Market Trends of Utility Tractor Industry
Growing Preference For Farm Mechanization
- Precision farming and the increasing adoption of farm technology to boost production are driving up demand for utility tractors in minimum arable landholdings across the globe. The growing number of farm training programs promoting the use of agricultural machinery on a wide scale is also driving the tractor industry. Moreover, governments in several developing nations are providing subsidies and financial aid to help automate key agricultural processes.
- Furthermore, modern tractors with pre-installed GPS and telematics systems have emerged due to different technical breakthroughs. The global agriculture tractor market is likely to be driven by the rising popularity of automated tractors and the widespread use of wireless connectivity for remote monitoring, which can be used for agriculture purposes.
- Agricultural mechanization is essential to increase farmers' income in modern agriculture. However, the use of machinery for crop production in China is inefficient. According to a study conducted by China Agricultural University (CAU), Beijing, in 2020, the national crop planting and harvesting mechanization rate reached 71%.
- The total mechanization rate of planting and harvesting exceeded 95%, 85%, and 90% for wheat, rice, and maize, respectively. To accelerate agricultural mechanization, the Chinese government issued a series of policies to encourage farmers to use machinery, including financial subsidies for machine purchases and machine operations and support for cooperatives to provide machinery for individual farmers.
- Farmers in the Asia-Pacific region also seek utility tractors with tailored features to fulfill their needs for effective farming. So, to meet consumer demand, many international and domestic agriculture machinery manufacturers are developing new technologically advanced utility tractors which can handle various farming applications to push the market to grow in the future.
- In 2022, John Deere US launched Gtaor Utility Tractor for Farmers. The AutoTrac-assisted steering system increases operator productivity by maintaining consistent, repeatable accuracy and efficiency as the vehicle moves across the field. With AutoTrac engaged, farmers can remain alert and focused on controlling machine settings and varying field conditions. Farmers use the utility tractor for precise grid sampling, spraying, and field boundary creation.
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Asia-Pacific Dominates the Market
- Despite abundant and cheap labor in India, there has been a growing demand for food, which has led to an increase in the adoption of farm mechanization, particularly in the form of tractors. This is also true for China, where there has been a similar trend toward mechanization in agriculture. For several reasons, farmers in India and China are increasingly turning to mechanization. One reason is the growing demand for food due to population growth and urbanization, which has led to a need for increased productivity in agriculture. Another reason is the rising cost of labor, which has made it more cost-effective to invest in machinery.
- The penetration of utility tractors in the country is higher in North India, particularly in Punjab, Uttar Pradesh, and Haryana. In India, under the mechanization component of the Macro-Management of Agriculture Scheme, by the Indian government, there is a provision of subsidy to promote agricultural mechanization, including 25% of the cost limited to INR 30,000 for buying tractors of up to 35 Power-take-off (PTO) HP. In India, custom hiring services have benefitted smaller farmers, and a new breed of entrepreneurs who operate utility tractors for the benefit of small landholders has emerged. These factors will lead the market to grow in the region during the forecasting period.
- The trend behind the increase in farm mechanization in China has been increased agricultural investments and the government's push toward farm mechanization. The investments in farm mechanization create the demand for utility tractors in the Asia Pacific. According to data from the National Bureau of Statistics of China, China produced 617,700 tractors in 2019. Large and medium-sized tractors gradually replaced small tractors.
- By the end of 2019, China boasted of 22.24 million agricultural tractors, including 4.44 million large- and medium-sized tractors. China has also introduced the 'Made in China 2025' scheme, which focuses on producing 90% of its agricultural equipment with high-end machines, like agricultural tractors, holding a one-third share of their segments by 2020. This, in turn, boosts indigenously produced tractors and propels the country's agricultural tractor market.
- Utility Tractors are being used for the agricultural process, and major players in the country are contributing to it, such as Mahindra & Mahindra and John Deere, with the help of their products, are contributing a lot to the agricultural practices carried out in the region to increase the market growth in the coming years. In developing countries, the demand for 35HP - 100HP tractors is high due to the low disposable income of farmers and high labor costs. Farmers prefer small and customized compact/utility tractors for agricultural purposes due to small farmland sizes. Moreover, lesser fuel consumption by small tractors helps to empower small and marginal farmers.
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