Vietnam Agricultural Equipment Market Outlook to 2027

Vietnam Agri-equipment market is anticipated to witness substantial growth propelled by Urban migration and government initiatives

Vietnam Agri-equipment market is anticipated to witness substantial growth propelled by Urban migration and government initiatives. In the coming years, tailored finance, fintech, and climate insurance embracing can address challenges and unlock growth. Agriculture's contribution to Vietnam's GDP is declining, but in 2022 the industry grew significantly, driven primarily by forestry and fisheries. Additionally, Vietnam is witnessing an acceleration of farm mechanization due to rising labour prices and scarcity. Import-dependent machinery is dominating the market and local manufacturers are finding it difficult to compete on cost.

Overall, Vietnam’s agricultural sector contributes 15% to Vietnam’s GDP. Tu Sang (Tien Giang province), Phan Tan (Dong Thap), and An Giang Engineering Co., Ltd. (An Giang) are some of the leading players in the Vietnam Agri-equipment market. The government incentives are promoting the domestic manufacturers of tractors, combine harvesters, and rice translators in the country. However, still, Vietnam's Agri-equipment industry heavily depends on countries such as China, Korea, Japan, and others.

The Vietnam Agricultural Equipment Market is extremely consolidated with approximately 100+ Foreign and Domestic Players operating across Vietnam. MNCs such as Kubota, Yanmar, John Deere, and Claas import machinery from around the world and assemble it in Vietnam. Kubota has a manufacturing partnership in the region. Thaco and VEAM are the two main local producers of Agri-equipment in the country. Additionally, around 35 financing companies are working in the overall ecosystem of the Vietnam Agricultural Equipment Market.

Vietnam Agricultural Equipment Market Analysis

The Vietnam Agricultural Equipment Market is developing consistently and is expected to grow at a CAGR of 5.5% in the forecasted period of 2022-2027. However, the industry is facing several obstacles in its growth including high costs, tax issues, illegal imports, dependency on imported raw materials, and skill shortages, necessitating strategic actions for sustainable growth.

Vietnam's Agri-equipment market is dependent on imports, particularly for 4-wheel tractors, due to a lack of local manufacturing capacity, increased domestic expenses, and a lack of technical skills.

The nation is reliant on imports because its manufacturers serve as small mechanical workshops lacking in technical knowledge and abilities related to manufacturing technologies. Furthermore, local agricultural machinery costs 15-20% more than their imported rivals.

Vietnam has a lower level of utilization of cutting-edge technologies than other nations in the region. 75 % of the nation's rural yield comes from advanced mechanization, most of which is centred in the Mekong River delta region.

The Ministry of Agriculture and Rural Development has set a 2030 deadline for switching from two-wheeled to four-wheeled tractors for rice growing in the northern regions. Mechanization of harvesting has reached about 70% in the southeast compared to about 40% in the north.

Key Trends by Market Segment

By Type of Tractor: The Vietnam Tractor market is classified into two major categories based on the type of tractor 2W and 4W Tractors. 4W tractor type is dominating the Vietnam tractor market with a significant ~90% of the market share. The 4W tractor type is taking the market lead because of its dual functionality for both agricultural and non-agricultural works. Additionally, easy credit access to small farmers in the country has also persuaded them to invest in 4W tractors.

By Type of Power: The Vietnam Combine Harvester Market is categorized into six major types: Below 100 HP, 100-200 HP, 200-300 HP, 300-400 HP, 400-500 HP, and Above 500 HP. The Northern Region's traditional farmers primarily use the under 100 HP market, which makes up the majority of the market. 100 HP power type is dominating the market by a big margin as more than 1200 units of 100 HP power were sold in 2022 while any other power type fails to reach the mark of 50 units.

By Type of Rows: The Vietnam Rice Transplanter Market is divided into three major categories: 8 Row Rice Transplanters, 6 Row Rice Transplanters, and 4 Row Rice Transplanters. Vietnam Rice Transplanter Market is ruled by 4 Row Rice Transplanters which has sold approximately 2200 units of rice transplanters followed by 6 Row Rice Transplanters, and 8 Row Rice Transplanters. In Vietnam, the government's drive to increase farm mechanization and the anticipated increase in rice output will likely result in a significant rise in domestic demand for agricultural equipment like rice transplanters.

Competitive Landscape

Major Players in The Vietnam Agricultural Equipment Market

The Market for Agriculture Equipment is highly consolidated as it is dominated by unorganized players in Vietnam. More than 100 players are active in the Vietnam Agricultural Equipment Market.

Kubota, Yanmar, John Deere, and Claas are some of the market leaders in Vietnam Agricultural Equipment industry. Another prominent player in the market, VEAM Group leads with over 30 years in Vietnam's Agri-equipment sector.

Veam, Vikyono, Vinapro and others are some of the small-scale manufacturers working in the Vietnam agricultural equipment industry that assemble and manufacture Agri-equipment in the country.

Reduced import duties (ranging from 0% to 5%) have discouraged investors from setting up production facilities in the nation, leading to a decline in the domestic sector. Moreover, misleading or underreported amounts of illegal imports further drive down the domestic industry.

Kubota is the single largest player in the Vietnam 4W Tractor segment with a market share of approximately 50% followed by Yanmar, Thaco, and Veam. On the other hand, VEAM is dominating the 2W Tractor segment with a market share of approximately 20%.

Recent Developments

Over the next several years, the northwest mountainous region is predicted to retain the majority of tractors. It is anticipated that companies will introduce 4 W tractors with modest power (24 HP or less) to serve the small-hold farmer market.

It is anticipated that domestic output will rise, resulting in a decrease in tractor prices. It is expected that more foreign companies will open local organizations or representative offices in Vietnam.

The Ministry of Agriculture and Rural Development, or MARD, has established goals to expand the nation's agricultural mechanization and transition from two-wheeled to four-wheeled tractors. Additionally, the government has policies on soft loans from banks for the purchase of farm equipment.

Future Outlook

The market will grow at a CAGR of 5.5% during 2022-2028 owing to factors such as Rising Food Demand, Government Support and Advances in Mechanization in the Country.

The government aims to achieve 70% mechanization in agricultural production by 2030 as a result the government has launched several initiatives in the country including financial assistance to the small farmers for the purchase of tractors.

Vietnam's combine harvester income growth is expected to be driven by increasing rice production and the introduction of more powerful and diverse machines, especially those with horsepower over 90.

During the forecast period of 2022-2027, the rice transplanter market in Vietnam is expected to grow significantly due to growing automation in agriculture and growing awareness of higher yield benefits.