Market Trends of North America Agricultural Tractors Industry
Increasing Adoption of Farm Mechanization and Shortage of Labor
With the development of more sophisticated agricultural machinery, farming methods have changed. Increased farm consolidation, a large production base, and greater government support through subsidies drive the adoption of agricultural tractor machinery.
Farmers in most markets in North America are increasingly adopting advanced technology, such as precision farming systems and GPS-controlled agricultural machinery. The North American market is driven by the sales of higher engine-power tractors, with tractors of power more than 40 HP contributing a major market share. Alongside, major players, like Deere & Company, AGCO Corp., and CNH Industrial NV, are focusing on manufacturing agricultural tractors with advanced technology, which drives the market during the forecast period.
The United States has been witnessing an acute shortage of farm laborers. A survey by the California Farm Bureau revealed that more than 40% of the farmers faced a consistent labor shortage in various farm operations in the state in the past five years. It led to an increased adoption rate of modern technologies such as tractors to ensure better management of farm resources. According to the World Bank's database, the employment in agriculture out of the total employment fell drastically and reached 1.36% in 2019.
Increasing Cost of Labor Paves Way for Agricultural Tractors
Farming has traditionally been a highly-labor intensive method in agriculture. However, the continually rising real wage of farm labor positively impacted the demand for tractors in the region, as farmers are increasingly adopting agricultural mechanization, including tractors, as a substitute for manual labor. According to the USDA reports, the annual average gross hourly wage for field and livestock workers was USD 16.62 in 2022. This was a 7% increase over last year's annual average of USD 15.56 per hour, further increasing the demand for tractors in the country.
According to the Canadian Agriculture Human Resource Council, Canada's farm labor deficit is expected to double by 2029 to 123,000 workers, or one in three jobs, as shortages continue to hit the sector's bottom line. The rapid shrinkage of farm labor has boosted the tractor market, thus driving the demand for tractors in the region.
According to the International Labor Organization, around 25% of human resources engaged in agriculture were skilled in the United States, which has decreased over the years. As technologically assisted agriculture needs skilled laborers that are in an acute shortage, farmers are adopting technologies such as tractors that can be productive, considering the current challenge.
