The Mexico Agricultural Machinery Market is projected to register a CAGR of 5.27% over the forecast period. Mexico has a large agriculture industry, with a vast cultivated land area. The growing agribusiness sector of Mexico is driven directly by the greater use of modern-day agricultural equipment. Planting machinery, for instance, enables crop farmers to sow with lesser labor input and greater precision. Tractors and combine harvesters are used widely across the region and are growing in popularity. The relatively shorter shelf-life of the product in this market converts to more frequent sales, and as the number of machinery owners rises, the market is bound to grow. The recovery of the agricultural sector since the last two years is driven by the counter-cyclical nature of growth and recovery in the sector, along with the increase in exports of agricultural products to Central and South America. However, the presence of significant structural inefficiencies, especially regarding the dominance of small farmers, along with slower adoption of technology, limits the growth prospects of the agricultural machinery market in Mexico.
Key Market Trends
Stable Growth in the Harvesting Machinery Segment
Crop and grain harvesting machines are basically mechanical devices, which harvest forage crops cultivated in fields. Combine harvester is an example of crop and grain harvesting machinery. These combines are used for cereal crops and other crops that require specific machinery, including soybean, corn, etc. AGCO is one of the largest manufacturers of the combine harvester in Mexico, followed by John Deere
Tractors Dominate the Agricultural Machinery Market
The tractors segment of the Mexican agricultural machinery market is projected to grow at a CAGR of 5.2% over the forecast period. Mexico’s trade barriers are negligible, owing to being the North American Free Trade Agreement (NAFTA) trading partner. Therefore, the United States and European manufacturers produce agricultural tractors and other farm equipment in Mexico. According to Secretaría de Agricultura y Desarrollo Rural (SAGARPA), in 2016, 6,503 tractors were distributed in Mexico. More than half of the tractors were marketed domestically. In 2017, the demand for new tractors increased as many tractors were reaching the end of their life, consequently, increasing sales and imports. Mexico is also the second-largest export market in agricultural equipment for the United States. Nearly 80% of the exports were for the agricultural tractors reflects on the fact that the major manufacturing operations are located in Mexico.
In the fast-growing Mexican agricultural machinery market, companies are not only competing on the basis of product quality or product promotion but are also focused on other strategic moves, in order to acquire larger share and expand their acquired market size. Considering all agricultural machinery in Mexico, the major players are John Deere followed by CNH Industrial and AGCO. John Deere already has a wide network of dealers and distributors in Mexico, which are dedicated toward the sale of its agricultural equipment in various regions of Mexico. It also has a dedicated network of dealers to deal with used machinery of the company.
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