The analysts of Persistence Market Research have followed a solution oriented approach while studying the global agricultural equipment market in a recent publication titled “Agricultural Equipment Market: Global Industry Analysis and Forecast, 2016-2024.” Major players in the market are focused on shifting their production bases to the Asia Pacific and MEA regions in order to capitalize on economies of scale. The analysts have observed that the tractors segment by product type is expected to dominate the global agricultural equipment market over the period 2015 to 2024. However, the seed drill and power weeder segments are expected to grow at an attractive CAGR over the forecast period. After studying the global agricultural equipment market in detail, the researchers have come to the conclusion that APAC and North America are expected to hold a relatively high volume and value share respectively. Among all regions, MEA is expected to witness relatively high CAGR during the period 2015 to 2024, followed by Latin America and APAC. According to this report, long-term strategic partnerships with component suppliers may provide good growth opportunities for agricultural equipment manufacturers. The report highlights key player strategies of studying market trends and consumer demand patterns to continuously evolve in product offerings and ensure uninterrupted revenue generation.
What are the market participants saying?
A product manager from a European agricultural equipment manufacturing company explained that the agricultural equipment industry in Europe has constantly faced lower sales and has had to deal with a dramatically decreasing customer base, even in terms of total engine power sold. Trends in commodity prices is not the only factor responsible for the change in the agricultural equipment industry. During primary research, the sales director of one of the agricultural equipment manufacturing companies in APEJ indicated that China and India are the major shareholders in the Asia Pacific agricultural equipment market owing to factors such as provision of favorable loans to farmers, recent changes in the subsidy policy for the purchase of agricultural equipment, demand for harvesting and tillage machinery, and decline in the tractor market over the past three months. The Business Development Manager of an agricultural equipment manufacturing company in MEA said that the Middle East and Africa market is fast gaining traction in the global agricultural equipment market owing to the availability of farm land on lease by the government at low prices and also indicated that most of the market movement can be seen in the Eastern (Ethiopia) and southern parts.
By Product Type
Yearly change in inflation rate has not been considered while forecasting the market numbers. Average Selling Price (ASP) has been considered to determine market values while studying the global agricultural equipment market. Top-down approach has been used to obtain market numbers, while bottom-up approach has been used to counter-validate the market estimations. Macroeconomic indicators such as GDP and end-use application industries’ growth have been considered in this report. The average price of agricultural equipment is inferred across all the five assessed regions. Market volume is inferred through in-depth secondary research and validated from industry experts through primary interviews. Each interview is thoroughly analyzed and average market volume is deduced and reconfirmed prior to incorporating in the report. The market value of the global agricultural equipment market is thus calculated from the data derived from the average selling price and market volume.
For the eight year forecast of the global agricultural equipment market, various macroeconomic factors and changing trends have been observed, giving an idea about the future of the market. Other important factors considered to arrive at market forecast include the size of the current market, inputs from the supply side and the demand side and other dynamics shaping the scenario of the market.
In the compilation of the report, the forecasts are conducted in terms of CAGR, while other important criteria such as year-on-year growth and absolute dollar opportunity have also been incorporated presenting the client with crystal clear insights and future opportunities as far as the global agricultural equipment market is concerned.
The tractors segment by product type is estimated to create incremental opportunity 8.5 times that of the combine harvesters segment between 2016 and 2024
The tractors segment is projected to create a total incremental opportunity of more than US$ 20 Bn between 2016 and 2024. This segment is estimated to reach a market value of a little more than US$ 100 Bn by 2024 end, expanding at a CAGR of 3.4%. The tractors segment is expected to be an attractive segment in terms of market share, owing to high sales in India and China (vs. sales of other equipment). The high sales of tractors can be attributed to their multipurpose features, as they are used as agricultural equipment in the months from February to April and for other transport and commercial purposes from May onwards. The tractors segment is estimated to account for nearly three-fourth of the global agricultural equipment market share during the forecast period. This segment is estimated to account for a major share and dominate the global agricultural equipment market during the assessment period.
Governmental support pertaining to the use of agricultural equipment in various regions likely to bolster the growth of the tractor segment
The world population is growing at an alarming rate. The population is expected to be more prosperous and urbanized, enjoying better diets and living standards. A rising need for food will spur the demand for agricultural products, which will increase the demand for agricultural equipment such as tractors. In many countries, governments provide extensive support to farmers to purchase agricultural equipment to work more efficiently, which is expected to bolster the growth of the tractor segment in the global agricultural equipment market. For instance, in India, the Rashtriya Krishi Vikas Yojana supports farmers to purchase agricultural equipment including tractors at subsidized rates. Many government authorities are undertaking initiatives to educate farmers about the benefits of using agricultural equipment in farming. Companies are also reaching out to farmers to educate them about loan policies, credit financing, and benefits of contract farming – and this is anticipated to drive the demand for agricultural equipment, mainly tractors. In European and American countries, governments are taking the necessary steps to educate farmers and guide them about the benefits of using agricultural equipment.
The demand for agricultural equipment is expected to witness significant growth during the forecast period. This strong growth can be attributed to shifting of agricultural activities from animal or manual operations to automated methods. Factors such as government initiatives, rising urbanization rate and time-saving properties are shifting the focus of farmers to mechanization and improving their investment power. Training programs conducted by the government for technicians, farmers, and machinery users is another important factor that is expected to further propel the demand for tractors over the forecast period.
The tractors segment is expected to account for a significant market share globally, owing to technological advancements
In North America, the tractor segment is estimated to gain more than 20 BPS between 2016 and 2024 and is expected to expand at a CAGR of 3.3% over the forecast period. Growing demand for tractors in the U.S. and Canada is expected to drive the North America agricultural equipment market. The tractors segment is estimated to be an attractive segment in terms of market share and incremental opportunity, owing to strong demand in the U.S. and Canada. In Latin America, the tractors segment was estimated to account for a major market share by 2016 end and is expected to show its dominance by the end of 2024. The tractors segment is estimated to be a relatively attractive segment in terms of incremental opportunity and market share in Europe – the segment is expected to expand at a CAGR of 2.9% over the forecast period, with a market share of more than 80%. In APEJ the tractors segment is expected to hold significant market share during the forecast period, owing to a large number of NBFC funded farmers buying agricultural machinery. The tractors segment is anticipated to be a relatively attractive segment owing to increasing government support for agricultural credit, replacement demand, and irrigation for large areas.