Market Trends of Europe Agricultural Tractors Industry
Rising Farm Labor Cost is Driving the Market for Tractors
Agriculture in the European Union has traditionally been a labor-intensive sector, with more seasonal immigrant workers working on farm fields in the member states. According to Eurostat, the European agricultural workforce has steadily declined by 35% over the last decade, with the workforce projected to drop to 7.9 million in 2030. Several factors have contributed to this declining trend, including a decrease in smaller family farms and significant growth in machinery and technology. However, an acute shortage of farm labor has surfaced in the region's farm fields.
According to the German Association of Agricultural Employers (GLFA), the number of seasonal immigrant laborers in Germany during the peak harvest times fell drastically in the last few years, which further led the way to a pilot project model, enabling German farmers to hire workers from Western Balkan countries till 2020. Thus, a shortage of farm labor is leading to a rise in wage rates, allowing farmers to adopt farm mechanization.
With the availability of advanced technology, coupled with the declining availability of farm labor, farmers are shifting toward using tractors in agriculture, as they aid in saving time and resources, decrease costs, and enhance productivity.
Germany is Leading the Market
Germany is one of the largest markets for agricultural tractors in Europe. Germany is s a pioneer in technological development and has a diverse industrial base. The production of tractors saw a remarkable upsurge over the past few years. Thus, Germany has become one of the leaders in producing agricultural machinery in Europe, which signifies its dominance in the agricultural tractors market. The country generates more than 27% of agricultural machinery and equipment components manufactured in Europe.
Agricultural tractors accounted for 93% of the overall German tractors market in 2021. Germany is the leading tractor exporter in Europe in terms of unit sales. Due to the booming domestic market, the export ratio over the past few years has been steady at 50-60%.
According to the European Agricultural Machinery Association, there was an increase of 5% in the preregistrations of tractors in 2020 compared to the previous year. The sales of the tractors reflected a positive trend. The farmers in the country are increasingly adopting above 50 HP tractors, as they have an improved operator's comfort level and aid in increasing the productivity of the farm work, which is leading to the market's growth.
