Market Trends of North America Agricultural Tractors Industry
Increasing Adoption of Farm Mechanization and Shortage of Labor
The evolution of sophisticated agricultural machinery has transformed farming methods. Increased farm consolidation, a large production base, and enhanced government subsidies are propelling the adoption of agricultural tractor machinery.
North American farmers are increasingly embracing advanced technologies, including precision farming systems and smart agricultural machines. The market is characterized by strong sales of high-powered tractors, with models exceeding 40 HP dominating the market share. Leading manufacturers such as Deere & Company, AGCO Corp., and CNH Industrial NV are focusing on producing technologically advanced agricultural tractors, driving market growth. For example, in 2023, CLAAS introduced three new compact tractor series in North America: ELIOS 200, ELIOS 300, and AXOS 200. These tractors offer various technical features related to performance, power transmission, comfort, and payload, catering to diverse customer needs and applications.
The United States, Canada, and Mexico are experiencing significant farm labor shortages. A California Farm Bureau survey revealed that over 40% of farmers faced consistent labor shortages in various farm operations over the past five years. World Bank data shows that agricultural employment as a percentage of total employment in these countries decreased in 2022, reaching 1.62% in the United States, 1.28% in Canada, and 12.64% in Mexico, representing declines of 0.04%, 0.05%, and 0.43% respectively from the previous year. This labor scarcity has led to increased adoption of modern technologies, including tractors, to improve farm resource management.
The technological advancements in agricultural tractors in North America are contributing to improved efficiency and time-saving results. These factors are anticipated to drive market growth during the forecast period.
The United States is the Largest Market
Agriculture is a vital component of the United States economy. The United States Department of Agriculture reports that agriculture, food, and related industries contributed 5.6% of the GDP in 2023. Additionally, about 40% of the country's land is dedicated to agricultural purposes, including livestock grazing. This extensive agricultural land use encourages the adoption of agricultural machinery for various farming operations.
The United States is experiencing a trend of farm consolidation and increasing farm sizes, driving demand for agricultural tractors capable of large-scale operations. According to the United States Department of Agriculture, the average farm size in the country increased from 463 acres to 464 acres from 2022 to 2023. This growth in farm size necessitates the use of advanced agricultural tractors, contributing to market expansion.
Tractors above 100 HP and 4WD Farm Tractors are in high demand in the United States agricultural sector. The Association of Equipment Manufacturers (AEM) reports that retail sales of tractors above 100 HP increased by 5.2%, while 4WD tractors saw a 31.7% increase from 2022 to 2023. This growth in agricultural tractor sales indicates a positive trend for the market in the coming years.
Manufacturers are responding to the increasing demand for advanced machinery by introducing smart and specialty tractors. For instance, in November 2022, John Deere developed new 5EN and 5ML Series specialty tractors designed for work in narrow orchards and vineyards, incorporating new technologies. The combination of farm consolidation, rising tractor sales, and ongoing product innovations by manufacturers is anticipated to drive the growth of the agricultural machinery market in the United States during the forecast period.
