Macro-Economic factors have a huge influence on Agricultural Machinery Market
The key factors influencing the sale of agricultural equipment are the level of net farm income and, to a lesser extent, interest rates, and general economic conditions, availability of financing and related subsidy programs, farmland prices, and farm debt levels. Net farm income is primarily impacted by the volume of acreage planted, commodity and livestock prices, stock levels, the impacts of ethanol demand, farm operating expenses (which includes fertilizer and fuel costs), crop yields, fluctuations in currency exchange rates, tax incentives, and government subsidies. Farmers tend to postpone the purchase of equipment when the farm economy is declining, and increase their purchases when economic conditions improve.
The quality, availability, and cost of used equipment for sale also affect the level of new equipment sales. Weather condition is a major determinant of crop yields, and therefore affects equipment-buying decisions. In addition, geographical variations in weather from season to season may also affect sales volumes differently in different markets. Government policies may influence the market for agricultural equipment by monitoring the levels of acreage planted, with direct subsidies affecting particular commodity prices, or with other payments delivered directly to farmers.
Global organization initiatives, such as those of the World Trade Organization, can also affect the market with demands for differences in governmental policies and practices regarding agricultural tariffs, subsidies, and acceptance of genetically modified organisms, such as feed, seed, and animals.
The increase in crop production for biofuels has also driven changes in the type of crops grown and crop rotations. The most significant change in the US crop production was the increase in acreage devoted to corn, typically using land previously planted with soybeans and cotton. In addition, a change in crop rotation resulted in more acres of corn being planted. As a result, agricultural producers are faced with new challenges for managing crop residues and are changing the type of equipment they use and the way they use it. Although the demand for new agricultural equipment tends to decrease during periods of economic stagnation or recession, the aftersales market is historically less volatile than the new equipment market and, therefore, helps limit the impact of declines in new equipment sales on the operating results of full-line manufacturers, such as agricultural equipment.
The Volatility in the Prices of Agricultural Commodities Will Affect the Market
The increasing concern over commodity price volatility affects producers (especially small farmers). Farmers are more disadvantaged in a scenario of low prices, which forces them to reduce investments in farm mechanization. The uncertainty can then be transformed into non-optimal decisions and production levels. In general, volatility becomes a problem when it induces risk-averse behavior, leading to inefficient investment decisions for machinery consumption.
Major Players: DEERE & COMPANY, AGCO CORP., CNH INDUSTRIAL N.V, and KUBOTA TRACTOR CORP amongst others.
November, 2017: New Holland Agriculture has launched a new flagship model the FR920, a forage cruiser with high capacity and enhanced productivity, powered by a new engine, improved feeding, and HydroLoc™ technology.
September, 2017: John Deere acquired Blue River Technology by investing USD 305 million. Blue River Technology has integrated machine learning and computer vision technology in lettuce fields to assist farmers in spraying herbicides exactly on weeds to ensure optimal usage of herbicides. The company is currently testing the technology in cotton fields. The company enables smart machines to detect, identify, and make management decisions about every single plant in the field using computer vision, robotics and machine learning.
Reasons to Purchase this Report:
• Provides latest insights into the Global Agricultural Machinery industry.
• Gives a detailed analysis of the competitive landscape in the Agricultural Machinery Market.
• Analyzes the market scenario with the help of Porter’s Five Forces Analysis.
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