Market Trends of Germany Agricultural Machinery Industry
Decrease in Farm Labour
- Germany is known for its advanced technology and engineering expertise, and these skills have been applied to various industries, including agriculture. German agricultural practices are often characterized by efficiency, precision, and sustainability. The use of cutting-edge technology and a well-trained workforce have made it possible to increase yields, reduce waste, and optimize the use of resources such as water and fertilizer.
- According to a United Nations Statistics Division (UNSD) report, Germany was one of the top five importers of agricultural machinery from the United States in 2021. German farmers also receive a subsidy from the European Union annually for farm investment. This enables them to invest in modern machinery that is otherwise expensive. Additionally, there is a constant shortage of labor-intensive agricultural operations in India due to the changing workforce preference from pure farm-oriented activities to allied sectors.
- Rapid urbanization is also one of the primary reasons for the increase in farm mechanization, as the workforce in agriculture is decreasing and moving to urban areas. For instance, according to the latest World Bank data, the percentage of people employed decreased for several years. Thus, the labor shortage is anticipated to drive and increase the demand for farm equipment over the coming years. The above factors are substantially driving the country's agricultural machinery market.
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Tractors dominate the Market
- Tractors are the leading segment in agricultural machinery in terms of revenue and quantities sold in Germany in the past five years. The trend is projected to continue during the forecast period. Germany has evolved to be one of the leaders in producing agricultural machinery in Europe, which signifies its dominance in the agricultural tractors market. Regarding sales, the emphasis is on tractor production at a share of around 40%, with a further focus on the power segment above 120 HP.
- Due to the booming domestic market, the export ratio in the last few years has been steady at 70-75%. Tractors are further sub-segmented into five segments: less than 25 HP, 25-50 HP, 51-100HP, 100- 175 HP, and greater than 175 HP. Tractors with high horsepower account for a relatively higher market share when compared to small- and medium-sized tractors, owing to their prices and requirements in the fields. Germany was also one of the major exporters of tractors globally in 2021.
- AGCO Corporation is one of the leading companies in the tractors market in Germany, which sells brands like Massey Ferguson and Valtra Inc. Hence, farmers are increasingly adopting agricultural mechanization as a substitute for manual labor with a more cost-effective, easily available, and more efficient means of agricultural operation. Tractors, the primary power source for driving agricultural machinery, have thus seen a phenomenal rise in sales.
