Agriculture equipment is used in the field for precise, efficient, and faster operations. The high return on investment (ROI) of these products, the ability to replace the conventional method of operations with mechanized techniques, and lower operational cost drive the market growth. Shifting preference towards organic farming, scarcity of skilled laborers, and the need for replacing the current farming operations to promote water conservation provides an impetus to the market growth.
The sales of farming equipment are ramping up across several nations in the global market. Many market players are looking to mitigate the losses they sustained during the COVID-19 outbreak. The current halt in import-export operations between countries hampers market growth.
The agriculture equipment market was valued at USD 109 billion in 2019 and is anticipated to grow with a CAGR of 7.48%.
Agriculture equipment improves the capacity of per hectare yield of the farmland. The most prominent problems include better crop sowing and management, adjusting to the threat of climate change, maintaining soil quality, and obstructing soil erosion. The use of high tech equipment provides better quality, compelling farmland owners to procure such equipment.
Farming and agriculture equipment is becoming affordable for farm owners and crop consultants. The lower initial investment and technological development is surging the return on investment. The increasing number of rental service players providing various farming equipment on a rental basis drives the market growth.
Over the recent past, there has been a severe decrement in the use of farmland. According to the recent statistics released by the U.S. government, the U.S. has recorded a 7% shrunk in farmland. Globally, the population explosion is surging the need for food products exponentially. The farmers and food product suppliers need to strategically develop an action plan to increase the current per hectare production scenario and mitigate the losses incurred due to the lesser availability of farmland.
The mechanized equipment used to perform farming operations is intended to help the farmers to increase their production and maintain the health of the soil. This ability of agriculture equipment to make precise calculations to obtain a return on investment by calculating the years of operations, cost of fuel and maintenance, and savings achieved by a decrement in the requirements of laborers accelerate the market growth.
In 2019, Mahindra and Mahindra finalized its investments in the K2 project, aiming to develop new tractor platforms. The tie-up of Mahindra and Mahindra with Mitsubishi is expected to attract a lot of traction towards the market. The company is also maintaining line balancing and outsourcing operations to maintain the production and demand ratio in the market.
Globally, governments and agriculture equipment providers are emphasizing the importance of integration of mechanization in farming operations to have better crop yield. Tractors elevate the level of mechanized operations and can be used as standalone equipment or as a hybrid machine. The ability of tractors to complement and provide efficiency in various critical farming operations propels the tractor segment growth.
The growing popularity of tractors in regions where traditional farming is still preferred is also reinforcing the improvement in sales. Government schemes in many countries, such as no-interest loans, loan waiver schemes, and schemes to uplift the production and per hectare yield, are the prominent factors promoting the growth of the market.
Asia-Pacific is estimated to emerge as the fastest-growing region in terms of sales of agriculture equipment. The intense pace of the market growth is characterized by the modernization of farming techniques and a large number of farmers operating in the region. The emergence of farming equipment manufacturers in Japan and China bolsters regional market growth. The government in India is expected to support farmers to procure the agriculture equipment, improve the yield output, and increase their profit margins. Additionally, the government of China is providing all the required aid to farming equipment manufacturers to supply products. In India, even after the critical shrink observed in the automotive industry, the sales of tractors witnessed a substantial growth of 80% in September.
The North American agriculture equipment market is expected to hold about 21.48% of shares. The introduction of agriculture equipment vehicles with superior performance and economical fuel consumption promotes the market growth. Apart from this, the rising awareness about modern farming equipment and governmental support to implement automation for better production drives the regional market growth.