LONDON--(EON: Enhanced Online News)--Technavio market research analysts forecast the global tractor engines market to grow at a CAGR of close to 7% during the forecast period, according to their latest report.
“Therefore, the absence of an organized rental market for tractors in APAC works to the advantage of the tractor engine market as more farmers are committed to buying their own tractors”
The market study covers the present scenario and growth prospects of the global tractor engines market for 2017-2021. The report also lists high power engine and low power engine as the two segments based on engine power. The low power engines accounted for close to 83% of the market share in 2016.
According to Praveen Kumar, a lead analyst at Technavio for powertrain research, “The popularity of low power tractors can be attributed to both the suitability of such tractors to a large addressable geographic region, their affordability, and subsequent low running and maintenance costs.”
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Technavio automotive analysts highlight the following three market drivers that are contributing to the growth of the global tractor engines market:
- High labor wages
- Developing global agriculture industry
- Unorganized tractor rental market in APAC
High labor wages
The increase in labor wages for agricultural laborers increases the cost of production and decreases farmers' profitability. APAC countries such as India and China are experiencing a rise in the minimum wage of agricultural laborers due to government intervention. The Indian government increased the daily wages of unskilled agricultural laborers by about 60% in 2016. Increased wages have restricted the number of laborers being employed by farmers. This also leads to decrease in productivity as only limited produce can be cultivated with restricted labor force. Therefore, farmers are likely to invest in machines and farming equipment that can replace human labor.
Developing global agriculture industry
Increase in global population and advancements made in the field of modern farming techniques are driving the global agricultural industry. Throughout the world, economies are increasingly focusing on developing their agricultural industry by increasing productivity. The global agribusiness and the food industry was valued at approximately USD 5.1 trillion in 2015.
Moreover, governments of various economies have been taking initiatives to encourage farmers to use modern techniques of farming and increase their productivity. The Indian government has eliminated the excise duty on low-powered new tractors to encourage farmers to purchase small tractors.
Unorganized tractor rental market in APAC
In India, 82% of the farmers have less than 5 acres of land, and they depend on renting tractors to increase the productivity of the land. Due to the low participation of central and state government in this arena and sale-only mindset of OEMs in India, the organized rental space is almost non-existent. Most of the small farms hire tractors either from middlemen or from wealthy farmers, the terms, and conditions of which are often tweaked to suit the lender. The way in which the unorganized tractor rental market operates is not conducive to the needs of the farmers because they are not always able to get tractors when they need them most. Moreover, new machines are usually not available for rent, leading to poor service and frequent breakdown.
“Therefore, the absence of an organized rental market for tractors in APAC works to the advantage of the tractor engine market as more farmers are committed to buying their own tractors,” says Praveen.
Browse Related Reports:
- Global Tractor Rental Market 2016-2020
- Global Walking Tractor Market 2017-2021
- Global Agricultural Machinery Market 2016-2020
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Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
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