Shortage of Farm Labor to Create Opportunities for the Agricultural Machinery Market in the US Through 2020, Reports Technavio

LONDON--()--Technavio analysts forecast the agricultural machinery market in the US to grow at a CAGR of 4% during the forecast period, according to their latest report.

The research study covers the present scenario and growth prospects of the global agricultural machinery market in the US for 2016-2020. According to the report, the agricultural sector in the US has benefited from rapid mechanization. Farmers have started upgrading their tools and machineries to keep pace with the growing demand for agricultural products in the country.

Technavio analysts highlight the following three factors that are contributing to the growth of the agricultural machinery market in the US:

  • Consolidation among farmers
  • Shortage of farm labor
  • Growth of supportive technologies

Consolidation among farmers

Large farms constitute only 4% of the total farms in the US. However, these farms account for a major share of approximately 65% of the total sale of agricultural products. According to Abhay Sinha, a lead analyst at Technavio for agricultural equipment, “Farms in the US have witnessed consolidation in the past two years, which has contributed to the increase in the number of large-sized farms. In addition, increased corporatization is noticed, wherein there is a transition from small-sized family owned or operated farms to massive corporate-operated farms. This trend is expected to continue as a large population of aging farmers nearing retirement are considering selling their acreage to have a secure retirement income.”

This has helped the large farms increase their investment in expensive agricultural machinery, driven by economies of scale, mass production, and higher revenue realization. Therefore, an increase in the number of large farms will fuel the demand for agricultural machinery, thus leading to growth of the market.

Shortage of farm labor

Lack of skilled workforce is plaguing the agricultural sector in the US. Agriculture is a labor-intensive and time-consuming process. Employment of labor has become expensive as there is a shortage of localized labor supply nationwide owing to an aging workforce and shift of focus towards other jobs. The average age of an American farmer is 58 years. In addition, stringent immigration rules are a major cause of this shortage as most of the laborers employed in farm activities in the US are immigrants. The competition from Mexican farms has further intensified the dwindling supply of labor. Therefore, lack of skilled workforce and subsequent mechanization are expected to fuel demand for agricultural machinery in the US.

Growth of supportive technologies

Agricultural machinery is becoming increasingly cost-effective owing to the use of intelligent production technologies to maximize yield while minimizing costs. Rising input costs, higher competition in agriculture, and limitations on land use have prompted efforts to boost field productivity. Market players are striving to integrate advanced electronics such as GPS, yield monitoring, autopilot technology, and fleet management into agricultural machinery.

There is also an increase in investment to help evolve new technologies such as software programs, drone technologies, big data, IoT, mobility, and life sciences. For instance, Hesston by Massey Ferguson introduced the WR9800 Series of Windrowers equipped with an advanced GPS steering that can reach field speeds of up to 17.5 mph. Such technologies will help improve efficiency and aid control and management functions.

Safety and fertilizing regulations, and demand for custom machinery are further driving development in precision farming. “This will enable greater adaptability of agricultural machines that are in sync with farm and crop conditions, and help improve sustainability in farms. These features in turn, will drive the demand for agricultural machinery,” says Abhay.

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About Technavio

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.

Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.

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Contacts

Technavio Research
Jesse Maida
Media & Marketing Executive
US: +1 630 333 9501
UK: +44 208 123 1770
www.technavio.com

Release Summary

Technavio analysts forecast the agricultural machinery market in the US to grow at a CAGR of 4% during the forecast period, according to their latest report.

Contacts

Technavio Research
Jesse Maida
Media & Marketing Executive
US: +1 630 333 9501
UK: +44 208 123 1770
www.technavio.com