Agricultural Tractors Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

Market Overview

The global agricultural tractors market was valued at USD 60.31 billion in 2020 and is projected to register a CAGR of 4.4% over the forecast period (2021-2026).

During COVID-19, the sector has seen a sharp dip in the tractor business, and the most affected business could be the dealership network due to the disruption of the supply chain. Additionally, manufacturing units were not 100% active. Due to travel restrictions, production of goods got delayed, as supply was interrupted, resulting in a sharp decrease in tractor sales during the pandemic.

China and India lead in the number of tractors sold across countries. China has around 60.0% of its farm activities mechanized. Beijing included agricultural machinery in its ‘Made in China 2025’ campaign in 2018. The program is expected to help the country produce most of its farm equipment domestically, which is expected to increase the sales of tractors in China.

The farm mechanization level in India was recorded at 40.0%-45.0% in 2017. The penetration of farm equipment is slow, as almost 80.0% of small and marginal farmers own less than five hectares of land in the country. The agriculture sector in India has witnessed a substantial decline in the use of animal and human power in the agriculture sector. A large number of these are driven by fossil fuel-operated vehicles, such as tractors and diesel engines. This has resulted in a shift from the traditional agriculture process to a more mechanized process. Though the level of mechanization in India is lower than in other developing countries, like China and Brazil, it is certainly in a growing phase. In order to increase the mechanization level, the Indian government is promoting ‘Balanced Farm Mechanization’, by providing subsidies on various equipment and supporting bulk buying through front-end agencies, which is expected to strengthen the tractors market during the forecast period.

Scope of the Report

For this report, tractors used in agricultural operations, especially four-wheeled tractors, have been considered. The report does not cover other agricultural machinery and attachments for tractors. The agricultural tractors market is segmented by engine power (less than 40 HP, 40 HP to 99 HP, 100 HP to 150 HP, 151 HP to 200 HP, 201 HP to 270 HP, 271 HP to 350 HP, and greater than 350 HP), type (orchard tractors, row-crop tractors, and other tractors), and geography (North America, Europe, Asia-Pacific, South America, and Africa).

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Key Market Trends

Increasing Farm Mechanization in Developing Markets Driving Lower Engine Power Tractor Sales

With an engine volume of not more than 1,500 cc, these tractors occupy less space and can be used with greater flexibility. Ease of customization makes them more amenable to experimentation, and consequentially, manufacturers are willing to try new components and technologies in this segment before moving on to high-powered ones. These tractors are compact, with a mass of fewer than 4,000 lbs, and use less than 40 PTO HP to run attachments. Invariably, all these high-production, economical, and user-friendly compact tractors are being used by schools, parks, landscapers, cemeteries, and hobby farmers. Low horsepower tractors work well in soft soil conditions, such as river basins. The less than 20 HP tractors are mainly used for horticulture in India. In developing countries, the demand for lower HP tractors is high due to the low disposable income of farmers and high labor costs. Farmers prefer small and customized tractors for agricultural purposes due to small farmland sizes. Moreover, lesser fuel consumption by small tractors helps empower small and marginal farmers. Like India, the governments of developing countries are promoting farm mechanization by subsidizing the purchase of equipment and supporting bulk buying through front-end agencies.

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