Global Agricultural Equipment Market to Surge Past Valuation of US$ 100 Bn by 2024
The global agricultural equipment market is forecasted to grow at a moderate CAGR of 3.4% during the forecast period (2016 to 2024), according to a new market study by XploreMR. The growth of the market is attributed to increasing sales of tractors owing to their multipurpose that makes them ideal for agricultural activities from February to April, and transport and commercial agricultural activities from May.
The sales of tractors are expected to majorly contribute to the growth of the agricultural market. Furthermore, agricultural methodologies have shifted from animal or manual operations to automated methods, thereby necessitating the employment of advanced equipment.
Besides, factors such as government initiatives, rising urbanization rate, and time-saving nature are asserting farmers to switch to mechanized processes and enhance their investment power. On the back of these factors, the global agricultural equipment market is expected to surge past valuation of US$ 100 Bn by the end of the assessment period.
Supportive Government Initiatives Promise Remunerative Opportunities
As the world population continues to grow at an alarming rate, the demand for food and agricultural products will remain steady on the higher side. The need to maintain an efficient cycle of agricultural production is propelling the demand for tools and equipment, thus ensuring healthy growth of the agricultural equipment market.
To ensure the agricultural activities remain unhinged, several governments across the world are offering support to farmers in terms of subsidies on the costs of agricultural equipment. On these lines, the Indian government launched a program named Rashtriya Krishi Vikas Yojana to support farmers in purchasing agricultural equipment to improve their productivity and efficiency.
Likewise, government authorities and regulatory bodies in North America and Europe are launching initiatives to educate farmers about the benefits of using advanced technologies in farming. Market players are also introducing loan policies, credit financing, and are investing in educating the consumers about the benefits of contract farming. Such initiatives are propelling the demand for agricultural equipment, especially tractors.
Tractors Remain the Most Sought Agricultural Equipment Globally
Tractors are expected to remain the most sought-out equipment type among consumers, accounting for the majority of revenue. The demand for tractors is many attributed to the usage of these vehicles in several activities, both as a piece of standalone equipment and in tandem with other implements.
Moreover, sales of tractors will continue to drive the majority of market growth, on the back of increasing adoption of mechanization coupled with a growing population, that surges the need for food production and productivity. Tractors segment is expected to remain the leading segment in North America and Latin America, owing to high demand in these regions. Latin America - which accounted for the majority of market share in the tractor segment in 2016 will remain the leading regional market for the tractor segment through the forecast period.
In Europe, the segment is expected to exhibit sluggish growth at a CAGR of 2.9%, while the Asia Pacific excluding Japan will hold a respectable share in global market value, backed by the presence of a large number of NBFC funded farmers buying agricultural machinery. Furthermore, increasing government support for agricultural credit, replacement demand, and irrigation for large areas, is also fuelling the demand for agricultural equipment.
Competitive Landscape of Global Agricultural Equipment Market
Some of the major players operating in the agricultural equipment market include John Deere, AGCO, Mahindra & Mahindra, CNH Industrial N.V., Iseki & Co., Ltd., and Kubota. Market players are focusing on mergers and acquisitions to gain a strong foothold in the competitive landscape. On this premise, AGCO Corporation announced the acquisition of Lely’s Hay and Forage division in October of 2017 to expand its product portfolio. The acquired division produces tedders, rakes, loader wagons, tillage products, round balers, and mowers.
The analysts of XploreMR 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.
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.
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