Brazil Agricultural Machinery Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Brazil Agricultural Machinery Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The Brazilian agricultural machinery market is projected to register a CAGR of 6.7% during the forecast period, 2022-2027.

The COVID-19 crisis has resulted in a decrease in commodity prices and farm revenues, which in turn made the farmer stop investment in machinery replacements leading to decreased sales in the market. As global supply chains were disrupted and manufacturing industries closed down in accordance with government measures to prevent the spread of the virus, the market was slowed down during the pandemic. The growth of farm machinery sales in Brazil was affected by the coronavirus pandemic as agricultural trade fairs are canceled and shops are closed, with industry representatives hoping for a rebound in the second semester.

As stated by Brazil’s ANFAVEA, the farm tractor year-to-date sales fell by 9.5% in May, with 2,562 units sold in 2019, when compared to 2,832 units in 2018. At the same time, sales were up 2.6% compared to the previous month, when 2,495 units were registered in April. The accumulated volume during the first five months of 2019 was 11,822 tractors.

Improved technology, such as precision farming, expanding planted areas, increased government initiatives, reducing import tariffs, improvements in infrastructure, and growing demand, for soybeans have been the key factors driving growth in the Brazil agriculture equipment market.​ The market is largely dominated by the top three global players John Deere, AGCO & CNH industrial, due to the higher quality of product and better after-sales service offered by these players. Domestic manufacturing accounts for the vast majority of machinery sales due to the presence of local production plants of all the major companies.​

Key Market TrendsThe Brazilian Farm Structure and Consolidation of Smaller Farms

The availability of skilled labor in Brazil is reducing, as compared to the increasing area under agricultural activities. As farming is a heavy job for most farmers, they depend on technology to help increase farm productivity. As of 2018, the agricultural land in Brazil covered about 31.0% of the total land available, out of which 65.0% was occupied by smaller farms of less than 20 hectares. More farms are being consolidated in Brazil in order to share the cost of heavy agricultural machinery and solve the national problem of food scarcity in Brazil. Additionally, as small farms are slowly being acquired by the bigger ones, the need for agricultural machinery is increasing. Hence, the market for agricultural machinery can be expected to grow at a fast pace in Brazil.

Additionally, FAO estimates that the irrigated area of Brazil could increase to 11.5 million hectares by 2024, or a 65% increase in just over six years. In 2016, localized irrigation for Brazil was 2,490 thousand ha which was 334.80 thousand ha in 2010. While area equipped for full control irrigation was 5,066 thousand ha in 2016. The increasing area under irrigation is an indication of growing demand for irrigation equipment and the over all mechanization of farms.

Rising Soybean Production

Soybean is a majorly cultivated and exported crop in Brazil. In 2018, Brazilian farmers witnessed an increase in soybean production by about 10% from that in 2017, covering more than 30 million hectares of cultivated land in the country. The farmers' investment toward high-cost inputs resulted in positive yields of the soybean crop. Increasing high-cost inputs in the agricultural farms may prevail over the forecast period, as the country’s economic conditions started recovering in 2018. The high-cost inputs are anticipated to increase during the forecast period. High return profits, owing to the increasing crop production and investment toward technology, may urge farmers to adopt agricultural machinery during the forecast period.

With excessive urbanization and fewer labor resources available, extensive and highly mechanized crop systems, such as soybean, sugarcane, rice, and corn, have been established to attend to higher productivity at different levels of technology. In addition to a large machinery production capacity, the Brazilian industry has also invested in advanced technology, mainly in tractors and combines, to save time and fuel, lower the level of fatigue and reduce cost.

Competitive Landscape

The Brazilian agricultural machinery market is fairly consolidated, and it is dominated by global manufacturers, as farmers prefer international companies for assurance of quality and after-sales services offered by the big companies. Machines manufactured domestically account for most sales, as most international companies have their local production setups in the country.

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