Indonesia Tractor Market - Industry Analysis & Forecast 2023-2028

INDUSTRY INSIGHTS

The Indonesia tractor market witnessed registrations of 978 units in 2022 and is expected to reach 1,185 units by 2028 growing at a CAGR of 3.25% during the forecast period. Precision farming technology, GPS navigation systems, digital connectivity, and telematics are progressively integrated into tractors, providing farmers with expanded functional and data-driven insights for improved productivity and resource management. The Indonesia tractor market will likely expand more in the future. The government’s emphasis on agricultural development, rising farm mechanization, and the need for increased productivity will fuel the demand for tractors.

KEY HIGHLIGHTS

• The Java region witnessed a massive increase in farm mechanization in terms of agricultural and industrial productivity.
• The Indonesia tractor market is highly concentrated, with the top players controlling most of the industry. Domestic and global brands, on the other hand, are equally represented in the industry.
• The Indonesian government plans schemes and initiatives to facilitate credit and improve agriculture-related operations, which will contribute to the growth of the overall value chain of the industry.
• The Indonesia tractor market increased by 10.1% in 2022 from 2021. The increase in crop production and tractor sales was due to favorable climate conditions and government support to farmers.

MARKET TRENDS & DRIVERS

Increased Agricultural Farm Mechanization
Farm mechanization in Indonesia has made some progress in recent years, but it still differs across different regions and agriculture industries. The Indonesian government recognizes the importance of farm mechanization in enhancing agricultural output, eliminating labor shortages, and improving overall sector efficiency.

Swath Control and Variable Rate Technology
Swath Control and Variable Rate Technology (VRT) have also advanced in the Indonesia tractor market. While the adoption of these technologies varies, they are gaining traction and being adopted in specific agricultural practices. The Swath Control Technology is used to optimize input application in agricultural practices. It enables farmers to reduce input waste while increasing efficiency by accurately managing the application of inputs like fertilizers and insecticides. Farmers can guarantee that inputs are applied where needed by turning specific portions of tools on and off, decreasing overlaps, and avoiding needless application in non-crop regions.

INDUSTRY RESTRAINTS

High Demand for Used & Rental Tractors
The high demand for used and rental tractors is increasing in Indonesia. When compared to new tractors, used tractors are frequently less expensive. Smallholder farmers and those on tight budgets may find it more cost-effective to buy a used tractor rather than a new one. On the other hand, renting tractors is a cost-effective choice for farmers who need machinery temporarily. Such factors are projected to impact the Indonesia tractor market growth.

SEGMENTATION INSIGHTS

INSIGHTS BY HORSEPOWER
The Indonesia tractor market is segmented based on the engine power output as less than 50 HP, 50 HP–100 HP, and above 100 HP. In 2022, Indonesia's Less than 50 HP segment recorded a high industry share. With their small frames, these tractors are ideal for small-scale farmers with relatively higher cropping intensity than marginal farmers. Compact tractors are widely used by farmers engaged in row-crop farming and horticulture in Indonesia. Individuals keen to grow organic foods at a small level also use these tractors. The major factor for the steady growth of the medium-power range of tractors is the increased business turnover among hobby and livestock farmers.

INSIGHTS BY DRIVE TYPE
The Indonesia tractor market is dominated by mid-range HP 2WD tractors. 2WD tractors are the most preferred tractors by farmers in the country. The low relative cost of ownership and numerous features and haulage power make 2WD tractors more popular among farmers. Ease of driving and flexibility with light loads and in plain fields are major factors that boost the demand for two-wheel-drive tractors.

REGIONAL ANALYSIS

The demand for agriculture tractors in the Java and Sulawesi regions was high in 2022. During the forecast period, strong demand for agriculture tractors will come from the Java region. Moreover, the Java region dominated the Indonesia tractor market in 2022, growing at a CAGR of 2.95% during the projected period. Tractors are frequently utilized in the agricultural sector of Java to mechanize farming tasks and boost output. They are used for plowing, land preparation, harvesting, planting, and transporting agricultural inputs and produce.

Banten, located in the western section of Indonesia’s Java Island, has a substantial agricultural sector that employs tractors for various farming tasks. The Banten agricultural tractor industry is expanding due to increased mechanization in farming practices and the need to meet the demands of a growing population. The expansion of commercial farming and the upgrading of smallholder agriculture all contribute to the region’s demand for tractors.

COMPETITIVE LANDSCAPE

John Deere, Kubota, CNH, and AGCO dominated the Indonesia tractor market. These brands have adopted several strategies to gain traction in the market. Product range and features are important factors in the industry. Manufacturers aim to suit the unique needs of farmers by producing a vast selection of tractor models with varying horsepower, setups, and features. Tractors appropriate for small-scale farming, specialty applications, and major commercial operations are all included. Major players in the Indonesian tractor market are announcing alliances, new product launches, and expansions to acquire a competitive edge. For instance:

• John Deere​ has announced MY24 updates for its 7, 8, and 9 Series Tractors lineup that will help prepare them for the future of precision agriculture.
• Kubota is developing various tractor implements in Asia. The company is expanding by investing in attachments for combine harvesters, rice transplanters, and excavators.