Agriculture equipment industry has seen a global trade boom in the recent past, in light of active contributions from worldwide governments, businesses, associations, and individuals to boost agricultural production. Several government administrations are offering incentives as well as a wide array of funding options to farmers to maximize output using advanced farm machinery and integrate sustainable agricultural practices, thereby developing a propitious outlook for companies operating in this market.
However, it is worth noting that this business sphere has long seen various challenges since the pre-COVID era, namely volatility in raw material as well as commodity prices, and the need for significant investments to establish new plants in emerging economies. But the pandemic introduced a fresh set of bottlenecks that would again redefine agriculture equipment market trends in the upcoming years.
Impact of the COVID-19 pandemic
The disruptive reverberations of the COVID-19 pandemic on global agriculture industry have been broad and versatile. Apart from the substantial loss of lives and lack of essentials during the nationwide lockdowns, the world economy suffered extreme financial distress. This gave birth to a new type of crisis in the farming sector, impacting not just agriculture but various other industries across the world.
Numerous manufacturers, amid these trends, shifted their focus to contribute more toward the frontline health workers. Meanwhile, the agriculture equipment industry primarily acted as a critical bridge in the food value chain, offering essential equipment as well as maintenance support, as deemed necessary. A gist of the key trends defining this sector has been outlined below:
- Emphasis on localization
The agriculture equipment industry saw a sharp decline in business as several companies struggled to remain operational during the COVID lockdowns. This compelled businesses to focus on the “producing local and consuming local” model in an effort to survive the pandemic onslaught.
Technological and social food system innovations along with the re-localization of supply chains could play a critical role in terms of pandemic response. It will also help in ensuring that these supply chains are more resilient and sustainable to any other potential or unexpected events. In effect, growing trends of localization in consort with a focus on integrating sustainable operations will pave the way for global agriculture equipment market growth in the upcoming years.
2.The rental boom
While the coronavirus outbreak led to a sharp dip for manufacturers in the global agriculture equipment market landscape, the dealership network faced some severe monetary repercussions. But on the positive side, these agriculture equipment dealers were found to be exploring various revenue-generating opportunities as well as deploying innovative strategies to recover from the pandemic losses.
For instance, Farmkart, an agritech startup, announced to have ventured into the unstructured agriculture-equipment rental business by debuting a tech-enabled platform called rent4farm. This platform allows farmers to rent advanced agriculture equipment and machinery at competitive prices.
Agriculture equipment rental solutions could not only help in increasing cognizance among farmers but also aid in reducing the cost of farming, improve incomes, as well as the overall output. A shared platform for agriculture equipment is likely to become popular in the upcoming years.
3.Expansion of precision farming
Precision agriculture is anticipated to witness stellar growth post-COVID era, further helping farmers and the food sector achieve a sustainable yield. Precision farming is basically generating more yield per area using monitoring precision tools, so that the overall output is sustainable and achieved through optimum resources.
In April 2022 for instance, Titan Machinery Inc., a leading agriculture equipment dealer, teamed up with Augmenta Agtech to give complete access of the Augmenta System to the U.S. farmers. The system can help farmers as it automates various operations as well as analyzes and implements real-time solutions to optimize output, reduce waste, maximize yield, and improve profitability.
Such developments are likely to transform global agriculture equipment market scenario in the subsequent years.
4.Demand for agriculture digitalization
Despite agriculture being one of the world’s leading industries, broad swaths of this sector remain underserved by digitalization. This is especially critical given the increased pervasiveness of volatile weather conditions due to global warming.
As per National Oceanic and Atmosphere Administration, droughts in the U.S. have caused USD 291 billion in economic damages since 1980. Similarly, a NASA study found that fluctuating rain and increased carbon dioxide could decrease annual crop yields by a quarter by 2030.
Such conditions provide unique and ample opportunities to various companies looking to unlock value across the supply chain and the overall agriculture equipment marketplace using technological innovations. Even some agritech companies are focusing on navigating the effects of climate change, food insecurity, and labor shortages through strategic collaborations or by raising funds.
Citing an instance, U.K.-based Better Origin managed to secure around USD 15 million in funding in April 2022 to localize the food supply chain and feed the ever-growing population sustainably.
5.Race to electrification and autonomy
While the industry has spent decades moving toward autonomous farming equipment, the race to commercially produce such products has gained significant traction lately. Farm equipment manufacturers are now getting close to having fully driverless tractors on farms.
Notably, there is a growing urgency to move toward greener technologies as net-zero targets remain at the center of the electric vehicle revolution. But electrification in agriculture could be better suited to autonomous robotics when it comes to heavy farm machinery.
Major agriculture equipment OEMs such as Mahindra, Kubota, and John Deere are already introducing driverless tractors that can operate with the highest precision. To that effect, the world’s largest farm equipment manufacturer John Deere is expected to launch an electrified 14-ton tractor in the fall of 2022 that will not require an operator.
Such developments will allow autonomous farm equipment market to generate lucrative returns in the upcoming years.
However, most of the bells and whistles surrounding modern and powered agriculture equipment are geared towards improving chemical application accuracy and reducing labor needs. The technology still lacks in terms of energy conversion and efficiency.
With continuous innovations, it would be interesting to see how powered farm machinery would revolutionize the agriculture equipment market in the next decade.