Insight:
- The tractor market for farming in the Asia-Pacific is growing a lot. This is because more machines are being used, tech is getting better, and there is a need for more food, especially row crop tractors.
- But there are problems too, like high prices, not enough good roads, lack of skills, tough competition, and worries about the environment that need to be fixed so the market can do even better.
The Asia-Pacific agricultural tractor market: what’s new?
The Asia-Pacific agricultural tractor market is projected to grow to $25.60 billion by 2024 and reach $33 billion by 2029. Besides, the CAGR growth rate is 5.20% for the period 2024-2029. Agriculture continues to be a key sector in Southeast Asian countries.
It is one of the basic occupations which is an integral part of the very fabric of culture and economy. Technology is developing, and the technology of tractors and other agricultural machinery is increasingly being used. This has stimulated agriculture.
In addition, other factors are driving the tractor market in Southeast Asia, including the increasing shortage of agricultural labor, rising wages, and government support for agricultural mechanization. In 2023, the Indonesian government allocated up to $538 million for the development of machinery, including tractor manufacturers.
In Thailand, the government also supports the growth of the tractor market, including tractor production. Thailand has also had new initiatives to promote and develop smart farming, smart businesses, and smart offices, including agricultural investment strategies and support policies encouraging the purchase of new tractors.
[Hình ảnh]
The Asia-Pacific agricultural machinery market is experiencing significant growth
the-asia-pacific-agricultural-machinery-market-is-experiencing-significant-growth
The agricultural tractor machinery market in the region is driven by the trend of prioritizing agricultural mechanization in developing countries, which is necessary to meet the increasing demand for agricultural production and food security. Government initiatives providing adequate credit facilities also contribute to this growth.
In Bangladesh, the Department of Agricultural Extension (DAE) reported that in 2022, approximately 95% of the land would be cultivated using walking tractors and wheeled tractors, with a significant increase in demand for higher horsepower tractors. As a result, these factors are expected to contribute to the growth of the market.
Related News
Read more >>> Vietnamese Coffee Exports Reach $5 Billion in 2024
The market trend: Row crops dominate the agricultural tractors market
Asia-Pacific has the dominant product segment of row crop tractors for the tractor market due to the dependability of row crop tractors and their popularity based on the predominant forms of crops within the region. Agricultural mechanization for sowing and management is necessary in these areas, where crops including rice, wheat, and corn take up over 50% of the regional agricultural land.
These most versatile tractors can perform each sort of work from planting to harvesting, which is the most economical option for farmers. Their compatibility with advanced technologies, such as GPS, aligns with the region’s shift towards precision agriculture.
Row crop tractors serve both small and large farms economically, with support from government subsidies. Row crop tractors are being equipped to face the increasing mechanization and growing commercial agriculture trends across a very diverse agricultural landscape in the Asia-Pacific region.
Intensifying global demand for agricultural products matched with supportive government policies, technological advances, and the increase in cultivated areas have proved beneficial for the growth of the row crop tractor market. For example, according to the FAO, rice cultivated areas in India stepped up from 45.7 million hectares in 2020 to 46.4 million hectares in 2022, reflecting a rising demand for tractors for land preparation and cultivation.
These factors are projected to significantly boost the demand for row crop tractors, increasingly recognized as a versatile alternative to manual labor, especially with declining labor productivity leading to increased production costs. For example, China experienced a 4.27% decrease in labor productivity in 2023 compared to the same period last year, compared to a 4.78% growth in the previous year.
Read more >>> Commercial Machinery Market Forecast 2024-2028
Opportunities and challenges in this market
The growing market for agricultural tractors
The phenomenon is coupled with a significant population growth in the Asia-Pacific region, which has quite a large area growing further- requiring increased amounts of food. As part of this phenomenon, urbanization accompanied a growth in the middle-income class which not only demands more produce but also requires better produce and a wider variety of agricultural products. As such, modernization of agriculture has become necessary so that increased production and productivity will meet the increased demand.
Much of agricultural productivity across many regions and areas is still low owing to primitive methods of farming. In addition, there is an influx of labor moving from rural to urban areas, leaving a shortage of agricultural workers in rural sectors.
Agricultural mechanization becomes an essential solution to increase productivity, reduce labor intensity, and meet production demands. A lot of the governments in the region are already cognizant of that fact, and they push for the adaptation of mechanization through public policies and subsidies, including preferential credit schemes to facilitate the adoption of agricultural machinery.
The development of technology is bringing new opportunities to the agricultural tractor industry. Smart tractors, integrated with GPS, sensors, and data management systems, allow for optimized farming efficiency.
Using renewable energy sources such as electricity or biogas in tractors is becoming increasingly popular, contributing to sustainable agricultural development. Precision agriculture is also being widely adopted, utilizing tractors to perform farming operations precisely, saving resources and increasing productivity.
The agricultural tractor market in the Asia-Pacific region is extremely diverse, with various segments and different needs. From small farms to large-scale operations, from crop cultivation to animal husbandry, each segment requires tractors with distinct features and configurations.
Demand also varies in terms of price segments, from low-cost tractors to high-end models, suitable for the economic conditions and intended use of each region. Furthermore, the diversity of crops and farming methods also creates demand for various specialized tractor types.
The development of the tractor supply chain, from manufacturing to distribution and after-sales service, is opening up many opportunities for related businesses. Close linkages between stages in the supply chain help enhance efficiency and reduce costs. E-commerce is also becoming an important distribution channel, helping businesses reach customers in remote areas and reduce transaction costs.
Challenges of the agricultural tractor market
Although it bears fruitful promises, the tractor market has many difficulties that hinder its complete growth. Affordability, lack of infrastructure, poor skills, stiff competition in the market, and many environmental and social factors prove to be barriers for any farmer to their business.
- Affordability: Farmer affordability is perhaps the biggest challenge in the agricultural tractor market. Most farmers in the region have little income which makes accessing expensive tractors somehow difficult. Access to credit for purchasing tractors is also limited, especially in poor rural areas. Furthermore, the prices of input materials and tractors can fluctuate, affecting farmers’ investment decisions.
- Poor infrastructure: Poor infrastructure is a significant challenge for the use of agricultural tractors. Undeveloped rural transportation systems make it difficult to transport and maintain tractors. Many areas lack electricity or have unstable power supply, affecting the use of electric tractors or related technologies. Additionally, maintenance and repair infrastructure for tractors is limited, especially in remote areas, causing difficulties for users.
- Skills and knowledge: Many farmers lack sufficient knowledge and skills to operate tractors effectively. This lack of operating skills can lead to inefficient use or damage to machinery. Additionally, farmers also need to be equipped with knowledge about regular maintenance to ensure tractors operate reliably and reduce repair costs. Accessing and using new technologies in tractors is also a challenge due to a lack of training and knowledge.
- Intense competition: There is stifled competition amongst various manufacturers from within and outside Asia-Pacific in the agricultural tractor market of this region. This competition is not only about price but also concern over the quality of products and services offered. The prevalence of counterfeit tractors and parts is also a pressing issue, affecting the reputation of genuine manufacturers. Large brands have advantages in terms of reputation and market share, creating challenges for new entrants to the market.
- Environmental and social factors: Climate change is causing negative impacts on agricultural production, reducing the effectiveness of tractor use. Agricultural mechanization, if not implemented carefully, can also exacerbate social inequality, especially for poor farmers. The use of tractors can also cause environmental pollution if there are no effective management and usage measures.
The Agricultural tractor market in Asia Pacific is witnessing huge opportunities ringing challenge bells to businesses. To make a successful foray, businesses have to understand the market well, offer the appropriate solutions, establish some very good contacts, invest in technology, and go for sustainable growth. Facing and overcoming these challenges will help businesses maximize opportunities and achieve success.
Conclusion
The agricultural tractor market is growing very rapidly due to the increased mechanization coupled with advancement in technologies capable of creating opportunities for all actors, especially soon. To put it briefly, this highly dynamic market has brought opportunities along with challenges, which make awareness of the market as well as adaptability essential in the process of success.
