Market Trends of Latin America Agricultural Machinery Industry
Increase in Area Harvested in Latin America
- According to the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) (OECD-FAO) report 2022, cropland use is projected to grow by 3%, while crop area harvested will grow by 5A% due to the rising prevalence of double cropping system. Of these 7.7 million hectares harvested by 2030, maize and soybean cultivation will increase by almost 53% and 23%, respectively. By 2030, the area will continue to be the world's top producer of soybeans, accounting for more than 54% of worldwide production.
- Average yields are expected to rise over the next ten years by around 10% for most major commodities and will account for a substantial share of production growth. There has been a significant increase in agricultural land under cultivation in Argentina, Brazil, and Mexico. The Pampas region has more than two-thirds of the Argentine agricultural land, and the average size of the cultivated landholding in the region was 533 hectares in 2021. Farmers generally own 10-15% of the land, and the rest of the land is leased on a yearly basis.
- Family farms have around 84% share in the Brazilian agriculture sector, while the other 16% comprises non-family farms. Smaller farms dominate more than 90% of the agricultural land in Mexico. Hence, the average farm size in Mexico can be estimated at around 25 hectares, owing to the rise in the number of smallholder farms under 5 hectares and large farms greater than 100 hectares.
- According to FAO, in 2021, the area harvested for Brazil, Argentina, and Mexico was observed at 86.54 hectares, 38.09 hectares, and 16.15 hectares, respectively. This increase in the area harvested shows that there would be more requirements for agricultural machinery in the region and drives the market during the forecast period.
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Brazilian Tractors Dominate the Market
- The use of tractors brought about an important change in agricultural mechanization in the country. The introduction of tractors as a power source provides the possibility of covering large agricultural areas in short periods. Due to the significant increase in row crops and horticultural crops, there is increasing usage of tractors.
- The international vendors that started investing in Latin America also brought their expertise to the field of agriculture equipment. These players use their global presence and capabilities to invest in research and development to innovate traditional farming activities. Innovative agriculture technologies and products help farmers to increase yield from the same acreage of land.
- Furthermore, the Brazilian government released Crop Plan for the 2022-2023 season. This bill allows small farmers to get credit to buy agricultural machinery, including tractors, at a 5% annual interest rate. Therefore, the advancements in farm technology and mechanization of the production systems of major crops such as soybean are anticipated to increase the market's growth in the forecast period.
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