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. Government support with farm loan waivers/
credit finance, OEM/sales incentives to support dealer service and rental operations, increase in farm mechanization, and contract farming are the major factors driving the growth of the farm equipment market.
The plowing & cultivating segment is estimated to lead the market in terms of value during the forecast period due to the growing requirement of plowing according to seasons, rising need for cultivators in small and large farms, and achieving better soil fertility. Asia Oceania dominates the plowing & cultivating implements market considering agriculture activities at a huge scale in the region. This trend is expected to remain the same in the future, considering the demand for higher productivity and efficiency.
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The tractors segment holds the largest share in the farm equipment rental market. The growth of the market can be attributed to the increasing farm mechanization driven by government efforts to encourage farmers to rent equipment as per their needs. The market for tractors accounted for the largest share, followed by combines. The rising concerns over farm productivity across the globe would subsequently drive the growth of the tractors segment in the farm equipment rental market during the forecast period. In Asia Oceania, most small and medium farmers are opting to rent tractors with high power output such as 71-130 HP for farming operations through key players such as John Deere, AGCO Corporation, Mahindra & Mahindra, TAFE, etc. For instance, TAFE is providing J-farm services for renting high-power output tractors through the farmer-to-farmer model, which negotiates the rental price and thus fulfills their respective requirements.
The 31-70 HP segment holds the largest share in the farm tractor rental market. Asia Oceania is estimated to be the largest market for 31-70 HP tractors for rental purposes, as these tractors are suitable for farmland that ranges from 1 to 20 acres. The key markets of Asia Oceania, such as China, India, and Japan, have smaller farmland sizes. The increasing demand for rental digital offerings and upgrades of popular tractor series are expected to drive the farm tractor rental market in the coming years. According to secondary research, sales of tractors with 31-70 HP accounted for a share of 80-85% of the total tractor sales in India in 2021. Various rental offerings made by Mahindra & Mahindra drive the farm tractor rental market in India. The demand for small- and mid-range tractors in China and Thailand and the increased investment capability of farmers fuel the market in Asia Oceania.
Contract farming is an agreement between the farmer and the buyer for agricultural production. The demand for this type of farming is growing in importance in Georgia, Scotland, the US, France, Spain, Belgium, Brazil, Argentina, Cambodia, Mozambique, and Morocco. Governments in several countries also consider contract framing as a part of their legal framework. For instance, in India, the Central Government enacted the Empowerment and Protection Agreement on Price Assurance and Farm Services Ordinance, providing farmers to enter direct contracts with customers who want to buy their produce. This is expected to help farmers set a suitable price for their produce with the buyer. Earlier, the agribusiness firms had to buy the produce through traders and could not directly contact the farmers. This policy will boost direct contracts between farmers and companies, thereby increasing their benefit margins. Thus, the adoption of contract farming globally may encourage farmers to invest in farm equipment and implements.
The increasing farm mechanization has contributed to the development and sustainability of the agricultural sector. Farm mechanization includes the usage of tractors, combines, balers, and sprayers. This helps reduce drudgery, save time and labor, cut production costs, reduce post-harvest losses, and increase crop output and farm income. The farm mechanization rate is about 90–95% in developed countries such as the US, Germany, Canada, and France. On the other hand, most populated countries, such as China, India, and Indonesia, have a low mechanization rate. However, to support the growing population, the farm mechanization rate is expected to grow significantly in developing regions.
Leading manufacturers such as John Deere and CNH Industrial have developed new mechanized irrigation systems that use regenerative water technology to conserve water and enhance crop productivity. With the increase in mechanization and deployment of technological products, the farm equipment market is expected to have a positive outlook during the forecast period. According to National Bank for Agricultural and Rural Development, the use of improved implements can increase productivity up to 30% and reduce the cost of cultivation up to 20%. According to the Indian Chamber of Food and Agriculture (ICFA), the farm mechanization rate in India is about 40%-45%, which is still low when compared to the US (95%), Brazil (75%), and China (57%).
Key Market Players:
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.
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