Farm Equipment Market worth $136.3 billion by 2028 - Exclusive Report by MarketsandMarkets™

CHICAGO, Sept. 7, 2023 /PRNewswire/ -- 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, according to a new report by MarketsandMarkets™. Growing demand for mechanization in agriculture with supporting subsidies & incentives from governments is projected to drive the demand for farm tractors. The market is set to grow, driven by the increasing popularity of electric and autonomous tractors, as well as the growing need for rental services of such equipment. This trend is creating avenues for expansion. Factors like the rise in farm mechanization, government backing through farm loan waivers and credit financing, contract farming, and a lack of skilled labor are the main forces behind the growth of the farm equipment industry.

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Farm Equipment Market Scope:

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 farm equipment industry. 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.

India will be leading the market in Asia Oceania, followed by China. India, a leading global tractor manufacturer, is addressing the rise in agricultural mechanization, which drives tractor use and necessitates a shift towards electric models. With the cost of electric tractors imposing a major challenge, government support, including subsidies, could bridge the cost gap between electric and diesel tractors. Central and state-level incentives, tax rationalization, and insurance fee reductions can boost the adoption of electric tractors, aligning with India's push for cleaner and more sustainable agriculture practices. The presence of dominant market players such as Mahindra & Mahindra (India), Kubota (Japan), Yanmar Holdings Co., Ltd. (Japan), etc., are actively contributing to the evolution of both traditional and electric tractor markets in the Asia-Oceania region, reflecting the growing emphasis on sustainable and efficient agricultural practices.

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Key Market Players:

The farm equipment companies are 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. They have expanded in various geographical locations through mergers & acquisitions and expansions and entered joint ventures/collaborations with other industry players to sustain their position in the market.

Recent Developments:

• In July 2023, John Deere launched a new See & Spray premium performance upgrade kit for John Deere self-propelled sprayers, the next addition to the See & Spray line. This kit uses an AI-powered vision system that can help farmers profit and combat herbicide resistance with precise application by spraying only weeds, not the entire field. This technology helps stabilize the spray arm when mounted cameras are needed to capture clear field images. Within milliseconds, a machine learning model uses multiple camera images to distinguish weeds from plants.
• In January 2023, Mahindra launched the SP PLUS series of tractors that offer more power and mileage. These powerful tractors are designed to improve your agricultural and transportation productivity. The SP PLUS tractor series has the advanced ELS-DI (Extra Long Stroke) engine. It has beneficial features such as a dual-clutch with reverse PTO, high lift hydraulics, easy shift transmission, and wet brakes.
• In December 2022, CNH Industrial launched the New Holland T4 electric power – the industry's first all-electric light utility tractor prototype with autonomous features. Production is expected to begin at the end of 2023 with a broader product offering.
• In March 2023, AGCO Corporation introduced the innovative Fendt 200 Vario series solutions at the 2023 Commodity Classic in Orlando. As Fendt's smallest tractor, the 200 Vario Series combines a compact design with high performance in three models ranging from 94 to 114 hp.
• In January 2022, John Deere introduced an autonomous 8R tractor. This new tractor comes equipped with several advanced features like a TruSet-enabled chisel plow, a GPS guidance system, and cutting-edge technology. It has six pairs of stereo cameras that help it detect obstacles all around it and quickly calculate their distance. Additionally, it uses a deep neural network to analyze every pixel in images within 100 milliseconds. This tractor represents a significant leap in modern farming technology.
• In July 2023, CLAAS KGAA expanded its product range in the compact tractor segment with three new series. The tractors have many different technical features in terms of performance, power transmission, comfort, and load capacity to suit additional customer requirements and fields of application. From a fully mechanical 4-speed manual transmission with a maximum output of 75 to 103 horsepower to a 5-speed powershift transmission with REVERSHIFT and TWINSHIFT.

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