Farm Tractors Market

Market Overview

The farm tractors market size was valued at 63.9 USD billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 5.75% from 2022 to 2030 and reach around 105.6 USD billion by 2030.

A Farm Tractor is a technical vehicle designed to deliver high torque at low speeds. Due to developments in tractor technology and increased innovations in the industry, the market for farm tractors is predicted to grow at a firm rate. Increasing government investment in agriculture to boost food crop production boosts the market. Due to increasing labour costs, a scarcity of skilled labour, rising cereal import and export, and increasing demand for productivity and operational efficiency, the debouching trend of mechanization is surfacing in all industries worldwide. 

Farm operations such as ploughing, harvesting, and digging have become more efficient thanks to automation, which has reduced the workforce. Farm tractors assist in the loading and unloading of agricultural products and the transportation of diverse crops, reducing the need for animals in agriculture.

Market Dynamics

Market Drivers

Compact Size and Low Cost of Farm Tractors to Drive its Adoption

Due to their small size, low cost, and benefits connected to all general agricultural tasks, the sector with less than 40 horsepower has the largest market share. Low horsepower farm tractors will soon become more prevalent in developing economies. Due to rising demand in developed nations like Europe and North America, the 41–99 hp category is predicted to increase significantly during the projection period. Due to increasing population and food demands, China and India are the primary users of 41–99 horsepower agricultural tractors.

Government Support with Farm Loan Waivers and Credit Finance for the Farmer

Farm loan forgiveness programmes encourage farmers to purchase farm equipment like tractors. Governments created various initiatives worldwide to relieve farmers of their debts and stimulate farm mechanization. Farm policies in 53 countries–all OECD, E.U. members, and 12 significant emerging economies–provided an average of USD 728 billion each year in direct support to farmers, according to the Organization for Economic Co-operation and Development (OECD). The Maharashtra (India) government introduced the Mahatma Phule Farm Loan Waiver Scheme. It also established a scheme for small and marginal fruit and vegetable growers called Maharashtra Agro Business Network Project (Magnet).

Subsidies from the government are critical in a country's agriculture sector. The U.S. Farm Service Agency (FSA), for example, offers guaranteed and direct farm ownership and operation loans to family-size farmers who are unable to acquire commercial credit through a bank, farm credit system institution, or other lenders. Land, cattle, equipment, tractors, feed, seed, and supplies can all be purchased with FSA loans. Various lending initiatives, including direct farm ownership down payment programme, were also introduced by the U.S. Department of Agriculture. The maximum loan amount increased from USD 250,000 to USD 300,000, and the amount insured on conservation loans increased from 75% to 80%. This has aided the massive growth of the farm equipment market.

Versatile Features of Four-Wheeler Drive to Surge Its Adoption

During the forecast period, the four-wheel-drive segment will dominate the market. The four-wheeler drive tractor has a dynamic movement of all four wheels, making it adaptable and appropriate for all agricultural farming operations. It also has a better ground grip than a two-wheeler drive tractor, so it's so popular for tilling, livestock operations, crop protection, mowing, slashing, hauling, and loader applications. As a result, demand for four-wheel-drive tractors is increasing dramatically in emerging countries. Due to its reduced cost, the two-wheeler drive is expected to be in great demand in developing and undeveloped economies such as India, China, Ghana, and Nigeria, among others.

Market Restraints

Tractor Renting Market Expansion

Farm equipment purchases, such as tractors and harvesters, are a significant investment in agricultural activities and account for most of the global rental industry. The price of farm machinery represents all of the steps involved in developing, manufacturing, and distributing the equipment. Due to small farmers' inability to invest a significant sum of money, farm equipment adoption in emerging countries is low.

Farmers lease farm machinery to increase productivity and turnaround time, which improves the efficiency and profitability of their business. Renting farm equipment is more cost-effective than acquiring agricultural equipment with a typical loan from a financial institution. The global shortage of farmworkers and growing labour wages have fueled the growth of farm equipment leasing enterprises. Modern technology in rental agriculture equipment is becoming increasingly crucial for operational efficiency and profitability. It allows small-scale farmers to rent high-cost farming equipment to increase their output. It enables small-scale farmers to hire high-cost farming equipment to produce more efficient and diverse crops in less time.

Market Opportunities

Precision Farming Adoption Increases Demand for Agriculture

Farmers must focus on efficiency and productivity to drive company success because the agriculture industry is constantly under pressure to provide agricultural products to meet the rising population. Precision farming is becoming increasingly popular among farmers who seek to produce more with less. This farming technology can address the issue of global food scarcity effectively. This technology also allows farmers to enhance production and improve operational efficiency, reducing the gap between supply and demand for agricultural products. Precision farming technology allows for more efficient use of water, seeds, soil, fertilizers, and agricultural equipment, resulting in higher yields and higher quality.

Regional Analysis

India to Spearhead Asia-Pacific’s Farm Tractors Market

The Farm Tractors market size in the Asia Pacific was valued at 23.92 USD billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 5.6 % from 2022 to 2030 and reach around 40.07 USD billion. Agriculture is the primary source of revenue in Asia-Pacific. It is expected to remain so during the forecast period. It is a critical factor in growing the region's agricultural output and the most significant contributor to India's regional market for farm tractors. India is the world's top producer of pulses and jute, according to the Food and Agriculture Organization (FAO). It is the second-largest producer of vegetables, fruits, cotton, groundnuts, sugarcane, wheat, and rice globally. The price of farm machinery represents all of the steps involved in developing, manufacturing, and distributing the equipment. Due to small farmers' inability to invest a significant sum of money, farm equipment adoption in emerging countries is low.

It is also a significant producer of plantation crops, spices, poultry, fish, and livestock. India's economy relies heavily on agriculture. The Tractor Manufacturing Association (TMA) reported that 63,447 units were sold in India. Deere & Company also stated that most of their tractors sold in the United States are manufactured in India. 

Europe’s Farm Tractors Market to Be Backed by the Presence of Massive Agricultural Lands: Due to the enormous agricultural fields in many European countries, such as Spain, Denmark, Hungary, and the Netherlands, Europe is predicted to be the second-largest market for farm tractors. Farmland in Europe accounts for about 38% of the total land area. Over the forecast period, these mandates are expected to move the regional market for farm tractors forward. Likewise, major farm tractor manufacturers such as CNH Industrial and CLAAS KGaA mbH encourage regional market growth.

The Farm Tractor market size in North America was valued at 20.6 USD billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 5.6 % from 2022 to 2030 and reach around 33.64 USD billion.

Segmental Analysis

The farm tractors market share is segmented by engine power, drive type, Operation, and region.

The market for farm tractors is divided into four categories based on engine power:

• Less than 40 horsepower
• 40 horsepower to 80 horsepower
• 81 horsepower to 120 horsepower
• 121 horsepower to 180 horsepower
• 181 horsepower to 250 horsepower
• More than 250 horsepower

The segment with less than 40 horsepower had the most significant market share, and this technology is likely to continue during the projection period. All agricultural operations are well-suited to this tractor line. Furthermore, they are more compact and less expensive than the other segments. As a result, demand for these tractors is expected to increase in the coming years. Because of the growing demand for high capacity tractors with greater comfort in developed countries worldwide, the 40HP to 80HP category is predicted to rise significantly over the forecast duration. The Farm Tractors market size for 40-99 H.P. was valued at 20.4 USD billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 5.6 % from 2022 to 2030 and reach around 33.2 USD billion.

The market is divided into orchard tractors, row-crop tractors, and other tractors based on Design Type. Over the forecast period, the Orchard tractors segment is expected to increase the most. These tractors are small and lightweight, ideal for various agricultural tasks. Furthermore, when compared to other sorts, they are inexpensive. The segment is expected to rise during the projected period due to the increasing adoption of orchard tractors in emerging nations.

The market for farm tractors is divided into two categories based on drive type: 2WD and 4WD (4WD). The demand for high-power agricultural tractors to execute various agricultural tasks efficiently is likely to generate significant growth in the 4-wheel drive (4WD) segment throughout the forecast period. 4WD tractors, for example, can readily handle substantial agricultural operations like tilling and sowing. All four wheels of the tractors take power from the engine in four-wheel drive—tractors with 4WD offer improved performance, speed, and less slippage. Over the projection period, all of these factors are expected to propel the 4WD segment forward.

The market for farm tractors is divided into two types based on Operation: manual and autonomous. Over the projection period, manual tractors are expected to develop significantly. The high availability of manual tractors fuels the segment's expansion. Manual tractors are less expensive than autonomous tractors, and farmers can choose from a wide choice of manual tractors. The autonomous tractors segment is expected to develop at a moderate rate during the projected period. Manufacturers are investing in developing electrically powered autonomous tractors to diversify their product offerings. The development of electrically driven autonomous tractors is likely fueled by government initiatives to minimize carbon emissions from automobiles.