2025 Outlook: Key Challenges and Emerging Trends for Agricultural Machinery Manufacturers

The world of farming is changing—and fast. 

Agriculture is the world's largest industry, employing over a billion people and generating more than $1.3 trillion in food annually. As we move into 2025, agricultural machinery manufacturers are staring at a critical choice: evolve or get left behind. The demands on farmers are skyrocketing—rising costs, labor shortages, and the push for sustainability are all piling on the pressure. Yes, these challenges are real—but today’s technologies give you the tools to supercharge your operations and stay ahead. For machinery producers, especially the smaller, family-owned ones, this isn’t just a challenge—it’s an opportunity to lead the charge.

So, what’s ahead for farmers in the U.S. over the next few years? And what does it mean for the companies that provide their machinery? With the agricultural machinery market set to grow from $151.55 billion in 2024 to nearly $200 billion by 2029, the time to innovate and adapt is now. Let’s break down the major trends and challenges farmers are facing, and how agricultural machinery manufacturers can stay ahead of the game.

Challenges Facing Agricultural Machinery Manufacturers in 2025

Market Pressures and Economic Factors

Fluctuating commodity prices, rising interest rates, and tightening farmer budgets are having a direct impact on machinery sales. Farmers across the US are being financially squeezed from all sides. Some of the financial challenges farmers are facing include: 

• Inflated Costs: Costs for key inputs such as fertilizers like urea, diammonium phosphate and potash have increased over 15% annually for the past five years.
• Pressure on Profitability: Net farm income is projected to fall by $6.5 billion in 2024, making it potentially the worst financial year for farmers since 2007. 
• Growing Trade Deficit: The US agricultural trade deficit is projected to widen to a record $42.5 billion in fiscal year 2025, up from $30.5 billion in the previous year.

To survive these challenges, farmers are forced to make difficult decisions—whether to delay investments in new machinery, cut back on other operational expenses, or find ways to innovate and become more efficient. US Tractor sales have been down roughly 15%-20% every month of the year so far. 

Even major agricultural machinery manufacturers are experiencing downturns, with layoffs and production cuts becoming more frequent. The total number of farms in the US has decreased by 6.1% over the past five years, while the average farm size has increased to 463 acres. This consolidation means fewer customers, but larger-scale operations with more specific needs and higher demand for machinery.

Manufacturers must navigate these competing pressures by innovating and differentiating their offerings. Flexible financing solutions, leasing options and designing specialized and affordable machinery are essential to maintaining a competitive edge. To achieve this agricultural machinery, manufacturers need to embrace new technologies in their manufacturing process to maintain a competitive edge and enable the production of affordable machinery designed to meet the future needs of farmers. 

Smaller manufacturers must also develop partnerships and strategic alliances to pool resources and increase their market reach. Additionally, proactive customer support and after-sales services are becoming increasingly important as a value differentiator in a market with constrained budgets.

America’s Labor Shortage: Opportunity and Challenge for American Agricultural Machinery Manufacturers

Labor Shortages Driving Mechanization for Farmers

Labor shortages continue to be a significant issue in the agricultural sector, affecting productivity and sustainability. Wages for nonsupervisory farmworkers have increased from $14.30 per hour in 2018 to $17.60 in 2022, further driving up the cost of operations for farmers. Add to this the 2.4 million agricultural jobs that need filling in the industry and a workforce that's aging rapidly, and it's no surprise that mechanization has become an essential survival tactic. The U.S. has lost a staggering 141,000 farms over the past five years, partly due to insurmountable labor shortages for many farming communities. The shortage of labor is affecting every level of farmers’ operations. For example, more than 71% of farmers report difficulty finding skilled tractor operators.

The labor shortage rippling through the American agricultural industry is a huge opportunity for agricultural machinery manufacturers to help fill these gaps with next-generation agricultural machinery. 

The demand for autonomous, AI-driven machinery continues to steadily climb as farmers look for solutions to mitigate the persistent labor shortage in the US agriculture industry. From self-driving tractors to AI-powered harvesters, companies that can introduce smart, efficient, and cost-effective solutions will be well-positioned to capitalize on this trend. Additionally, manufacturers who offer training and support in adopting these technologies will gain a competitive edge, helping farmers transition seamlessly to more automated and mechanized processes.

Labor Shortages and Skills Gaps Facing Agricultural Machinery Manufacturers 

However, the shortage of labor in the agricultural sector is also affecting the agricultural machinery industry, where shortage of workers continues to worsen. The US is forecast to have a shortage of 2.1 million  manufacturing workers by 2030. Skilled manufacturing talent is in high-demand and manufacturers outside major urban centers are facing growing challenges in attracting skilled workers to staff their manufacturing and assembly lines. 

Key aspects of this labor shortage in manufacturing include:

• Skilled worker scarcity: 75% of manufacturing professionals report a lack of skilled workers over the past year (source).
• High turnover: 46% of manufacturers reported notable resignations, with 81% experiencing disrupted plant operations due to turnover (source).
• Unfilled positions: If workforce challenges are not addressed, more than 1.9 million of the projected 3.8 million jobs needed by 2033 could go unfilled (source).
• Primary business challenge: 65% of manufacturers polled said attracting and retaining talent is their primary business concern (source).
• Aging workforce: One-third of the manufacturing workforce is over 55 years old, suggesting the problem could worsen as baby boomers retire (source).
• Digital skills gap: There is an increasing demand for advanced digital skills, with a 75% increase in demand for simulation and simulation software skills over the past five years (source).

To address these challenges, manufacturers must embrace a digital-first approach. Whether it is standardizing and digitizing assembly work instructions or implementing MES or PLM tools, adopting digital tools can help capture and preserve critical knowledge, streamline operations, and ensure consistency across production lines. Leveraging real-time data and investing in robotics and AI can reduce labor dependency, improve efficiency, and position companies to meet the demands of a rapidly evolving market. Reducing reliance on manual processes is no longer optional—it’s essential for maintaining competitiveness in the modern agricultural machinery landscape.

Integrating New Technologies into Agricultural Machinery

The growing challenges facing the US agricultural industry including labor shortages, increased input costs and market pressures are accelerating adoption of new agricultural technologies by farmers. US agricultural machinery manufacturers are working to adapt to the demand for new technologies.

Three major areas of innovation seeing growing adoption are:

• Precision Agriculture: Farmers are increasingly adopting precision farming technologies to boost efficiency and maximize yields. This involves using technologies such as GPS guidance, IoT and data analytics to optimize planting, irrigation, and fertilization. 
• Automation and AI: Automation and AI are fundamentally changing agriculture, enabling farmers to tackle labor shortages, reduce costs, and boost productivity. The agricultural AI market is expected to quadruple by 2026, reaching $4 billion. AI-driven technologies are increasingly being integrated into equipment, enabling machinery to perform complex tasks autonomously—from soil analysis to targeted pesticide application. 
• Drones, Sensors, and Robotics: High-tech drones, soil sensors, and robotic systems for repetitive tasks such as planting, weeding, and harvesting are helping farmers optimize input use and monitor crops more efficiently than ever before. Drones equipped with high-resolution cameras and sensors can monitor crop health, identify pest infestations, and evaluate soil moisture levels in real time. 

In the face of growing demand for new technologies, agricultural machinery manufacturers need to learn how to integrate these new technologies into their products as quickly and affordably as possible. The adoption of AI, autonomy and precision agriculture is quickly shifting from optional to essential  for agricultural machinery manufacturers to stay competitive.

Building next-generation agricultural machinery and integrating technologies like drones, autonomy and AI require manufacturers to modernize factory operations, retool production lines and develop new in-house competencies. The traditional approach to hardware development and producing agricultural machinery is no longer sufficient to meet the demands of an increasingly competitive market. 

Smaller, family-owned manufacturers often face budget constraints that limit their ability to invest in large-scale technological upgrades, putting them at a disadvantage compared to industry leaders and international competitors with the financial resources to innovate. To bridge the gap, manufacturers must buy or license new technologies and modernize their factory operations in order to integrate AI and automation into their products without incurring significant R&D expenses. 

Sustainability and Environmental Concerns

The increasing impacts of climate change—such as erratic weather patterns, prolonged droughts, and new pest outbreaks—are demanding new approaches in agriculture. Farmers are shifting toward more sustainable practices to reduce their environmental impact. Regulatory pressures are also mounting, as governments push for lower emissions and more environmentally friendly farming practices. 

Agricultural machinery is a critical focus of these environmental concerns and a key differentiation opportunity for agricultural machinery manufacturers. Agricultural machinery manufacturers that can offer solutions that support sustainable farming—such as electric and hybrid machinery, precision sprayers and machines optimized for minimal soil disturbance—will be best positioned to meet this growing market demand.

Designing machinery with environmental impact in mind requires meaningful redesign efforts across the entire design, manufacturing and assembly process for agricultural machinery manufactures. 

How BuildOS Equips Agricultural Machinery Manufacturers With Powerful Software and AI to Increase Efficiency and Output

A Turnkey AI Solution for your Manufacturing Process

At Dirac, we created BuildOS to be a powerful software product that enables manufacturers of all types to quickly and seamlessly integrate the power of AI into their existing workflows, with minimal disruption. 

Historically, integrating software into your manufacturing process has looked like painstaking deployments of PLM or MES systems that consume hundreds of hours of time, hundreds of thousands of dollars and take months (if not years). 

In contrast, BuildOS can be rolled out across your organization in as little as six weeks and offer immediate dividends by bringing AI to your factory floor by digitizing your work instructions. BuildOS. 

From Paper to Digital Work Instructions

BuildOS offers agricultural machinery manufacturers a streamlined solution for integrating technology into their assembly process. Manufacturers can transition from a time-consuming, manual approach to creating paper-based work instructions to digitized work instructions in as little as 6 weeks, reaping immediate benefits. 

• Automated Work Instructions Creation: Simply upload your CAD files into BuildOS and watch as the platform runs simulations and automatically generates detailed, step-by-step work instructions with minimal manual intervention. BuildOS automates the first 80% of creating work instructions immediately, leaving the last 20% to your team to finalize. 
• Capturing Tacit Knowledge: BuildOS allows manufacturers to capture the tacit knowledge and expertise of veteran employees by embedding their insights directly into work instructions. This feature helps mitigate the risks associated with an aging workforce, ensuring that invaluable assembly knowledge and know-how doesn't walk out the door when employees retire.
• Easy-to-Follow, Interactive 3D Visualizations: BuildOS generates interactive 3D animations based on your CAD files that bring the assembly process to life. New and existing workers can visualize each assembly step in motion enabling them to more easily understand the assembly process and reducing the risk of errors.

Fast and Easy Rollout with High Return on Investment 

BuildOS is designed to be intuitive, easy-to-use and plug-and-play requiring minimal integration with existing software systems. With BuildOS, even smaller manufacturers can afford to digitize operations without breaking the bank. 

BuildOS eliminates the need for extensive capital expenditure and complex systems integration, making digital transformation accessible to all manufacturers. Minimal training and onboarding requirements mean that employees can start using the system quickly and confidently, further accelerating the benefits of digital transformation.

Conclusion: Seizing the Future with BuildOS

The agricultural machinery industry is at the cusp of significant change. 

The path forward is clear: embrace innovation, digitization and AI in your manufacturing process to remain competitive. The mounting pressures of rising costs, labor shortages and demand for new, sophisticated technologies are daunting, but they also present unprecedented opportunities for manufacturers willing to adapt.

With tools like BuildOS, manufacturers can streamline operations, preserve invaluable knowledge, and integrate cutting-edge technologies into their products. By adopting solutions that enable manufacturers to address the industry's most pressing challenges—from precision agriculture and automation to sustainability and efficiency—agricultural machinery manufacturers can position themselves not only to survive but to thrive in the years ahead.

The stakes are high, but so are the rewards. Those who act now to modernize, innovate, and lead the charge will be the ones shaping the future of agriculture. The time to evolve is not tomorrow—it's today.

Take the First Step Today

Schedule a free consultation and discover how BuildOS can digitize your approach to creating work instructions and transform your assembly operations to help your business thrive into 2025 and beyond. 

The future of agricultural machinery is digital—don't get left behind.