The Spain agricultural machinery market is expected to register a CAGR of 4.8% during the forecast period of 2020–2025. Spain's agricultural machinery is characterized by a large number of medium and large-sized enterprises, along with foreign manufacturers. Small businesses have consolidated their positions, exporting parts, while medium and large manufacturers are focused on increasing both exports and revenues. The market for agricultural machinery in Spain is impacted by factors like an optimized supply chain, productivity concern, a decline in the experienced labor force and involvement of FDI in agriculture.
Key Market Trends
Increasing Importance of Mechanization in Productivity
Agricultural mechanization in the country has shifted from traditional tools to sophisticated machinery to meet the targets of capacity enhancement, timeliness of farm operations and efficient utilization of inputs. It has also been observed that the percentage growth of tractors, pump sets, and threshers has been higher in marginal and smallholding categories as farmers are more aware of the importance of mechanization. In the current scenario, farmers are achieving higher yields by adopting technologies such as drip irrigation systems and fertigation, driving the demand in the Spanish market for agricultural machinery and technology. The Government of Spain recognizes the impact that farm technologies and machinery have on the country’s agricultural sector, where 6% of Spain’s workers are employed in agriculture, contributing to about 3% of the county’s GDP. Owing to these benefits, the government is providing subsidies to farmers, making them aware of the benefits of agricultural mechanization. The European Union spent more than USD 72 billion on agricultural development in 2016, of which close to half was spent on direct subsidies like the Single Farm Payment subsidy. The EU's Common Agricultural Policy is among the largest agricultural policies in the world that have undergone significant changes over the decades to include the technological development in equipment.
Tractors Dominates the agricultural machinery market
The usage of tractors brought about an important change in agricultural mechanization in the country. The introduction of tractors as a power source provided the possibility of covering large agricultural areas in a short period. The agricultural tractor market in the country is dominated by international players. In 2017, Deere & Company accounted for 22.2% of the market followed by New Holland 17.4%, Case IH 6.8% among others. In 2019, the total market of tractors in the country was 44,542 units. Since 2000, the mean price of an average tractor in 2019 has increased by 108.1%. Nearly half of such an increase is due to compliance with environmental and safety regulations.
In the Spain agricultural machinery market, companies are not only competing based on equipment quality and promotion but are also focused on strategic moves, in order to hold larger market shares. New product launches, partnerships, and acquisitions are the major strategies adopted by the leading companies. The market is dominated by international players. These players accounted for 80% of the market in 2019.
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