World demand for agricultural equipment is expected to increase 6.8 percent per year through 2016 to $175 billion. Growth will be driven primarily by sales gains in rapidly developing nations -- particularly China, Brazil, and India -- as these countries continue to mechanize their agricultural sectors. Population expansion and strong economic growth in these nations -- and in other developing nations -- will put increasing pressure on their farm sectors to become more efficient and productive, resulting in growth in machinery sales. Farm tractors accounted for the largest share of product sales in 2011, representing 30 percent of all agricultural machinery sales. Plowing and cultivating machinery is expected to be the fastest growing product type through 2016. These and other trends, including market share and product segmentation, are presented in World Agricultural Equipment, a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.
Agricultural machinery demand in the Asia/Pacific region was more than twice that of any other region in 2011. China and India will be the primary nations fueling future market advances in the region, although other smaller markets, including Thailand and Indonesia, will also expand rapidly. Central and South America will post strong sales gains as well, powered by growth in Brazil and other countries with large, increasingly mechanized agricultural sectors, such as Argentina.
Throughout the industrialized world, sales of farm equipment will be determined largely by demand for replacement machinery. North America and Western Europe will both record below-average growth through 2016. Demand in these regions will be driven by technological advances, as the efficiency gains afforded by new, technologically sophisticated equipment will make it economically feasible for farmers to replace their machinery more frequently. However, many farmers in developed regions delayed replacing their older machinery during the 2008-2010 economic crisis, avoiding major purchases of new machinery because of an uncertain economic environment. As a result, 2011 saw the beginning of a spike in demand for agricultural machinery, as better economic conditions prompted farmers to finally replace older machines. Since an average replacement cycle is generally eight to nine years, high demand in 2011 will mean many farmers will not be looking to replace machinery in 2016, constraining agricultural equipment demand.
The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.