Published by MarketsandMarkets, the global farm equipment market is projected to grow from USD 111.8 billion in 2022 to USD 141.6 billion by 2027, at a CAGR of 4.8% during the forecast period. An increase in farm mechanization, government support with farm loan waivers/credit finance, contract farming, and a shortage of skilled labor are the key factors driving farm equipment growth globally.
The demand for electric & autonomous tractors and the rising demand for farm equipment rental services would create growth opportunities in the farm equipment market.
Battery electric tractors would lead the future of the tractors industry
To meet the stringency of Non-Road Mobile Machinery (NRMM) emission regulations, the OEMs are developing hybrid and electric farm tractors. Hybrid electric farm tractors use a diesel engine and a regenerative energy storage system that helps increase fuel efficiency and offers the required propulsion in heavy-duty applications. Alternatively, the pure battery electric tractors would run on battery power only. Hybrid electric tractors can offer 35-40% savings on annual fuel expenditures. Challenges such as high battery cost, limitations in battery technology and limited possible applications of battery electric tractors would slow down the demand for these tractors for the next 3-4 years. However, the benefits such as energy efficiency, high torque, low emission, and low maintenance of electric tractors would boost their demand in the long run.
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The 31-70 HP farm tractor would hold the largest share in the rental market
Tractors hold the largest share among all the rented farm equipment. Companies collaborate with application companies to promote leasing businesses and encourage farmers to use farm equipment at affordable prices. The North American and European countries have a higher demand for tractor rental compared to developing regions. The demand for high-powered tractors is higher in European countries, whereas Asian countries demand low-powered tractor rental. For instance, demand for >50 HP tractors is more for rental purposes, as they are used for multiple implements. According to Agri Evolution Report 2020, the rental market for 31-70 HP tractors is higher in India, China, and other Asia-Oceania countries.
Asia Oceania is estimated to be the dominant regional market
Farmers in the Asia Oceania region are increasingly producing rice and crops such as palm and cotton. Further, a shift from adopting labor-intensive farming techniques to advanced technological equipment in the agricultural sector across the Asia Oceania countries has led to increasing demand for tractors and various farming equipment such as harvesters and spraying and threshing equipment for the renting purpose. Increasing government efforts to promote farm mechanization, contract farming, and loan waivers would also to drive the market. Investments in various agricultural machinery have also increased crop production, particularly in developing countries such as India, China, Vietnam, and Indonesia. India is the largest market for tractors in the world. The rolling out of government schemes and loan waivers for farmers and the promotion of farm mechanization would boost the Indian tractor market. Regulations would mainly drive the Indian farm industry.
The farm equipment market is consolidated. John Deere (US), AGCO Corporation (US), CNH Industrial (UK), Kubota Corporation (Japan), and CLAAS (Germany) are the top players in the farm equipment market. New product development, partnership, and joint venture strategy have been the most dominating strategy adopted by major players from 2018 to 2022, which helped them to innovate their offerings and broaden their customer base.
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