Market Trends of Canada Agricultural Machinery Industry
Increasing Demand for Tractors Amid Declining Farm Labor
The need for sustainability in the management of farm operations induced the demand for highly developed and efficient machinery in recent years. According to the latest census of Statistics Canada, Industry consolidation and the aging of farmers have led to fewer farms and farm operators. For instance, the number of farms dropped by 1.9% from 2016 (193,492 farms) to 2021 (189,874 farms). Hence, to meet the increasing demand for food crops, farmers have been turning to self-propelled and tractor-mounted equipment. This, in turn, is likely to promote the growth of agricultural machinery during the forecast period. Additionally, in Canada, mechanization of farm practices is primarily guided by the economic principle that the use of automated tools instead of manual labor results in cost and higher yield benefits, which is likely to drive the demand for machinery.
Furthermore, the interest in farming is lost by individuals due to the heavy tasks performed in farming. This, in turn, surfaced a shortage of farm labor on the farm fields in the country. According to the Canadian Agriculture Human Resource Council, Canada's farm labor shortage is anticipated to double by 2029 and lead to a 123,000-worker shortage. During 2020-2021, the farm labor shortage cost around USD 2.9 billion for farmers in the country, and this shortage is anticipated to grow over the coming years. This led to increased demand for agricultural machinery, including tractors, in the country.
Besides, tractors are the leading segment in agricultural machinery in terms of revenue and quantities sold in Canada in the past years. The trend is projected to continue during the forecast period. Tractors, being one of the essential agricultural machineries, have witnessed a huge growth potential in the market. Farmers in this country are increasingly keen on purchasing high-end tractors to work on larger fields as part of their effort to improve crop yields and boost farm efficiencies. For instance, as per the Association of Equipment Manufacturers, the sales of Less than 40 HP Tractors were 1,162 Units, 40 to 100 HP tractors were 613 units and Greater than 100 HP were 383 units in 2023.
Harvesting Machinery is the Significant Segment by Type
The adoption of improved production techniques and increased farm mechanization has helped produce more food with fewer workers. Hence, the increasing food demand and labor costs have increased the demand for combined harvester usage across the countries of the region. The combine harvester automation is one of the rapidly evolving sectors of precision farming technology. Also, the acute farm labor crunch has surfaced in Canada in recent years. According to the Association of Equipment Manufacturers, in 2021, the sale of self-propelled combine harvesters was 131 units which increased by 160 units in 2023.
To meet the consumers’ needs, the players in the market are investing in continuous research and developmental activities and introducing advanced products. For instance, in November 2023, Massey Ferguson, a worldwide brand of AGCO introduced a host of new features and options to increase performance and efficiency across its range of MF IDEAL combine harvesters. Further, the government of Canada has formulated programs to support agricultural machinery, including harvesting machinery. For instance, in 2022, the Ministry of Agriculture and Agri-Food announced over USD 1 million in funding for SomaDetect Inc. and Vivid Machines Inc. through the AgriScience Program to help producers improve farm management and their bottom line. Such innovations are projected to induce the demand for agriculture machinery, including harvesting machinery, in the long run, thus also boosting the market over the coming years.
