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Farm Equipment Market Projected to Reach $136.3 Billion by 2028

Farm Equipment Market Projected to Reach $136.3 Billion by 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% from 2023 to 2028.

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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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.

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>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. 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:

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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Mr. Aashish Mehra
MarketsandMarkets™ INC.
630 Dundee Road
Suite 430
Northbrook, IL 60062
USA: +1-888-600-6441

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