The global farm tractors market is growing at a healthy pace across the globe, owing to the rising innovations and advancements in its technology. The growing investments by governments across the globe in the agriculture sector in order to enhance the quantities of food produce are some of the other factors expected to accelerate the growth of the market in the near future.
Used in agriculture or construction, tractors are vehicles designed to move at slow speeds while delivering high torque. This high torque in tractors and other farm machinery allows for heavy agricultural implements to be towed behind or on top of the tractor. Tractors and other farm machinery are also known to provide the power similar to that of a semi-truck.
The growing demand for agriculture produce, owing to the tremendously rising population is one of the important factors estimated to fuel the growth of the global farm tractors market in the next few years. Significant rise in demand for food produce, the farm tractors market is expected to register a progressive growth rate throughout the forecast period. The rising number of players in the market with a view to expand their product portfolio and offer improved and technologically-advanced farm tractors are some of the other factors estimated to encourage the growth of the market in the near future.
The latest report by Reportlinker indicate that the global farm tractor market is projected to reach $93.7 billion by 2025, driven by the growing world population; the rising pressure on food production, productivity and yields; And growing importance of mechanized agricultural technologies against the backdrop of spiraling labor costs and labor shortages.
The market is also gaining momentum owing to the technological advancements that are revolutionizing the farming and agricultural processes. For example, the implementation of agricultural tractors with self-driving capabilities is expected to increase productivity and efficiency in agriculture. Companies such as CNH Industrial N.V., Escorts Limited, and Deere and Company have already launched concepts for their autonomous and electric tractors. For instance, in October 2019, Deere and Company announced the launch of its autonomous concept tractor that produces zero emissions and has a power output of 500 kW. In 2018, Escorts Limited announced the launch of its autonomous concept tractor that is designed specifically for precision farming.
Key benefits of mechanization driving its importance in sustainable agriculture include increases land productivity; relieves the burden of labor shortages; decreases the environmental footprint of agriculture; increases crop quality & yield in unit area; efficient use of expensive inputs i.e. seeds, fertilizers, pesticides and water; lower food prices and higher farm profits; and makes food security goals more attainable.
Need for the replacement of existing machinery with advanced machines is expected to fuel the market growth. However, high cost of agricultural tractors is one of the prominent factors restricting market growth, especially in the developing economies. Similarly, taxes and import tariffs imposed by the governments of different countries are expected to hinder market growth. For instance, in 2017, the Republic of Turkey announced a 21% import duty on agricultural machinery imported from non-EU countries. Similarly, the government of India imposes a 29.8% import duty on agricultural tractors [Chart above].
Few of the factors driving uncertainty in labour availability and putting food security goals at risk and accelerating adoption of agricultural machinery as a coping strategy include reducing share of population working in agriculture as countries develop; increased migration of population to urban cities; industrialization and better employment opportunities in the manufacturing sector; aging society and unwillingness of the younger generation to participate in the agriculture sector; poor working conditions discourage participation in the agricultural sector; and inability of small farms and farm households to meet minimum wage requirements.
The agricultural tractors market is concentrated. Market vendors are increasingly focusing on M&A activities to increase their agricultural tractors market share. The market includes some vendors that are strong competitors to one another. Thus, these competitors invest in constant R&D to enhance their product features and differentiate themselves in the market. J.C. Bamford Excavators Ltd., Kubota Corp., Mahindra & Mahindra Ltd., Tractors and Farm Equipment Ltd., and Yanmar Co. Ltd. are some of the major market participants.
Factors such as the introduction of driverless agricultural tractors will create immense growth opportunities for market vendors. However, challenges such as the cyclical pattern of the agricultural industry will impede the growth of the market participants. To boost the agricultural tractors market demand, vendors should focus more on the growth prospects in the fast-growing segments, while maintaining their positions in the slow-growing segments.