Growth in adoption of tractors for agricultural purposes
The rise in the rate of adoption of modern agricultural machinery in a bid to increase productivity and yield output has positively affected the dynamics of the Romania Agricultural Tractor Machinery Market. The presence of EU farming subsidies and funds has propelled the sales volume of tractor machinery in the country, as more farmers look forward to increasing business profitability with aggressive marketing strategies. The country has positively benefited from the introduction of the EU Common Agricultural Policy (CAP) funds, which estimate to be around 22 USD billion to be invested from 2014 to 2020 in Romania's farming sector and rural areas through the CAP.
The national economy is primarily driven by services and private economic activities which do not produce material goods, with agriculture contributing roughly 4% to Romanian GDP. The high rate of industrialization in the country has resulted in a decrease in arable land. A European Commission agri-report estimates Romania to cover an area of 238 391 km² of which around 50 % is agricultural land. As such, it becomes more vital to increase agrarian activity in the existing area. The national government emphasizes the increased growth in local communities through the adoption of agricultural machinery to ensure progress regarding technical capabilities and agricultural production. The good-quality soil and discounted land prices have increased domestic consumption and the need for better yield, which can be fulfilled by the commercial adoption of tractors on a full scale.
The strategy of co-operation and voluntary association among small farms
The Romanian farming sector is characterized by 92.2% of small holdings under 5 hectares of land, with peasants and family farmers holding a significant share of the private farms in and around the country. The small farms are thus following the strategy of the formation of associations and cooperative organizations in a bid to increase profitability and productivity through the aggregation of sales and marketing strategies. Some of the associations and organizations include CAI (Combinatul Agroindustrial Curtici), Lunca Somesului Mic cooperative, Cooperativa Agricola Legume de Vidra, and Bucovina. Most of these organizations and associations follow a joint marketing strategy. For instance, CAI, with 2500 peasant members and around 5000 hectares of land, also owns a network of 29 shops where they sell their agricultural end-products. To support small- and medium-sized farmlands, generally 30 hectares or less, the Romanian government has introduced the policy of redistributive payments (a top-up payment for the first 5 hectares, with a further top-up for the next 5.01-30 hectares), presenting new business opportunities of growth and business expansion.
Need to replace old and outdated machinery
The need to replace old machinery with modern and innovative tools of agriculture would present new opportunities and boost the sales volume of end-products. According to statistics published by Factor Regional Development Center (FRD Center), approximately 73% of the tractors in Romania exceeded the recommended operation period of use. For instance, 30% of the tractors used in Romania are over 20 years old. The farmers and government realize the importance of replacing outdated equipment with innovative products, aimed at increasing crop yield over limited acreage of land and boosting regional sales volume. However, small farmers in Romania prefer to purchase second-hand agricultural machinery. Manufacturers are thus focused on developing shorter replacement cycles of tractors in a manner to propel market demand. The key market players are thus focused on commercial product launches and portfolio expansion. For instance, in October 2018, Romania-based SC IRUM SA announced the launch of TAGRO, an agricultural tractor intended primarily for small and medium-sized farms and sold in domestic as well as foreign markets.
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