European farm machinery manufacturers must fundamentally rethink their strategic positioning as evolving farmer needs, accelerating technological change and intensifying global competition disrupt the sector, according to a new report from Rabobank.
The RaboResearch analysis argues that the coming decade will reshape the machinery landscape through market pressures, digitalisation and competitive shifts, forcing OEMs to reassess where and how they compete.
Farmers want proven tools, not complexity for complexity’s sake
While sensors, variable‑rate systems, robotics, drones and AI are steadily becoming mainstream in agtech, adoption among farmers remains notably low. The report attributes this to high costs, complexity, unproven reliability at scale and insufficient service infrastructure.
“Current investment postponements by farmers reflect weak farm economics and elevated uncertainty,” Barend Bekamp, senior specialist food & agriculture at RaboResearch, told AgTechNavigator. “Highly innovative solutions are often expensive, complex in early use, insufficiently proven at scale over the long term, and may entail software risks and sometimes have limited capacity. Technology adoption decisions are highly context- and company-specific, with no universal solution.”
Farmers favour proven, easy-to-use technologies with a clear business case, such as higher revenues or lower operating costs, he said, making market adoption more challenging for highly innovative products.
Variable‑rate spraying and sensor‑based irrigation are leading adoption, while robotics and drones still lag, slowed by technical limitations and gaps in enabling policy frameworks.
Maturing EU market pushes OEMs abroad – but no obvious ‘next big market’
Rabobank notes that Europe’s agricultural market is maturing, pushing OEMs to look overseas to maintain growth. Yet Bekamp stresses that the US is no longer the automatic first choice, given high tariffs on steel and aluminium, subdued farm incomes and an unfavourable euro‑dollar dynamic.
“There is no longer a clear number one market to enter first,” he said. Companies need to evaluate where their target farmers are located, how a service network can be built, and how sensitive a market is to geopolitical risks.
Asian manufacturers are rising – EU brands should not assume technological superiority forever
Rabobank highlights intensifying competition, with Asian companies already posing a clear threat to traditional American and European manufacturers in more basic technologies.
“Visitors to Agritechnica last year could observe a broadening product portfolio from Asian suppliers. While these companies often still lack an established dealer and service network, a strong reputation, and products fully adapted to EU conditions, these gaps are likely to close over time. Once that happens, Asian players will represent serious competition. The industry should be aware of that.”
Cost remains Asia’s primary advantage today. But Bekamp warned that capabilities in robotics and smart technologies could become a decisive strength in the move towards large-scale precision and autonomous farming, underlining the need for the EU to intensify innovation in these fields.
Policy pressure accelerating tech shift – especially around sustainable precision tools
According to Rabobank, the EU’s regulatory environment, particularly the Common Agricultural Policy (CAP) and environmental frameworks, is set to accelerate precision machinery adoption. Tight labour markets, food‑security ambitions and the need to close the innovation gap with the US are all pushing investment toward automation and autonomy.
Bekamp said stricter water quality targets are also likely to accelerate the use of precision techniques. “With the deadline for achieving good water quality under the Water Framework Directive set for 2027, and many Member States currently failing to meet key indicators, there is growing urgency to promote the adoption of precision techniques.”
Strategic positioning: EU OEMs must decide who they want to be
Rabobank’s report emphasises strategic positioning along two key dimensions: technological innovation (basic versus advanced) and internationalisation (EU-focused versus global).
Other key considerations include make-or-buy decisions, whether to develop technologies in-house or source them externally, and the strength of the service network.
“The strength of the service network becomes increasingly important as machinery utilisation intensifies, making downtime more costly and risky for farmers. This favours manufacturers with strong and reliable service networks,” Bekamp said.
Start-ups are now both rivals and potential partners
Rabobank observes that agtech startups are competing directly with OEMs, especially in robotics and autonomy. However, Bekamp sees rising collaboration between OEMs and start-ups rather than confrontation.
“Unlike the large, high-profile investments seen in the past, these relationships now more often involve smaller, less mature companies, he said. “Start-ups’ technologies are increasingly being used to enhance existing machinery platforms. OEMs can benefit from developing an ecosystem of innovative startups around their organisation, supporting the most promising ones with knowledge, networks, and financing, with the longer-term objective of exclusive cooperation models or even integrating these startups into the company.”
