Increasing Labor Wages: In 2020, Vietnam increased its minimum wage by an average of 5.7%. The new rates came into effect in January and range from USD 140 to USD 148in smaller provinces and suburban districts. This increase is higher in urban areas such as Ho Chi Minh and Hanoi. As a result, farmers have started shifting to agricultural machinery which is time efficient as compared to manual labor. Renting a combine harvester is approximately 3 times cheaper than hiring labour for per hectare of produce in some areas.
Climatic Conditions: As the daytime temperatures become unbearable, rice farmers in Vietnam have no other option but to work in their fields at night. Due to changing climatic conditions, the temperature in Vietnam has been rising by 1-2C every year. The highest temperature was recorded last year at 43.4 C (110 F) in Ha Tinh province in central Vietnam. In such a situation, mechanized farm operations help farmers mitigate/adapt to climate risk by carrying out farming operations in a short duration or suitable window.
Increasing number of Free Trade Agreements Hamper Domestic Manufacturing: As a result of FTA, import of agricultural machinery in Vietnam has amplified remarkably. Consequently, many players don’t prefer establishing a manufacturing facility in Vietnam due to 0% import tariffs. This has caused a problem for the domestic manufacturers as they have higher product cost especially as compared to Chinese manufacturers. In addition to the same, due to lack of solid base in metallurgical operations, the domestic producers are not able to provide the same quality as that of Japanese or a Korean product.
Impact of COVID-19 on Vietnam Agricultural Equipment Industry: COVID-19 has severely impacted the agricultural equipment market in Vietnam. In Q1 and Q2, due to supply chain disruptions and decrease in farming activities, companies observed a decline in demand of tractors, combine harvesters or rice transplanters in terms of domestic sales leading to an overall decline in the market. The imposed lockdown in the country, decline of manufacturing and import and movement of transport impacted the industry adversely. In addition to this, closure of dealerships and retail stores led to decline in domestic agricultural machinery sales.
Analysts at Ken Research in their latest publication “Vietnam Agricultural Machinery Market Outlook To 2025 – Agriculture Tractor Market (By Type: 2W And 4W Tractors, By Power: Below 12 HP, 12HP-35HP, And Above 35HP, By Region: Central Highlands, North Central & Central Coast, Mekong Delta, Northern Midlands and Mountains, Red River Delta and South East), Combine Harvester Market, Rice Transplanters Market and Agriculture Implements Market (By Product Type: Rotavator, Plough, Harrow, Fertilizer Spreaders and Others)”observed that Vietnam is a growing agricultural machinery market in South East Asia and is slowly recovering from the economic crisis after pandemic. The increasing credit availability in the country along exemption in taxes is driving the growth of the industry. Increasing focus on promotional and marketing activities, new product launches, partnerships & collaborations are expected to drive the industry in the future. The Vietnam Agricultural Machinery is expected to grow at a CAGR of 6.4% on the basis of sales revenue over the forecast period 2020-2025.
Key Segments Covered:-
By Product Type
Tractors (2W and 4W)
By Tractor Segment
Upto 12 Hp
Between 12-35 Hp
Above 35 Hp
By Region of Sales
Red River Delta
Northern Midlands and Mountains
North Central and Central Coast
By Implement Segment
VEAM (Vietnam Engine and Agricultural Machinery Corporation)
Thaco (LS Mtron)
Key Target Audience:-
Agricultural Equipment Companies
New Market Entrants- Domestic OEMs
New Market Entrants- Foreign OEMs
Agricultural Equipment Financing Companies
Investors & Venture Capital Firms
Agricultural Equipment Manufacturers
Agricultural Equipment Distributors
Agricultural Equipment Associations
Time Period Captured in the Report:-
Historical Period – 2014-2020
Forecast Period – 2021-2025
For More Information on the research report, refer to below link:-
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Ankur Gupta, Head Marketing & Communications