Latin America Agricultural Machinery Market is projected to grow at a CAGR of 3.8% during the forecast period (2020-2025).
- Farmers in Mexico, Argentina, and Brazil are accepting mechanization in their farms, and are supported by government subsidy programs, thereby increasing the demand for agricultural machinery, especially tractors, which is on the rise in the region.
- The area under harvest in the region is increasing and farmers have been able to generate more income as compared to previous years, and hence, they have higher dispensable incomes to invest in machinery and other agricultural inputs.
- The Central and South American agricultural machinery market is dominated by local market players who are introducing new technologies to attract the attention of farmers.
- The United States is one of the largest exporters of agricultural machinery to the region. But recently, imports from the Central and South American region declined because of regulation on import taxes. Trade disagreement between the United States and Mexico has led to declining demand from the country. China and Canada are the two other major exporters of agricultural machinery to the region.
Key Market Trends
Increase in Area Harvested in Central and South America
There has been a significant increase in the agricultural land under cultivation in Argentina, Brazil, and Mexico. The Pampas region has more than two-thirds of the Argentine agricultural land, and the average size of the cultivated landholding in the region is 533 ha, of this farmers generally own 10-15% of the land and rest of the land is leased in yearly. Family farms have around 84% share in the Brazilian agriculture sector, while the other 16% is comprised of non-family farms.
Smaller farms dominate more than 90% of the agricultural land in Mexico, and hence, the average farm size in Mexico can be estimated at around 25 ha, owing to the rise in the number of smallholder farms under 5 ha, as well as large farms, greater than 100 ha.
Brazilian Tractors Dominate the Market
The use of tractors brought about an important change in the agricultural mechanization in the country. The introduction of tractors as a power source provides the possibility of covering large agricultural areas in short periods. Due to the significant increase in row crops and horticultural crops, there is increasing usage of tractors. The continuous decrease in the import of tractors in Brazil had a significant impact on market growth. In 2016, the revenue generated from the import of tractors was around USD 46.1 million, a decrease of 40.1% from 2015. The decrease in revenue generated was attributed to the increase in the price of agricultural commodities and the growth of Brazil’s large and prosperous domestic market for food and other agricultural products.
The market is highly competitive owing to the presence of few prominent players, accounting for more than half of the market. The key players in the market include Deere and Company, AGCO Corporation, CNH Industrial N.V., Iseki & Co., Ltd., and Kubota Corporation. The main strategy adopted by the key players has been to invest in R&D to encourage innovation and maintain a strong market base. The advent of advanced technologies like Artificial Intelligence, Robotics, and growing number of government initiatives have driven the demand for agricultural machinery to rise.
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