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The global agricultural tractor market demand is expected to reach 2,467.0 thousand units by 2027, expanding at a CAGR of 3.0% over the forecast period, according to a study conducted by Grand View Research, Inc. Growing popularity of compact tractors with advanced technology, such as LiDAR and GPS, is anticipated to positively impact the market growth. Increasing demand for mini tractors that are used in small agricultural lands is expected to fuel the market growth over the forecast period. Such machines can operate in tight spaces, such as narrow rows of orchards, along with steeper inclines, due to their lower center of gravity. The ability to work on different terrains and smaller agricultural lands, coupled with better productivity and lower total cost of ownership, is increasing the popularity of smaller agricultural tractors.
Additionally, the market is expected to witness significant growth in the forthcoming years owing to growing population across the globe. According to the UN Department of Economic and Social Affairs, the world population was 7.6 billion in 2017 and is expected to reach 9.8 billion by 2050. Consequently, the global demand for food is expected to rise significantly, thereby increasing the pressure on farmers to produce more crops. This is expected to instigate farmers to be efficient in terms of land usage and choice of machinery, which is expected to boost adoption of agricultural tractors.
Several governments across the globe are undertaking initiatives to promote mechanization in agriculture to cater to the growing needs of the population. For instance, in 2017, the Indian government lowered the Goods and Services Tax (GST) slab rate on tractor parts from 28% to 18%. This is expected to reduce the total cost of tractors. However, farmers’ inclination towards traditional farming and agricultural methods is proving to be a challenge for the market.
The agricultural tractor market is characterized by high competition due to the presence of major global players, such as Deere & Company, CNH Industrial N.V., Escorts Limited, Kubota Corporation, Mahindra & Mahindra Ltd., and AGCO Corporation. These players are focusing on providing electric and autonomous tractors to gain a competitive advantage over their competitors. For instance, in February 2019, Deere & Company announced the launch of its fully electric autonomous tractor “GridCON”, which provides up to 400 hp.
Further Key findings from the study suggest:
- The market is gaining traction owing to increasing demand for autonomous tractors
- Based on engine power, the less than 40 HP segment is expected to witness significant growth in the coming years owing to increased demand from countries, such as India and China, that have smaller agricultural lands
- Latin America is anticipated to expand at a CAGR of over 2% in terms of volume from 2020 to 2027 owing to a large number of farms and agricultural lands in Brazil and Mexico
- Key agricultural tractor market players include Deere & Company, CNH Industrial N.V., Escorts Limited, Kubota Corporation, Mahindra & Mahindra Ltd., and AGCO Corporation.