Global Farm Tractor Market: Industry Analysis and Forecast (2024-2030)

In 2023, the farm tractor market was valued at USD 73.67 billion. By 2030, the global farm tractor market is projected to reach USD 104.35 billion, growing at a compound annual growth rate (CAGR) of 5.1%.

Overview of the Farm Tractor Market:

The worldwide agricultural business is facing production-specific challenges because to the increasing demand for food, the rapid population growth, water shortages, the lack of arable land, and the decline in soil fertility. Consequently, mechanisation innovation is on the rise, which is anticipated to boost farming efficiency. The 56th most traded goods worldwide is a tractor. 2019 saw a -4.59% decline in tractor exports and a total trade volume of 57 billion USD. Tractors that are traded in account for 0.31% of global trade. From small family farms to massive multinational agricultural holdings, agriculture has developed into a complex and diverse enterprise on a global scale.

As the world's population increases, food poverty and malnutrition especially in developing nations have emerged as significant worldwide issues. Based on present and projected growth rates, the world's population is predicted to reach about 10 billion people by 2050. The adoption of mechanised solutions is being driven by a number of macroeconomic and intrinsic factors, including population growth and demand, urbanisation, a surge in agri-exports like tractors, improved agricultural credit flow, labour migration, shortages, and agricultural, social, and economic growth drivers.

Market Dynamics for Farm Tractors:

Tractor demand is rising as a result of precision farming and the growing use of agricultural technologies to boost output. The tractor business is also being driven by the increasing number of farm training programs that encourage the widespread use of agricultural machinery. The automation of important agricultural operations is being aided by financial aid and subsidies from the governments of various developing countries. Many technological advancements have led to the development of contemporary tractors with built-in GPS and telematics systems.

The industry is growing as a result of the technological innovations that are changing farming and agricultural procedures. It is anticipated that self-driving farm tractors will increase industry output and efficiency. Concepts for automatic and electric tractors have been made public by CNH Industrial N.V., Escorts Limited, and Deere and Company. For instance, in October 2019, Deere & Company announced the release of their autonomous prototype tractor, which produces 500 kW of power and emits no pollutants. Furthermore, Escorts Limited declared that their autonomous prototype tractor, designed especially for precision farming, would make its debut in 2019.

The market is anticipated to expand because to the need for better machines to replace the existing equipment. However, the expensive price of agricultural tractors is one of the main issues impeding market expansion, especially in developing nations. In a similar vein, import taxes and levies imposed by different governments are anticipated to hinder market expansion. For instance, the Republic of Turkey announced in 2019 that it will impose a 21 percent import tax on agricultural gear purchased from countries outside the European Union. The Indian government also levies a 29.8% import tax on farm tractors.

The use of mechanisation in farming and other agricultural tasks is being further promoted by government initiatives worldwide. For instance, the Indian government introduced the "Macro-Management Scheme of Agriculture," which offers tractors with PTO horsepower up to 35 a 25% subsidy.

In a similar vein, the Canadian government launched the "Canadian Agricultural Loans Act" (CALA) program, which provides farmers with loans up to USD 500,000 for building repairs, land purchases, or tractor purchases. Such actions, along with an increasing desire for operational efficiency and rising labour costs, are anticipated to fuel demand for farm tractors during the projection period.

Impact of COVID-19 on the Farm Tractor Market:

Worldwide, COVID-19 has affected many different industries. One of the sectors most affected is the tractor sector. Tractor sales in this sector have drastically decreased as a result of supply chain interruptions and partially operable production facilities. The dealership network may be the company most impacted. Tractor sales fell precipitously during the pandemic as a result of delayed production and disrupted supplies due to the government's lockdown and travel restrictions. In addition to the stoppage, the company has had a supply deficit during the peak harvest season. In 2022, tractor sales are soaring, but the industry is having trouble meeting demand because of supply chain problems, such as a tyre shortage.

Demand for agricultural machinery, particularly tractors, increased in the last stages due to increased Kharif sowing, stable financial flows to farmers, timely and consistent rains worldwide in June and July, continued increased government support in rural areas, and the lifting of lockdown restrictions. Consequently, the tractor market has not been significantly impacted by the worldwide pandemic. Tractor volume in India is anticipated to increase over time as a result of the Indian government's initiatives in rural development and farm mechanisation, including increasing rural pay and lowering the shortage of farm labour. Tractor registrations rose 16.11% to 6,44,778 units in 2020–21 from 5,55,315 units in 2019–20, suggesting that nothing has changed overall.

Analysis of Segments:

The market is divided into three segments based on power output: less than 40 horsepower, 41 to 100 horsepower, and more than 100 horsepower. In 2019, the market was led by the sub-40 horsepower sector, which accounted for over 60% of the entire volume. This is because of the benefits of contemporary agricultural tractors, which include their compact size, affordability, and ability to do all necessary agricultural duties. As more agricultural tractors are used in developing nations, the industry is anticipated to expand during the predicted years.

Throughout the projection period, agricultural tractors with engine power ranging from 41 to 100 horsepower are expected to enjoy significant growth due to rising demand from developed regions like North America and Europe. Compared to emerging markets like China and India, these regions have a far greater adoption rate of agricultural technology. As the need to serve farmers in these regions increases, so does the demand for these agricultural tractors. In 2019, over 10% of the market was made up of agricultural tractors with more than 100 horsepower. In many European countries, such as Germany, Turkey, and France, there is a growing need for high-capacity agricultural tractors.

The market is divided into two-wheel drive and four-wheel drive segments based on the kind of driver. In 2023, 2WD tractor transmissions will expand at a negative pace due to the pandemic, which will lower tractor sales overall. Approximately 97–98% of 2WD tractors are sold worldwide. Large field tasks requiring a great deal of flexibility are best suited for 4WD tractors. By 2030, the amount will be 50% higher than it was in 2020.