Market Trends of Asia-Pacific Agricultural Tires Industry
Replacement Tires To Exhibit The Highest Growth Rate During The Forecast Period
- Agricultural tire maintenance is important, as tires are usually exposed to crop stubble while operating, and in some cases, they occasionally find objects, like a hidden fencepost or deer antler in the field, which results in punctures in the tire. The tire running underinflated or over-deflected could cause damage to the body plies making the tire unusable.
- In the case of worn tires, the effect is more visible in wet conditions, as it increases the slip ratio. The use of worn tires tends to waste time, as their lugs may have been shortened due to wear and the possibility of reduction in their traction capacity in soft or wet soil, which increases the slip rate.
- These tires have more chances of punctures/impacts, and a possible breakdown during working periods can lead to a loss in yield.
- A tire replacement can preserve the soil and increase the machine's traction force, with the benefit of reduced fuel consumption and, ultimately, increased productivity. Various dealers who deal with new tires generally trade aftermarket tires. They generally provide vulcanizing, regrooving, and other on-site services. So, any authentic dealer is the right destination to buy an aftermarket tire for tractors and other agricultural use.
- However, the year 2020 was difficult for tire manufacturers and farmers as well, with uncertainties and disruptions in transportation owing to COVID-19. The farmers were looking for replacements for their tires as, due to lockdowns, most of them were unable to replace their tires, which was expected to propel the growth of the segment in the shorter term.
- The demand for farming machinery and equipment is increasing in the Asia-Pacific region owing to the rising population and its growing food need. Economies such as India, Thailand, China, etc., are still in the developing stage, and farmers in these countries are heavily investing in farming equipment.
- However, for some farmers, it is not feasible to buy expensive original equipment manufacturer (OEM) tires that come with the new machinery. Therefore, the market for replacement/aftermarket tires is booming owing to their cost effectiveness and the presence of a large number of options.
- The aftermarket tires cost nearly 50% to 75% less than the OEM tires and are easily available at offline and online channels. The rapid and large-scale penetration of smartphones and the internet in the geography is boosting the growth of Online sales channels.
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India To Exhibit A Significant Growth Rate During The Forecast Period
- Agriculture is the primary source of livelihood for about 58% of India's population. The Indian agriculture industry is poised for huge growth and is increasing its contribution to the global food trade every year due to its immense potential for value addition, particularly within the food processing industry.
- In light of new government initiatives to promote agriculture, the demand for agricultural machinery is expected to grow in the upcoming period, thereby creating parallel demand for agricultural tires. The migration of people from rural to urban regions, rising labor costs, and lack of skilled labor in most developing states are fueling tractor sales. Shortage of farm labor and its rising cost are among the main reasons for the increasing mechanization of the farming industry.
- The increasing need for operational efficiency and the rise in labor costs are expected to boost the demand for agricultural tractors. Over the forecast period, the market for agricultural tractors will be driven by limited labor availability.
- Considering simple demand-supply economics and the transfer of labor from urban to rural areas, the cost of farm labor has a direct link to the percentage of a country's entire population employed in agriculture. Hence, to reduce dependency on human labor, farm owners are investing in farm equipment, thereby reducing the time and effort taken for farming.
- Various governments have introduced new strategies to produce and consume locally to bridge the supply chain gaps and address the labor shortage in the agriculture sector. To assist smaller players, the governments have implemented a few comprehensive tax reforms. For example:
- The Indian government has implemented the 'Macro-Management Scheme of Agriculture,' which provides a 25% subsidy on tractors up to 35 PTO HP. At the same time, the Canadian government has introduced the 'Canadian Agricultural Loans Act,' which offers farmers a loan of up to USD 500 thousand when purchasing land or a tractor. It may also be used to repair buildings.
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