Impact Analysis of Covid-19
The complete version of the Report will include the impact of the COVID-19, and anticipated change on the future outlook of the industry, by taking into the account the political, economic, social, and technological parameters.
Agriculture and farm machinery is comprised of tools and machinery required by farmers in agricultural farmlands to increase the productivity of corps. These types of machinery include harvesting machinery, tractors, cultivators, etc. that are used for numerous applications such as tilling, plowing, disking, and harvesting. These machineries vary on the basis of the type of farming, i.e. organic farming and non-organic farming. Over the years, agriculture machinery has evolved significantly with the incorporation of advanced technologies such as GPS tracking and enhanced fuel efficiency.
The global agriculture and farm machinery market is estimated to account for US$ 342.8 Bn in terms of value by the end of 2027.
Market Dynamics- Drivers
- Increasing demand for food worldwide is expected to drive growth of the global agriculture and farm machinery market during the forecast period
The demand for food is increasing across the globe significantly. This is due to rising global population and growing disposable income. Increased demand for food has encouraged farmers to adopt modern farming practices, in order to increase crop yields thereby boosting the demand for agriculture machinery globally. In Asia Pacific, countries such as India and China are witnessing the shift in overall population. Growing population is responsible for increasing food demand in Asia Pacific, which in turn will fuel the demand for agricultural machinery for farm production in this region. Thus, these factors are expected to drive growth of the global agriculture and farm machinery market during the forecast period.
- Growing mechanization of farming operations is expected to propel to global agriculture and farm machinery market growth over the forecast period
Many farmers across the globe are adopting advanced machinery for farming operations. The mechanization of farming operations results in increased production and profitability by achieving timelines in farming operations. Farm mechanization also helps to preserve the farm produce thereby increasing profitability and cost-effectiveness by reducing post-harvest losses. These processes reduce wastage, increases shelf-life, and results in value addition and higher-income transfer to the farmers from different classes of consumers. According to Agrievolution VDMA, the sales of new tractors in Asia Pacific for India and China collectively in 2011 were 840,000 units. Hence, these factors are expected to propel the market growth in the near future.
Europe held dominant position in the global agriculture and farm machinery market in 2019, accounting for 35.3% share in terms of value, followed by North America, Asia-Pacific, and RoW respectively.
Agriculture and Farm Machinery Market Report Coverage
||Market Size in 2019:
||US$ 174.6 Bn
|Historical Data for:
||2016 to 2019
||2020 to 2027
|Forecast Period 2020 to 2027 CAGR:
||2027 Value Projection:
||US$ 342.8 Bn
- North America: U.S., Canada
- Latin America: Brazil, Argentina, Mexico, Rest of Latin America
- Europe: Germany, U.K., Spain, France, Italy, Russia, Rest of Europe
- Asia Pacific: China, India, Japan, Australia, South Korea, ASEAN, Rest of Asia Pacific
- Middle East: GCC Countries, Israel, Rest of Middle East
- Africa: South Africa, North Africa, Central Africa
- By Product Type: Farm Tractors, Harvesting Machinery, Plowing and Harvesting Machinery, Planting and Fertilizing Machinery, Haying Machinery, Other Agriculture Machinery, Parts and Attachment.
CNH Global NV, Yamabiko Corporation, Deere and Company, Mahindra & Mahindra Limited, CLAAS KGaA mbH, Same Deutz-Fahr, Bucher Industries AG, AGCO Corporation, Iseki & Co., Ltd., J.C. Bamford Excavators Limited (JCB), Kubota Corporation, and Alamo Group, Inc.
- Increasing demand for food worldwide
- Growing Mechanization of farming operation
|Restraints & Challenges:
- Rising urbanization and decreasing farmlands
- High cost and low purchasing power
Figure 1: Global Agriculture and Farm Machinery Market Share (%), in terms of Value, By Region, 2019
Market Dynamics- Restraints
- High cost and low purchasing power is expected to restrain growth of the global agriculture and farm machinery market during the forecast period
Farming and agriculture machinery is significantly expensive. Machineries such as cultivators, tractors, harvester, crop spray, and trailers require significant capital investment. Not all farmers can afford such heavy equipment due to low purchase power, especially farmers from emerging economies such as India, Brazil, Indonesia, and South Africa. As a result of this, the demand for these machineries is low in emerging regions such as Latin America and Middle East. Thus, these factors are expected to restrain growth of the market during the forecast period.
- Rising urbanization and decreasing farmlands is expected to hinder the global agriculture farm machinery market growth over the forecast period
Over the years, farmlands have been turned into commercial properties due to rising urbanization across the globe. These farmlands are being used for business investments such as housing, hotels, and shopping centers. This has an indirect impact on the use of agriculture and farm machinery. It has become challenging for individual farmers to own heavy equipment due to diminutive size of farmlands since return on investment takes a considerable amount of time. Hence these factors are expected to hinder the global agriculture and farm machinery market growth in the near future.
- Availability of subsidies to by government to promote adoption of farm machinery can present business opportunities
Since these equipment are substantially expensive and farmers alone cannot afford it, many government authorities are offering subsidies to encourage its adoption. For instance, the Government of India initiative for promotion of agriculture mechanization includes a subsidy of 25% to 50% of the cost of equipment/machine. The subsidies are available to all categories of farmers under various schemes of Department of Agriculture and Cooperation such as the Rashtriya Krishi Vikas Yojana, National Horticulture Mission, and Macro Management of Agriculture.
- Innovations in the field of autonomous tractors can provide lucrative growth opportunities
Many manufacturers are focused on technological advancements. Advanced technologies are being incorporated in tractors and harvesters. Advent of autonomous tractors has provided numerous opportunities. Autonomous tractors are GPS-directed and hence can perform extensive applications with improved accuracy.
Figure 2: Global Agriculture and Farm Machinery Market Value (US$ Bn), 2017 - 2027
The global agriculture and farm machinery market was valued at US$ 174.6 Bn in 2019 and is forecast to reach a value of US$ 342.8 Bn by 2027 at a CAGR of 8.8% between 2020 and 2027.
- Growing focus on emerging economies
Until recently, farming in emerging was performed using traditional methods. Major agricultural machinery manufacturers, including CLAAS KGaA mbH and J.C. Bamford Excavators Limited (JCB), are focusing majorly on developing economies including India, China, and Brazil to overcome the knowledge gap about farming practices and promote modernized agricultural practices. Various large multinational companies are also capitalizing on flourishing markets by expanding their operations. Governments of various countries such as India, Brazil, Germany, among others are focusing on expanding the reach of subsidies on agricultural machinery in order to promote farm mechanization. Furthermore, certain companies manufacture lower power tractors at cheaper rates for small-sized farmers. For instance, Mahindra & Mahindra offers affordable and low-power tractors suited for small-size farmers.
- Growing demand for agriculture machinery due to rising agricultural practices
Rising demand for food owing to the growing global population has led to the innovation in agricultural practices worldwide. The growing agricultural practice is directly affecting the agricultural and farm machinery market. Agricultural machinery such as tractors, combines, and harvesters are used in plowing and harvesting, which in turn, increases the productivity of farmlands. The success of agricultural practice is thus, directly dependent on the use of agricultural machinery.
Global Agriculture and Farm Machinery Market - Impact of Coronavirus (Covid-19) Pandemic
Due to the Covid-19 pandemic, agricultural industries have witnessed a significant shift in their business. Due to non-availability of labor and issues in the transportation of goods has increased the demand for agriculture equipment’s in the agriculture industry. The agriculture sector mainly depend on migrant laborers for several operations such as harvesting, cultivating, tilling, and many others. For instance, in March 2020, according to coherent market insight, 140 million migrant people are expected to return their native hometown from cities in India. Due to lockdown imposed by many countries, there are restrictions on the movements of people and vehicles that have a negative impact on the farm economy. Thus, due to the shortage of labor, people are shifting to modern farming for more production and increases the demand for agriculture and farm machinery market in the future.
Value Chain Analysis
The agriculture and farm machinery comprises various machineries used in agricultural practice including farm tractors, harvesting machinery, plowing and cultivation machinery and haying machinery among others. These different machineries need different parts and components which are then assembled to form a distinct machinery unit. For instance, for manufacturing tractors the major components required are filters, engine parts, cooling system, air system and real axle among others. Some manufacturers of tractor components include Tractormatic Ltd., and Agriengineers, among others. The components and raw materials are readily available to the manufacturers. However, proximity to the suppliers and timely delivery play a vital role in the value chain.
Major companies operating in the global agriculture and farm machinery market are CNH Global NV, Yamabiko Corporation, Deere and Company, Mahindra & Mahindra Limited, CLAAS KGaA mbH, Same Deutz-Fahr, Bucher Industries AG, AGCO Corporation, Iseki & Co., Ltd., J.C. Bamford Excavators Limited (JCB), Kubota Corporation, and Alamo Group, Inc.
- Major market players are involved in product launches, in order to expand the product portfolio. For instance, in April 2017, Mahindra & Mahindra Limited, an India-based tractor manufacturing company, launched Mahindra JIVO with 20HP 2WD.
- Key companies are focused on product development, in order to enhance the market presence. For instance, in September 2019, SDF India, a subsidiary Same Deutz-Fahr, launched new Tractor of Agromaxx series with versatile technology.