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The increasing population has been propelling the demand for food items, which is consequently driving the growth of the global farm equipment market. The up gradation in the technology, increasing government subsidies on agricultural machineries, growth of precision farming and easily available credit schemes from financial institutions are encouraging the growth of the global market. Asia-Pacific accounted for the largest share in the global market in 2014, owing to its large population that translates into demand for crops. Among the various types, the tractors segment dominated the global farm equipment market in 2014.
Farm equipment includes machineries used for the production and maintenance of crops and agricultural livestock. Tractors are one of the essential farm equipment that serves several purposes in agriculture, including plowing, harrowing, and transportation of agricultural products. The harvesting equipment includes combine harvesters and threshers. The modern tractors are equipped with global positioning systems (GPS) and on-board computers. The expansion of precision farming has been positively impacting the growth of the farm equipment market. The farmers are up grading their traditional farm equipment with more advanced alternatives. The advent of do-it-yourself (DIY) repair tractors have also reduced the cost and hassle of tractor repairing, thus providing more comfort to farmers.
The government in different countries has been extending several subsidy programs to encourage farmers in their agricultural ventures. In 2004, China implemented subsidy policy for agricultural machineries, which increased over the years and now includes 12 agricultural categories. Around 175 types of agricultural machineries were subsidized by the Chinese government in 2015. During 2004 – 2012, the Chinese government dedicated $12 as subsidy for agricultural machineries. In order to promote food security in the country, the Chinese government has announced a subsidy scheme in 2015 for farm equipment, under which about 30% of the sales price of such equipment will be subsidized. The staple crop growers in the country, including sugar and cotton farmers will be prioritized.
The large replacement cycle of farm machineries is one of the major restraints in the growth of the market. Moreover, the high cost of modern equipment is one of the major challenges for market penetration of small scale farms. The reducing farm land, owing to rapid urbanization is expected to be one of the major hurdles for the market during the forecast period.
Certain product related legal restrictions associated with the modern farm equipment are creating a low degree of dissatisfaction among the consumers. Such restrictions include legal authorization of manufacturers for putting password or an encryption on the devices associated with the equipment, and the legal unlawfulness on the password breach by the consumers.
The major farm equipment markets in Europe include Germany, France, Italy, the U.K., Russia, Turkey, and Poland. Whereas the key markets in Asia-Pacific include China, India, Japan, and Australia. The major companies in the global market include Alamo Group Inc., AGCO Corporation, Deere & Company, Daedong industrial Company Limited, Escorts Group, and Netafim.
Global Farm Equipment Market Segmentation: