a positive trend over the year. Increasing land consolidation and cost of production creates the need for mechanisation so as to increase the prodictivity. Thus making the farmers in Brazil to purchase tractor leading to increased sales of the tractors.
The agricultural machinery market in Brazil is consolidated and is dominated by global manufacturers since farmers prefer international companies for assurance of quality and after-sales services offered by the big companies. The key players in the market are AGCO Corporation, CNH Industrial, Deere and Company, Kubota Agriculture Machinery, Mahindra and Mahindra Ltd.
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