Labor Crisis and High Labor Wage Rates have Rapidly Increased the Agricultural Mechanization in Vietnam: Ken Research

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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 1-2žC every year. The highest temperature was recorded last year at 43.4 žC (110 žF) 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.

vietnam-agricutural-market

Key Segments Covered:-

By Product Type

Tractors (2W and 4W)

Combine Harvesters

Rice Transplanter

Implements

By Tractor Segment

Upto 12 Hp

Between 12-35 Hp

Above 35 Hp

By Region of Sales

Mekong Delta

Red River Delta

Northern Midlands and Mountains

North Central and Central Coast

Central Highlands

South East

By Implement Segment

Rotavator

Plough

Harrow

Fertilizer Spreaders

Others

Companies Covered:-

Kubota Vietnam

Yanmar Vietnam

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

Government Bodies

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:-

Vietnam Agricultural Machinery Market

Related Reports:-

Thailand Agricultural Machinery Market Outlook to 2025 – Agriculture Tractor Market (By Type: 2W and 4W Tractors, By Power: 8HP-15HP, 20HP-35HP, 36HP-47HP, 48HP-75HP, 75HP-100HP, 100HP-120HP and Above 120HP), Combine Harvester Market (By Power: 70HP & Below, 75HP-105HP and Above 105HP), By Rice Transplanters (By Rows: 4Row, 6Row and 8Row), Agriculture Implements Market

Philippines Agricultural Equipment Market Outlook to 2023- By Product Type (Tractors, Combine Harvesters, Planters, Seeders and Tillage Equipments and Tillage Equipment), By Tractor Segment (Upto 60 Hp, Between 61-130 Hp and above 130 Hp), By Production (Imported and Domestically Manufactured) and By Region (Luzon, Visayas and Mindanao)

Europe Agriculture Equipment Market Outlook to 2023 – By Type (Tractors, Harvesting Equipment, Soil Preparation and Cultivation Equipment, Haymaking Equipment, Crop Protection Equipment, Transport and Handling Equipments and Other Agricultural Equipment); and By Major Countries (Germany, France, Italy, UK, Poland, Spain and Others)

Contact Us:-
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

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