Farm Equipment Market Size, Share & Trends [2023-2028]

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% during the forecast period. Farm mechanization has shown significant growth recently, and top OEMs are investing in the same, which would further drive the demand for agriculture equipment. Though the demand for farm equipment is growing in Europe and North America, Asia Oceania remains the key market.

The research study involved various secondary sources, such as company annual reports/presentations, industry association publications, farm equipment magazine articles, directories, technical handbooks, world economic outlook, trade websites, technical articles, and databases, which were used to identify and collect information for an extensive study of the Farm Equipment market. Primary sources—experts from related industries, automobile OEMs, and suppliers—were interviewed to obtain and verify critical information and assess prospects and market estimations.

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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.

Battery Electric Tractors would lead the future of the tractor industry.

To adhere to strict emission regulations for Non-Road Mobile Machinery (NRMM), manufacturers are creating hybrid and electric farm tractors. Hybrid versions combine a diesel engine with an energy storage system to enhance fuel efficiency and power for heavy tasks. Alternatively, fully electric tractors rely solely on batteries. Hybrid tractors can save around 35-40% on annual fuel costs. Challenges like expensive batteries, limited technology, and restricted applications may slow electric tractor adoption in the next few years. Yet, the advantages—like energy efficiency, strong torque, clean emissions, and low upkeep—will drive demand over the long term.

Many Indian states are offering incentives to promote the adoption of electric tractors. States like Kerala, Tamil Nadu, and Madhya Pradesh offer a waiver of road tax for electric tractors, and the discount on road tax ranges from 50% to 100%. States like Delhi, Gujarat, Maharashtra, and Rajasthan provide direct cash incentives along with the road tax waiver. These incentives are structured similarly to the FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme. Solectrac, Inc., a Northern California-based company specializing in battery-powered electric tractors for agricultural and utility use, has unveiled that its e25 compact electric tractor is now qualified for participation in the Clean Off-Road Equipment (CORE) Voucher Incentive Program, supported by a substantial USD 125 million fund. With all the support from governments, developments in battery technology like increased battery capacities, reduced charge time, etc., and increased cost of skilled labor, especially in vineyards, would generate a demand for electric tractors.

>250 HP segment to grow fastest over the forecast period.

>250 HP tractors have a powerful hydraulic system, which can be used to power implements such as Plows and harvesters and are designed to be comfortable for the operator, even during long hours of use. The agricultural industry constantly evolves, and farmers increasingly look for ways to increase productivity. High-power tractors can help farmers do this by allowing them to work more land in a shorter time. High-power tractors are popular in large-scale farming operations in the North American region in the United States and Canada, where extensive fields and mechanized farming techniques require powerful equipment to increase efficiency and productivity. According to USDA (United States Department of Agriculture), in the US, the average farm size for 2021 was 445 acres, up from 444 acres the previous year. These tractors are not popular in Asia Oceania owing to their high cost and higher requirements and the popularity of lower HP tractors. Companies like John Deere, Fendt, and Valtra provide tractors of >250 HP. Valtra’s Q Series meets these needs effectively with its powerful engine, efficient transmission, strong hydraulics, and optimal wheelbase. Fendt 1050 Vario and John Deere 8R are some tractor models launched in 2022 with a power output of more than 600 HP.

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.

Key Market Players:

Major players operating in the farm equipment market are John Deere (US), AGCO Corporation (US), CNH Industrial (UK), Kubota Corporation (Japan), and CLAAS KGAA (Germany).

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