[Nam Gyu-cheol Column] K-Agricultural Machinery, Beyond “Cost-Effective Exports” to Local Industrial Ecosystems

[Nam Gyu-cheol Column] Korea Agricultural Machinery Industry Cooperative, Director Nam Gyu-cheol

The environment surrounding the domestic agricultural machinery industry is far from ordinary. In 2025, domestic agricultural machinery sales stood at 20,803 units, down 4.7% from the previous year. Compared with 34,727 units in 2021, this represents a 40.1% decline in just four years. Agricultural machinery sales have fallen for five consecutive years. This is the result of a combination of factors, including the aging of the farming population, the expansion of outsourced farm work, rising agricultural input prices, and uncertainty over farm income.

Sales value increased slightly due to a higher share of large models and rising product prices, but the decline in unit sales shows that the domestic industrial base is narrowing rapidly. As it becomes difficult to maintain technology development and a production base with the domestic market alone, developing overseas markets has become not a choice but a matter of survival.

Exports, too, are not in a situation where we can feel reassured by appearances alone. In 2025, Korea’s agricultural machinery exports increased to about 1.367 billion dollars, but more than 70% of total exports are concentrated in the U.S. market. Major items are also concentrated in small and medium-sized tractors under 100 horsepower. Until now, domestic companies have grown in the North American market by emphasizing quality and price competitiveness, but as the burden of U.S. reciprocal tariffs and tariffs related to steel·and aluminum overlaps, ‘performance for the price’, their existing strength, is being shaken.

However, declining domestic sales and tariff barriers should not be interpreted only as a decline of the agricultural machinery industry. Rather, the global agricultural machinery market is growing amid labor shortages, food security, responses to climate change, and the spread of precision agriculture. Market research firm Global Market Insights estimates that the Asia·Pacific agricultural machinery market reached 112.5 billion dollars in 2025 and forecasts that it will grow at an average annual rate of 6.8% from 2026 to 2035.

The global agricultural machinery market is not disappearing; the way competition in the market is conducted is changing.

From ‘price competitiveness’ to ‘technology·service competitiveness’
Global agricultural machinery companies are already transforming beyond simple machinery manufacturers into robotics·data·and agricultural service companies. Autonomous tractors, agricultural work robots, AI-based work route generation, yield prediction, remote diagnostics, and preventive maintenance are being connected into a single system.

Domestic companies are also cooperating with artificial intelligence companies, robotics companies, farm implement manufacturers, and research institutions to develop autonomous tractors and intelligent agricultural machinery. This is a desirable change aimed at overcoming price competitiveness weakened by tariffs through technological competitiveness.

However, it is difficult to secure an advantage in the global market simply by developing one autonomous tractor. Unlike general consumer goods, agricultural machinery requires different performance depending on soil, climate, cultivated crops, farm size, and farming methods. No matter how excellent the equipment is, if it does not suit the local agricultural environment or if parts and technical personnel cannot be obtained when a breakdown occurs, it is difficult to survive in the market for long.

Going forward, competitiveness will be determined not only by the performance of the machine itself but by the ‘entire agricultural work system’ that includes local adaptability, maintenance, operating personnel, and the ability to use data.

The unit of exports must change from ‘products’ to ‘industrial ecosystems’
Now, overseas expansion of agricultural machinery·and materials must move away from selling a few finished products and shift to package-type expansion that also raises the productivity and self-reliance capacity of local agriculture.

First, equipment suited to the local agricultural environment must be jointly developed. The humid rice farming of Southeast Asia, the large-scale field farming of Central Asia, the high-temperature·dry environment of the Middle East, and Africa’s small-scale farming all require different agricultural machinery. Rather than selling equipment developed domestically as it is, output, implements, cooling systems, and electronic control systems must be adjusted in consideration of local crops, soil, fuel quality, and maintenance levels.

Second, performance evaluation and demonstration systems suited to local conditions must be established. Equipment should be put into actual agricultural work for a certain period to verify durability, work efficiency, fuel consumption, and changes in crop yields. Only when a structure is in place that reflects the operational data obtained there back into product improvement can true localization be possible.

Third, parts supply and A/S systems must be built at the same time as product sales. If equipment stops during the busy farming season, the damage to farms is far greater than with ordinary industrial machinery. Local stockpiling of key parts, mobile maintenance, remote diagnostics, and training of local maintenance personnel must be combined. In overseas markets, the reputation of K-agricultural machinery is determined more by the response after a breakdown occurs than by the initial sale.

Fourth, education·and training for farmers and technicians are needed. Autonomous driving and precision agriculture technologies do not take root simply by supplying equipment. Technology can be used sustainably only when local personnel can independently carry out everything from operator training, mechanic training, and data analysis to the establishment of agricultural work plans.

It is necessary to consider a ‘industrial-complex-type·hub-type joint expansion model’ that brings these functions together in one place. Rather than building large-scale production facilities from the outset, the approach is to start from an overseas expansion hub equipped with a joint exhibition hall, demonstration farm, parts warehouse, A/S center, and training center, and then gradually expand assembly, parts production, and local equipment development functions according to demand.

If domestic companies that produce tractors, implements, facility agriculture systems, irrigation equipment, agricultural robots, and data platforms enter overseas markets individually, costs and risks increase. By using a joint hub, SMEs can also share local market information, logistics, certification, demonstration, and A/S networks. An industrial ecosystem is needed in which competitive companies combine their respective technologies to create a single Korean-style agricultural solution.

The domestic market must also shift from ‘ownership’ to ‘services’
To enhance the competitiveness of the export industry, the domestic market must also provide a stable demonstration base. Behind the decline in agricultural machinery sales are the increase in elderly farm households and the expansion of outsourced farm work. This also means that the agricultural machinery market is shifting from a simple ownership-centered model to a service-centered one.

There is a need to expand a service-type agricultural model in which local agricultural cooperatives, farming association corporations, and farm-work service providers jointly operate high-performance agricultural machinery, and farms pay only for the work they need. Autonomous agricultural machinery and agricultural robots can also take root more quickly in Korea’s small-farm-centered agricultural structure when combined with farm-work outsourcing services rather than being sold to individual farms.

Service operation experience accumulated domestically can also be applied to Southeast Asian and African markets, where there are many small-scale farms. Solutions created to overcome the structural limitations of rural Korea can become a new export model in overseas markets.

Beyond ‘Made in Korea’ to ‘Made with Korea’
The direction of government support must also go one step beyond individual product development and participation in exhibitions. It should supplement the foundations that are difficult for companies to handle alone, such as joint development of autonomous driving and artificial intelligence technologies, overseas demonstration and certification, export finance and insurance, and the establishment of joint A/S networks and parts centers.

Companies, too, must prioritize long-term market trust over short-term sales performance. They must develop products jointly with local companies, train maintenance personnel, and continuously improve products and services based on data obtained in the field. A cooperative export structure is also needed in which agricultural machinery manufacturers, implement·and parts companies, and software companies enter markets together.

If ‘Made in Korea’ means a product well made in Korea, ‘Made with Korea’ means an industrial ecosystem that designs together with local partners, operates together, and grows together.

For K-agricultural machinery to establish itself as a sustainable brand in the global market, Korea must move beyond being a country that sells machines and become a country that solves agricultural problems together. The answer to overcoming the domestic market freeze and tariff barriers lies not in cheaper products, but in an ecosystem of trust that brings together autonomous driving, artificial intelligence, localization and A/S, education·and training.

Now the goal of K-agricultural machinery exports must change from ‘how many units were sold’ to ‘what kind of agricultural ecosystem was created together’. That is the new path for K-agricultural machinery moving beyond ‘Made in Korea’ toward ‘Made with Korea’.