According to a research report “Farm Equipment Market by Tractor Power Output (250HP), Type (Tractors, Balers, Sprayers), Tractor Drive Type, Electric Tractor by Type & Propulsion, Implement by Function, Rental & Region – Global Forecast to 2028″ published by MarketsandMarkets, the global farm equipment market is projected to grow from USD 107.7 billion in 2023 to USD 136.3 billion by 2028, at a CAGR of 4.8% from 2023 to 2028.

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Market Dynamics

DRIVER: Government support with farm loan waivers/ credit finance

Farm loan waiver programs serve as incentives for farmers to invest in agricultural equipment. Governments worldwide have introduced these schemes to alleviate farmers from debt burdens and promote the adoption of mechanized farming methods. According to the 2019 Agricultural Policy Monitoring and Evaluation report by the Organization for Economic Co-operation and Development (OECD), farm policies in 54 countries, including OECD and EU nations, along with 12 key emerging economies, provided an average of USD 817 billion per year in direct support to farmers from 2019 to 2021. This represents a 13% increase compared to the period from 2018 to 2020. EU For instance, In India, the Ministry of Agriculture and Farmers’ Welfare has allocated Rs 1,25,036 crore (USD 15.14 Billion) in 2023-24, 5% more than the revised estimates for 2022-23. Rashtriya Krishi Vikas Yojana (RKVY) scheme was restructured under the 2022-23 budget to subsume other schemes such as the Pradhan Mantri Krishi Sinchai Yojna-Per Drop More Crop, Paramparagat Krishi Vikas Yojna, National Project on Soil and Health Fertility, Rainfed Area Development and Climate Change, Sub-Mission on Agriculture Mechanization including Management of Crop Residue.

OPPORTUNITY: Precision agriculture

As per the Economic Survey findings, the relationship between farm mechanization and crop productivity is direct. Mechanization offers time and labor savings, diminishes laborious tasks, cuts production expenses, minimizes postharvest losses, and elevates crop yield and farm revenue over the long term. The agricultural sector faces ongoing pressure to meet the demands of a growing population, compelling farmers to prioritize efficiency and productivity for business expansion. Precision farming has become commonplace, particularly for farmers seeking heightened output with limited resources. This approach effectively addresses the global food demand challenge. Additionally, it enhances operational efficiency, bolsters production, and reduces the gap between agricultural supply and consumption. Employing agricultural machinery optimally enhances productivity, enables timely farm operations, and facilitates swift crop rotation on the same land. Precision farming technology optimizes water, seed, land, fertilizer, and equipment use, ultimately enhancing yield quantity and quality.

Light Duty electric tractor segment is estimated to be the fastest growing market

The light-duty electric tractors are quiet and emission-free, making them a good choice for farmers looking to reduce their environmental impact. The increasing emphasis on sustainable agriculture and advancements in tractor technology drives the demand for light-duty tractors. Their versatility and adaptability to smaller plots of land are significant drivers. However, the higher cost of electric tractors than diesel ones can discourage their adoption. However, a ten-year cost analysis suggests that the overall cost difference is relatively small despite initial high purchase expenses. This cost competitiveness could be enhanced with incentives. For instance, India introduced the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) scheme in 2015, extended in 2019 to promote electric vehicles and reduce fossil fuel reliance. The current subsidy offers around INR 15,000 per kWh battery or up to 40% of the total vehicle cost. India’s history of subsidizing agricultural electricity and states offering discounted power rates, especially for irrigation, could further decrease the operating costs of electric tractors. TAFE, a leading tractor manufacturer, supported around 64,000 small farmers in Tamil Nadu through its “Free Tractor Rental Scheme” (FTRS) under the JFarm service. TAFE enabled farming across 1.03 lakh acres. Within 60 days of the FTRS launch, they offered over 1.55 lakh hours of free tractor and farm implement rental services, benefiting the farming community significantly.

Asia Oceania is estimated to be the dominant regional market.

The Asia-Oceania region boasts diverse crops, including staples like rice and wheat, palm and cotton, and products like sugarcane, tea, and fruits. These crops heavily influence the demand for tractors, as mechanization is pivotal in increasing agricultural efficiency. In Asia Oceania countries, there’s a notable transition from labor-intensive farming methods to advanced agricultural technology. This shift has led to higher requests for renting tractors, along with equipment like harvesters, sprayers, and threshers, which are crucial for modern farming. Agriculture employs over 50% of the workforce in this region, with 450 million smallholder farmers producing 80% of the consumed food. With most smallholding farms, the demand for low HP tractors will lead the market as these tractors are tailored to their needs. According to Markets and Markets analysis, 31-70 HP tractors are projected to dominate the market. According to a study published in 2022, the Southeast Asia agricultural tractors market was primarily dominated by tractors with less than 50 HP horsepower. With a focus on operational versatility, this horsepower range aptly addresses the diverse needs of small to medium-sized farms prevalent in the region. Its affordability resonates well with cost-conscious farmers, particularly those within the substantial smallholder segment. Government efforts to enhance agricultural production further align with these tractors, suited for crop farming and fragmented landholdings in the region.

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 KGAA (Germany). These companies have adopted several strategies to gain traction in the market. 

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