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statzy · 3 years ago

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Major Drivers" for the Powered Agriculture Equipment Market in India

Market Overview

The sustainable and economic development of the country has always been dependent on agriculture and its allied sectors. In the previous years, 2016-17, agriculture contributed 17.4 percent of the country’s economy. And the demand for mechanization within the country has always been accelerating rapidly each year. The Powered Agricultural Equipment Market in India currently holds about 40-45 percent in terms of farm mechanization and this has been predominant in states like UP, Haryana, and Punjab among many others. The penetration rate of Powered Agricultural Equipment in such states is still considered negligible when compared to other countries such as the United States, Brazil, and China.

Each with a penetration rate of 95%, 75%, and 57% respectively for farm mechanization. The major highlight is noticed in recent years when the country has a sudden jump in sales of agricultural machinery. The sales over the past few years were at an all-time high at a rate of 3.64 percent. Many factors complement the growth in sales of powered agricultural machinery such as Increased availability of power to farms, huge demand for tractors, and tillers. It is also possible to insist that many government policies in recent years have been focused on boosting the rate of mechanization of farms to economically and timely meet the increasing food demand in the country.

As discussed above, increasing demand for tractors and tillers can be considered as a complement to the growth in the sale of powered agricultural machinery in India. Thus, it is also identified that the share of power from the tractor segment in terms of overall farm power has been increasing rapidly over the years. The availability of farm power has increased from 0.29 to 2.02 kW per hectare from 2000 to 2017. And farm power requirement is said to reach 4.0 kW per hectare by 2030 when compared with the growing demand for food grains. In recent times, the power availability per hectare in the year 2020-21 is 2.761 kW. The use or dependence on any available equipment for the available farm power is divided into tractors (59.39%), power tillers (1.02%), diesel engines (14.028%), electric motors (19.57%), Animals, and Humans (6.002%).

It is clear from the above data that maximum farm power is dependent on Tractors and Tillers. And this is also identified in the increased sales volume of tractors from 580,000 units in 2016-2017 to 900,000 units in the year 2020-2021. The expected project for the sale of tractors in the year 2021-2022 (FY22) is 930,000 units. A similar kind of increase is recorded for the sale of Power Tillers, which has increased from 14,385 units to 19,844 units in the same period. A significant boost in the sale of powered agricultural equipment can be achieved if the sale of Tractors and Tillers remain at a steady hike.

India is one of the largest producers of tractors and is thus considered the largest market for tractors in the entire world. India has always been an active exporter of tractors to various countries all around the world. The domestic sale, as well as the export of tractors, is at a rapid incline compared to the previous year. The domestic sales went up by 26.9% and exports by 16.4% in comparison to 2019-2020. It is predicted that the sale of tractors is bound to increase further under the influence of various schemes offered by the government such as the Remunerative Approach for Agriculture and Allied sector Rejuvenation (RKVY), National Food Security Mission (NFSM), National Mission on Oilseeds and Oil Palm (NHM & NMOOP).

Import and Export Data:

Tractors are exported to more than 169 countries around the world. During the year 2020-2021, the export volume of 8,684,538 units of tractors contributed to a net worth of 148.64 Million USD. The import trading of tractors took a rapid hit in 2020 when compared to 2019. The trading value dropped by 17.36 per cent compared to the previous year from 69,920,928 Million USD to 57,776,006 Million USD.

Competition Strategy

The Powered Agricultural Machinery Market of India faces tough competition from global market players such as Mahindra & Mahindra Ltd., TAFE, Escorts Group, Sonalika, John Deere India among many others. These companies want to attain the highest market share possible and they do it through means of mergers and acquisitions, expansions, partnerships and innovative product launches. This has been leading to the consolidation of the market for many years.

Some of the Global Major Players include:

John Deere India Private Limited

TAFE Motors and Tractors Limited

International Tractors Ltd. (Sonalika)

Escorts Limited

Mahindra & Mahindra Limited

CNH Industrial (India) Private Limited

Covid-19 scenario:

Surprisingly, a positive effect has been established on the demand for tractors due to the pandemic. With a sudden rise in demand for agricultural produces like vegetables, fruits, and cereals, farmers considered moving towards powered agricultural machinery for their daily farming activities.

As per the recent reports, a CAGR growth of 5.1% is predicted for the Indian Tractor Market from 2021 to 2030 and is estimated to reach a net worth of 12.70 Billion USD by 2030 from 7.5 Billion USD in 2020. Although, some of the practices that must be addressed are lack of information or understanding in farmers about efficient agri-machinery, high-cost requirements for tractors and other equipment. Some of these abundant issues are tackled by the government and if done well, this will open new opportunities shortly.

Questions:

Who is the current largest exporter of Tractors in India?

Sonalika Group is the largest exporter of tractors in India. It has exported around 28,722 units from April 2021 to January 2022.

Which country exports the most number of Tractors?

The top 5 countries in terms of trading value for the export of tractors are,

Germany: US$7.7 billion (16.8% of total exported tractors)

Mexico: $6.5 billion (14.2%)

Netherlands: $4.8 billion (10.5%)

United States: $4 billion (8.7%)

France: $3.1 billion (6.8%)

Which year has the highest export of tractors ever recorded from 2009 to 2020?

The highest recorded export of tractors was in the year 2015 with a trading value of close to 1 Billion USD (1,001,841,820 USD to be exact). Compared to this, the export trading value for the year 2020 has been reduced to 727 Million USD.

Where does India stand in terms of Global export of tractors?

India is ranked 17th in the world, after Poland and before South Korea for the export of tractors during the year 2019-2020.

Which is the number one tractor company in the world?

Mahindra & Mahindra Limited is the world's number one tractor company. It tops the list in terms of the maximum number of units manufactured and the quality of its products.

It is also the only tractor brand in the world that has won both the Deming Award and the Japanese Quality Award.

#Agriculture Equipment Market #Agriculture Equipment #Agriculture Machinery Market

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statzy · 3 years ago

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India's Contribution to the 6.5% increase in Global CAGR for Powered Agricultural Equipment Market

India is an active exporter of agri-machinery to 147 countries like the US, UK, Germany and Italy. The global demand is expected to hit 279.5 Billion USD by 2025, increasing from 2018 to 2025 at a CAGR of 6.5%.

Market Analysis:

The top 5 countries that India exports the highest dollar value of agri-machinery are the USA (11.06 Million USD), Germany (4.95 Million USD), Nepal (2.77 Million USD), Hungary (1.72 Million USD), Kenya (1.42 Million USD). Each with a share percentage of 27.04, 12.1, 6.77, 4.21, and 3.74 respectively. The total export value of agri-machinery in these countries is 21.92 Million USD. These top 5 countries account for over 53.59% of the total agri-machinery export from India.

The USA is the largest market for Agricultural Machinery export from India. In 2020-2021 (Apr-Nov), the USA imported 11.06 USD million worth of Agricultural Machinery from India. Among the top countries, the USA market share of the total Agricultural Machinery export shipments from India is 27.04%. The next spot is Germany, with the Agricultural Machinery shipment value being 4.95 USD Million. A share of 66.28% of the Agricultural Machinery export value from India is held by the top 10 countries in total.

Considering the top trading partners which import Agricultural Machinery from India, Mauritius recorded the fastest growth in their import shipments from India compared to previous years. Uzbekistan is at the last with the least amount of imports from India.

Market Segmentation:

The Global and Local Agri-machinery market can be segmented by using various criteria:

Type of Machinery: Tractors, Fertilizing, Plant Protection Equipment, Harvesting Equipment, Irrigation Equipment, Hay and Forage Equipment, Crop processing Equipment, Seeding Equipment, Grain Handling Equipment, Cutters, Shredders and Sprayers.

Application Type: Agri Equipment, Construction Equipment, Chemical Applications, Financing Equipment, Material Handling Equipment, Snow Removal Equipment, Property Maintenance Equipment.

Agricultural Phase Type: Land Development, Sowing, Planting, Cultivation, Harvesting, and Threshing.

The coronavirus/pandemic has largely impacted the purchase behaviour of customers globally. Even after surviving the pandemic, India seems to be doing much better than last year in terms of its contribution to the powered agricultural equipment market. In recent years, agricultural mechanisation has been progressing steadily. A steady curiosity and understanding are being developed in the farmers subject to the application of Mechanical pieces of equipment to power their farming activities. Some of the major factors that have driven the market for the past many years are:

Labour Shortage

Ease of Financing.

Government Incentives.

Rising Incomes.

Large Untapped Market.

The emergence of Contract Farming.

Labour Shortage: This is one of the major reasons that has led to the mechanisation of agri-machinery. A ripple effect is a cause for labour shortage even in countries that are rich in labour like India. The large scale migration from rural to urban areas that promote different rural employment schemes creates a huge labour shortage in rural localities that are rich in agriculture. Many such schemes restrict migrant labourers from Bihar, UP and others into Punjab and Haryana during the crucial sowing and transplantation season. Thus due to the shortage of labourers, a sharp increase in the demand for farm machines is seen.

Ease of Financing: A large number of banks and microfinance institutions have been set up all across rural India for the support of the Agri industry. This has provided many farmers with easy availability of credit to purchase farm machinery.

Government Incentives: Government actively works towards providing Incentives in the form of subsidies, low import duties on agricultural machinery and easy financing schemes. Thus the Indian government has also been a major driver of the farm equipment market in India. Some of the subsidies in favour of farmers owning machinery are Rashtriya Krishi Vikas Yojana (RKVY), National Food Security Mission (NFSM), Sub-Mission on Agricultural Mechanization (SMAM), and NABARD loans in India.

Rising incomes: Due to strong economic growth and agricultural productivity, the income levels of rural households have been continuously increasing over the last few years. This is one of the many reasons that enabled farmers to significantly increase their spending on agriculture mechanization.

Large Untapped Market: Despite strong growth in recent years, the penetration of tractors and several related types of equipment remains relatively low. This indicates a major loophole in the market that can be captured with continuous innovation and cost-cutting machinery.

The emergence of Contract Farming: Contract Farming is expected to strongly boost the agri-equipment market. It enables farmers to get the benefits of technology, training and financing. It is studied that the revenue earned from contract farming is 11 per cent higher than average non-contract farming.

Recent News:

There is a scope for improvement in terms of product innovation and availability of retail finance for small farm machinery. If made available, the mechanisation of the farms is predicted to increase rapidly. This will help reduce the cost by 20 per cent and improve productivity by 30 per cent. With plans to double Farm Mechanisation within ten years, the government must work on supporting small utility machines that are to be used by smallholder farmers. The powered machinery market in the agricultural industry lacks new and modern innovations. To counter this, VST, the largest maker of power tillers, launched and claimed that 95 DI Ignito is India’s first 9HP electric start power tiller. It is partnered with the launch of a range of fuel-efficient brush cutters to meet the needs of small and marginal farmers.

Conclusion:

The powered agricultural machinery market in India is evolving rapidly. The industry has always focused on innovation and flexibility to support smallholder farmers that are major risk-takers. India is also coming up with solutions to boost exports that are at the highest in recent years. To boost export it must focus on building better trade relationships with other countries besides those that are being targeted by major competitors of such as Germany ($1.03B), the Netherlands ($989M), the United States ($713M), China ($659M), and Italy ($625M).

Questions:

How does India manage such a high volume of exports of agri-machinery to so many countries?

India exports agri-machinery to nearly 147 Countries. The USA is India’s largest Importer and Uzbekistan is the least. There are about 35 top exporting ports in India that trade Agricultural Machinery from India. Nhava Sheva Sea exports the majority of Agricultural Machinery shipments from India with a share of 52.0%, followed by Bombay Air Cargo with 13.0%.

What are the major exporting ports in India that deal in agri-machinery?

There are about 35 top exporting ports in India that trade Agricultural Machinery from India, Nhava Sheva Sea exports the majority of Agricultural Machinery shipments from India with the share of 52.0%, followed by Bombay Air Cargo with 13.0%.

Which is the top importing port for agri-machinery from India?

Felixstowe port, UK solely imports 3167 shipments of Agricultural Machinery from India and holds the largest share of 32.0%.

What is the objective of providing subsidies for farmers to own their agri-machinery?

To adapt to newer and faster machines.

Further, to facilitate machine purchasing.

Helping to decrease the cost of cultivation.

Additionally, to ensure the timeliness of cultivation timing.

Most importantly, to improve the livelihood of the farmers.

What are the different types of agri-machinery covered through various government incentives offered?

The list includes some of the machinery namely,

Tractor

Rotavator

Laser Land Leveller

Post Hole Digger

Straw Baler

Hey Taker

Rotary Slasher

Pneumatic Planter

Paddy Trans-planter

DSR machine

#Agriculture Equipment Market #Agriculture Equipment Market Size #Agriculture Equipment Market Forecast #Agriculture Equipment Market Analysis #Agricultural Machinery Market

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