The global precision irrigation systems market was valued at USD 4.56 billion in 2022. It is anticipated to reach an expected value of USD 9.74 billion by 2031, registering a CAGR of 8.8% during the forecast period (2023-2031). Water scarcity is a significant issue in the current agricultural situation and a major factor in the use of irrigation systems. As a result, there is a greater need for artificial irrigation to guarantee a high crop yield and meet the rising consumer demand. The market is driven by the consolidation of farmlands across the globe, enabling farmers to invest in pricey irrigation systems like precision irrigation systems. The market is driven by governmental policies and subsidies, technological advancements, and growing water scarcity concerns.
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Subsidies from Government and Support from Financial Institutions
To encourage farmers to adopt cutting-edge irrigation technologies, government organizations are promoting precision irrigation systems in various nations by offering various benefits or subsidies to farmers. In May 2018, the Indian government and the National Bank for Agriculture and Rural Development approved an initial aggregate of USD 702.3 million to establish the micro irrigation fund (MIF). The Pradhan Mantri Krishi Sinchayee Yojna (PMKSY), created on July 1, 2015, is the legal framework under which this fund is registered. The scheme's primary goal is to spread awareness of precision irrigation technologies, especially among food crops like cotton and sugarcane. Furthermore, it focuses on expanding field crop coverage under precision-irrigation technologies. Moreover, the central government offered a 35% to 45% subsidy for drip irrigation systems. This is anticipated to strengthen the precision irrigation systems market in the coming years.
Additionally, stakeholders, citizens, and decision-makers are scrutinizing sectoral policies' environmental performance more and more in Europe. Several EU policy initiatives have been launched to address the issue of sustainable water use in agriculture. These initiatives include a more integrated approach to water management, reusing, research and innovation, and increased environmental interest in agricultural policy. The precision irrigation systems market is expected to experience significant growth, particularly in developing nations like Latin America and the Asia-Pacific. This is due to favorable government policies regarding low-interest loans and subsidies for implementing precision irrigation systems.
In order to reduce water wastage, advanced irrigation technologies, such as precision irrigation systems, are used by farmers in many developed economies. Thus, significant companies like Netafim Ltd, Jain Irrigation Systems Limited, and The Toro Company offer drip irrigation systems that can be embedded in pipes to simplify the installation process while creating sustainable agricultural production and improving the livelihood and economic position of millions of smallholder farmers.
Mobile-controlled electric motors use automated technology to provide better services. Some major companies, like Netafim Ltd and Jain Irrigation systems, are focusing on enhancing the production of advanced automated irrigation systems. This is expected to drive the irrigation systems market's growth. In 2020, Nelson Irrigation Corporation launched R55VT and R75 End of Pivot Sprinklers that will make it easier to fix it to any center pivot system but not the impact pivot sprinklers. As technology is made affordable and efficient, the adoption rate of precision irrigation machinery is anticipated to increase. This is projected to fuel the market's growth during the forecast period. Thus, the above factors drive the market and are anticipated to grow during the forecast period.
High Initial Capital Investments
In precision irrigation systems, drip and sprinkler irrigation systems are technically complicated. High installation costs of these irrigation systems are impacting their adoption. Furthermore, this factor is restraining the market's growth, especially in developing regions, such as South America and Asia-Pacific. In developing economies, small-scale farmers are reluctant to practice irrigation systems due to higher initial investment. For instance, in India, Albeit, a precision-irrigation system is gaining prominence. However, its adoption rate is stagnant for annual crops like cotton. Thus, high initial capital costs are impeding the market's growth.
The actual irrigation method, or the capital and operational costs related to the specific irrigation method, has an impact on three parameters via several factors, such as capital costs and related financing service charges, operational costs, and labor costs. These costs impact the farm budget on several levels. Although the initial investment is high, it also yields better yields and reduces dependency on rains over the long term. The high fixed cost required to install many new systems can prove to be a restraint for the market.
Global Water Scarcity
The precision irrigation systems market is primarily driven by factors such as the need to increase crop productivity while addressing water scarcity issues. Thus, governments in various regions are focusing on formulating initiatives to increase the usage of precision irrigation systems, such as drip, sprinkler, and pivot, while limiting water shortage. With water increasingly becoming a scarce commodity, farmers have been seeking novel ideas to grow more crops with the same quantity of water. Precision Irrigation systems, including sprinklers and drippers, are witnessing high demand. This is projected to augment the growth of the market studied.
The global population has been increasing significantly over the past few years, along with the demand for food. The Food and Agriculture Organization (FAO) introduced the Global Framework for Action in 2016 to address the effects of global water scarcity on agriculture in the context of climate change. This initiative is founded on the idea that, in the face of water scarcity, the key to achieving food security lies in maximizing benefits that span various aspects of the relationship between food, water, and climate. This framework emphasizes modernization, and the creation of multifunctional and climate-resistant irrigation infrastructure is seen as a critical action area to increase the effectiveness of water use in agriculture while preparing for the effects of climate change. Compared to traditional gravity flow irrigation, precision irrigation systems like sprinkler and drip irrigation systems give farms limited amounts of water with little waste. The market for precision irrigation systems is anticipated to expand during the forecast period due to rising demand for reducing water use and waste.
The global precision irrigation systems market is segmented by type, crop type, and region.
By type, the global precision irrigation systems market is segmented into sprinkler irrigation (traditional sprinklers, center pivot sprinklers, and lateral move/linear sprinklers), drip irrigation (surface drip irrigation, sub-surface drip irrigation, precision mobile drip irrigation, other types). The sprinkler irrigation segment accounted for the largest market share and is estimated to grow at a CAGR of 8.4% during the forecast period. The components of conventional sprinkler systems consist of pipes and sprinkler heads that move from one end of a field to the other while dispensing water in rectangular patterns. They can either be placed atop "lateral move" systems, which are pipes on motorized wheels that automate the distribution of water at a predetermined pace, or set up and moved by hand. To reach the untapped market, companies in the sprinkler irrigation industry are focusing on developing nations. Companies are creating novel products to meet the needs of these smallholding farmers on a custom basis to generate demand among the medium and smallholding farmers in these developing nations. Thus, innovative products meeting the specialized demands of small farmers in developing countries are anticipated to propel the market for traditional sprinklers during the forecast period.
By crop type, the global precision irrigation systems market is segmented into field crops, plantation crops, orchards and vineyards, and turf and ornamentals. The field crops segment accounted for the largest market share and is estimated to grow at a CAGR of 9.4% during the forecast period. Technological advances in precision irrigation practices and equipment have profoundly changed irrigation in agriculture. According to the FAO, about 70% of the cultivated land was used to grow cereals, as most cereals are water-intensive crops, such as rice and maize. Farmers worldwide are under pressure to boost cereal production due to the growing world population, which has resulted in a rise in the usage of precision irrigation in this industry. In the United States, Nebraska is the highest irrigated state, which increased from 8.2 million ha irrigated land in 2014 to 8.6 million ha irrigated land in 2018. Nebraska accounts for about 15% of the country's total irrigated land. The prevalence of irrigated acreage in Nebraska accounts for the abundance of groundwater resources as much of the state overlies the high plains aquifer. Nebraska is a major producer of corn. Rice is a significant cereal crop in Japan, but rice production decreased due to ineffective precision irrigation systems. As a result, the country's Agriculture Ministry allocated USD 544 million to convert rice paddies to dry fields and improve drainage and irrigation systems for farmland, which is more than the previous year's allocation of USD 431 million. These shifts in the budget allocation to improve precision irrigation is projected to increase the precision irrigation systems market.
The plantation crops segment is the second largest. Plantation crops include large-scale estate crops, such as cotton, tea, coffee, sugarcane, coconut, and rubber. Cotton, sugarcane, cashew nut, coconut, turmeric, etc., are the major plantation crops in India. Guatemala, the third major sugarcane producer in Latin America and the fourth significant exporter worldwide, experienced the benefit of precision irrigation systems. For instance, most sugarcane farmers in Guatemala utilized overhead sprinkler systems in their sugarcane plantations and witnessed a 25% increase in output in 2019. This growth is anticipated to drive the market's growth during the forecast period.
By region, the global precision irrigation systems market is segmented into North America, Europe, Asia-Pacific, Africa, and South America
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North America accounted for the largest market share and is estimated to grow at a CAGR of 9.8% during the forecast period. The United States irrigated area increased due to improvements in groundwater pumping technologies and water development programs at the federal, state, and local levels. Farmers in the nation have had timely access to subsidies in the form of loans for agricultural equipment with adjustable interest rates and repayment terms. This has encouraged even the smallest farmers to purchase agricultural machinery, growing the market for precision irrigation systems. Sprinkler irrigation systems are used in various topographic conditions in many different applications, including home gardens and turf, municipal landscaping, crop irrigation, controlling airborne dust, and cooling. Sprinklers can be used for various purposes, and the nation's rising demand for landscaping is fueling the market's expansion even more.
Asia-Pacific is the second largest region. It is registering a CAGR of 9.4%. In China, many farms are less than an acre in size. So they receive minimum benefits from new technologies. Agricultural irrigation and drainage systems still depend mainly on the labor input of rural areas. Of all the industrial sectors in China, agriculture is the most water-intensive, which depends mainly on irrigation. Chinese agricultural sector consumes the most significant proportion (more than 60%) of the national water withdrawal. China's irrigation-ready land recently surpassed 69.9 million hectares or about 52% of the country's total arable land. From 41,847 metric tons in 2016 to 44,804 metric tons in 2019, the annual production of cereal increased. Hence, it is anticipated that the sale of irrigation systems in the nation will increase in the upcoming years. Therefore, it is anticipated that the growing emphasis on farm mechanization and the government's desire to irrigate more land will increase sales of precision irrigation systems and fuel market growth in the region over the forecast period.
Europe is the third largest region. Germany is a significant producer of cereals, mostly water-intensive, and timely irrigation yields better produce. The area under wheat cultivation increased from 3,036,300 ha in 2018 to 3,118,100 ha in 2019. The increase in the area will lead to higher demand for irrigation, surging the use of precision irrigation systems and spiraling the market during the study period. Therefore, the decreasing labor force is resulting in increased mechanization of agriculture in the country. With the rising awareness of water use efficiency and mechanized irrigation, the precision irrigation systems market is anticipated to propel during the projected period.
The global precision irrigation systems market major companies are Jain Irrigation Systems Ltd, Lindsay Corporation, Mahindra EPC Industries Limited, Nelson Irrigation Corporation, Netafim Ltd, and Rivulis Irrigation Ltd, Rain Bird Corporation, The Toro Company, Valmont Industries Inc., T-l Irrigation Co., Deere & Company.