Farm Equipment Rental Market

Market Overview

The global farm equipment rental market size was valued at USD 35.38 billion in 2022. It is estimated to reach USD 61.99 billion by 2031, growing at a CAGR of 6.43% during the forecast period (2023–2031).

The term "farm equipment" refers to agricultural or farming machinery. Farm equipment rental is a business concept and contract that offers cheaply priced, time-limited rentals and leases of tangible agricultural instruments and self-propelled equipment to authorized consumers. Its standard components include tractors, harvesting equipment, mower conditioners, tillage systems, rotary tillers, fertilizers, and herbicides. A rental agreement with specific terms and guidelines must be signed by both parties to obtain these things.

Renting farm equipment avoids upfront investments, cuts unneeded maintenance costs, and gives access to cutting-edge agricultural machinery, which lower overhead costs. In addition, farm equipment rental provides high-performance tools on a contractual basis, allowing instrument usage in short-term projects to meet sporadic farming needs, permitting product testing, and enhancing agricultural practices. As a result, the service is applied in cultivating, planting, and fertilizing applications.

Highlights

• Tractor dominates the product segment
• Asia-Pacific is the highest shareholder in the global market

Market Dynamics

Market Drivers:

High Cost of Agriculture Equipment

Agriculture equipment is among the primary requirements for all agricultural activities. Since the 2000s, the move toward precision farming and digitization in the agricultural industry has resulted in inflation in agricultural equipment prices. This has resulted in farmers needing help to purchase necessary equipment for their agricultural activities, leading to decreased agricultural production.

Small and medium-scale growers with less land availability face the significant impacts of inflation in equipment prices. The annual production and revenue generated by these growers leave them unable to afford new farm equipment. According to a study by the University of Illinois Department of Agricultural and Consumer Economics, most machinery costs increased by 7-9% between 2017 and 2019. Thus, farm equipment rental service provides an excellent opportunity for growers to use the latest farm equipment in their field without paying the product's total price. This allows a farmer can use a product as required in the field, thereby driving market growth.

Rising Global Food Demand

Global food demand is one of the major concerns for the entire agricultural industry. The global population has increased significantly since the 2000s and is expected to reach 9.72 billion by 2050. Farm productivity must be increased to cater to the growing population and food demand. Farm equipment rental service is a huge solution to this problem. Due to the high cost and unavailability of equipment, farmers cannot increase their agricultural productivity.

In addition, farmers are not able to maximize output, making it challenging to meet the needs of an expanding population. Rental farm equipment and subsidies on farm equipment offered by the government have been essential in increasing agricultural production. This service provides the farmers with vital necessities in the field. Therefore, rising global food demand and awareness of the sudden need for increasing agricultural production has been a strong driver for the growth of the global market.

Market Restraint:

High Rental Costs and Interest Rates

Rental farm equipment has proved to be a great solution to the long-standing problems of the high cost of farm equipment. Through the availability of farm equipment on a rental and lease basis, farmers have been able to use the necessary farm equipment in the field. This has also helped in increasing agricultural productivity. The availability of rental farm equipment has greatly helped small and medium-scale farmers, though the high rental costs for this equipment are still a significant issue for small-scale growers.

For instance, the Kubota M6-141 tractor manufactured by Kubota Corporation is rented out to the farmers on a weekly charge ranging from USD 2,200 to USD 3,100. Also, fuel prices for the equipment are not included in the rental cost. Thus, even though farm farm equipment i equipment is available to the grower on a rental basis, it is still tricky for small-scale growers to afford it weekly. The market has vast potential in the regions with small and medium-scale farmers, but the growth could be improved because of the high rental costs of equipment.

Market Opportunities:

Rising Adoption of Modern Agricultural Equipment

Growth among farm equipment manufacturers is a massive opportunity for the farm equipment rental market. Farm equipment availability on a rental basis has benefited the development of the overall agricultural industry. The agriculture industry is one of the industries wherein the equipment is only replaced for a short period. For instance, two-wheel and four-wheel farm tractors are usually replaced after ten years. As a result, equipment with low efficiency and productivity is used in the field for longer durations. This affects the productivity of the field as with wear and tear, and the equipment loses its efficiency.

Rental farm equipment makes new and underutilized agricultural equipment available to farmers, increasing the utilization of cutting-edge technology in the field. This would also raise awareness of the specifications of the new farm equipment and the benefits that this equipment entails over the previously used equipment. The field's overall productivity and efficiency will also increase, leading to better production and revenue generation for the farmers. Thus, the rental farm equipment market can increase the adoption of modern farm equipment in the industry, thereby increasing agricultural productivity.

Regional Analysis

Asia-Pacific Dominates the Global Market

Based on region, the global farm equipment rental market is bifurcated into North America, Europe, the U.K., China, Asia-Pacific, the Middle East and Africa, and South America.

Asia-Pacific is the most significant shareholder in the global farm equipment rental market and is anticipated to exhibit a CAGR of 7.37% during the forecast period. The Asia-Pacific region is a vital component of the global food chain. The region accounts for about 19% of global food and agriculture exports and about 31% of food and agriculture imports. In this region, the agricultural industry is an important industry that significantly impacts the country's GDP. Thus, development in agricultural technology is crucial in these regions to enhance their agricultural sector and cater to the growing population. In order to meet the expanding demand for food, farmers in the area are now focusing on improving crop yields and offering a year-round supply of agricultural products. Consequently, Asia-Pacific is expected to be the leading region in the global market. Governments in the Asia-Pacific region are taking initiatives to develop the agricultural industry and offering subsidies to the farmers in some nations, such as India. The Asia-Pacific region is still in the early stage of adopting agriculture technologies; however, it is expected to grow substantially over the forecast period.

North America is estimated to exhibit a CAGR of 5.76% over the forecast period. The agricultural industry plays a massive role in the overall economy of the countries in the North American region, such as the U.S. and Mexico. The region's farmers own land ranging from 1 hectare to over 100 hectares. Therefore, the cost of farm equipment, such as tractors, harvesters, and sprayers, among others, becomes a significant hindrance for small and medium-scale farmers in the North American region. This problem for the farmers has been remedied by the availability of farm equipment for rental since the farmers may rent out any equipment they need hourly, weekly, or monthly. Due to multiple farm equipment rental providers in the region, the global market is expected to grow in North America in the coming years. In addition, some of the leading rental farm equipment providers in the North American region include MacAllister Rentals, KWIPPED, Inc., and Flaman Group of Companies.

Europe is expected to grow significantly over the forecast period. Since 2010, Europe has been one of the regions in the world that have been developing its technological capabilities. The region is steadily expanding as a result of the increased technical breakthroughs, particularly in nations like Germany and France. In the last decade, the environmental conditions in the region have caused the European farming industry to accept eco-friendly farm production techniques. In addition, European Union changed various policies to support the agricultural sector to help farmers. The agricultural policy comprises many areas, such as traceability, trade, food quality, and promoting farm products. Likewise, the European Union financially supports farmers and encourages sustainable and eco-friendly practices while investing in rural areas' development. Many different farm equipment rental companies operate in the European region, which is expected to drive the market.

The U.K. government is investing in new technologies and technical developments to focus more on the agriculture industry and increase its sustainable output. The government, technology, science and education, and scientific research centers collaborate to deliver innovative solutions to the agriculture sector. Therefore, the demand for the global market increased over the forecast period.

The Middle East and Africa region is one of the regions in the world where most of the population lives in rural areas. The Middle East and Africa region covers an area of 1100 million hectares and includes a diversity of climates. The Middle East and Africa region is more economically deprived than other developed areas. In most of the region, the early development of irrigation-based civilizations laid the groundwork for intensive agricultural systems still in use today. Since the majority of the population relies on agriculture, the scope of the farm equipment rental market in this region is anticipated to increase.

Segmental Analysis

The global market is segmented by product.

Based on product, the global market is segmented into tractors, harvesters, balers, sprayers, and others.

The tractor segment owns the highest market and is expected to exhibit a CAGR of 6.82% over the forecast period. Farm tractors are one of the essential components in traditional and modern agriculture. A tractor is equipment that provides machine power to perform agricultural tasks. In addition to other uses, tractors can pull various agricultural instruments for sowing, cultivating, and fertilizing. Tractors are also used for personal transport and handling materials. By providing propulsion, tractors have replaced human and animal power, which are still widely used in other parts of the world. Although tractors are one of the most significant parts of conventional agriculture, most participants in the global market offer rental tractor services. A well-equipped tractor enables a wide range of applications in the field. Since a tractor has multiple applications in the field, a wide range of tractors can be differentiated based on drive type and power output. Furthermore, the tractor segment can be sub-segmented based on drive type into two and four-wheel drive. In contrast, based on power output, the segment is sub-segmented into less than 50 HP, 50HP-100HP, and more than 100 HP.

Harvesting is a process in which grain farmers always face a challenge due to the shortage of labor and increase in wages in the country. The labor shortage has increased the adoption of combined harvesters in the agricultural industry. Farmers are incredibly attracted to farm mechanization due to the benefits that these harvesters entail. Harvesters combine threshing, reaping, cleaning, and bagging in a single operation. Harvester is among the significant equipment rented out in the global market as the applications of the harvester in the field are vast. In addition, farm equipment rental companies widely rent out harvesters due to the high cost of the harvester. The inflation in harvester prices is due to the increased digitization in the agricultural industry, which has grown farm equipment costs.

A sprayer is an equipment deployed to spray liquids such as water, insecticides, and pesticides. They are also utilized in the agricultural sector to apply fertilizer and pesticides to crops. Agricultural sprayers have components such as a spray nozzle, liquid tank, spray pump, pressure regulator, valves, and hydraulic fluid system, and some sprayers have a spray gun. These agricultural sprayers are available in various sizes, designs, and performance specifications. Small sprayers with very large sprayers help cover small areas of ample land. Several sprayers are designed for different spraying applications like gardening, crops, trees, fruit, livestock needs, and weed control. Due to increased agricultural digitization, UAVs have been used as spraying equipment. In traditional agriculture, farm equipment rental companies offer sprayers due to the high equipment requirement in the field.

Recent Developments

• February 2023- Kubota Tractor Corp. started utilizing two of North America's largest farm sector trade exhibitions to debut a new line of compact tractors designed for rural residential and commercial applications. During the 2023 National Farm Machinery Exposition in Louisville, Kentucky, the company debuted two LX20 Series models, the LX3520 and LX4020, as well as the L2502 and L4802 compact tractors from the L02 Series.

• August 2022- Sonalika Group launched its new ‘Sonalika Agro Solutions’ tractor and implemented a rental app to bridge the gap between farmers and hi-tech farm machinery, from land preparation to harvesting. The platform connects the farmers with a huge range of machinery renters that offer high-tech agricultural implements for rent within their vicinity.