The global Farm Equipment Market is projected to grow
from USD 99.4 Billion in 2021 to USD 126.0 Billion by 2027, at a CAGR of 4.0%
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.
However, a projected recovery in Q1-Q2 of 2021 in farm
equipment production supports the growth of the farm equipment market.
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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.
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.
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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 31-50 HP accounted for a share of
80-85% of the total tractor sales in India in 2020. 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.
Key Market Players
The farm equipment market is led by established players, such as
John Deere (US), AGCO Corporation (US), CNH Industrial (Netherlands), Kubota Corporation
(Japan), and CLAAS (Germany). These companies have adopted several strategies
to gain traction in the market. They have expanded in various geographical
locations through mergers & acquisitions, expansions, and entered into
joint ventures/collaborations with other industry players to sustain their
position in the market.
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