The Farm Equipment Rental Market is expected to register a CAGR of 7.31%.
Increasing arable land area, demand for agricultural mechanization in matured, as well as emerging markets, is driving the tractor market, globally. There have been significant advancements in the technology to enhance engine efficiency and increase the horsepower capacity of the tractors.
Over the past few years, a rise in the number of startups offering farm equipment rental services has increased. Farm equipment rental services offer cost-saving benefits to end-users. They also aid in transforming agriculture through mechanization.
Farm equipment such as farming implements are not used frequently in farm operations, and only has a limited requirement in each farming season and remains idle during the rest of the year. This increases the need for providing farm equipment on rent for only certain times of the year, this factor has encouraged many start-up companies to enter the global farm equipment rental business.
Key Market Trends
Increasing Developments in Tractor Rentals Service Driving the Market for Tractor Rentals
Tractors covered a major share of in the agricultural machinery rental market in 2018, and are anticipated to remain a major machinery segment, during the forecast period, with increasing demand for high horse-power tractors, ranging above 40 horsepower (HP), i.e. utility tractors and row crop tractors, from matured markets, like Europe and North America.
The rising demand for mechanization and the increased number of medium-scale farmers are the primary factors that created a demand for tractor hiring in Ghana and other African countries, majorly in south of the Sahara, which allows tractor owners to fully utilize their machines, while providing services to farmers, who can not afford their own tractors.
Small farmers in African countries, such as Nigeria, can not afford tractors. However, an Uber-like program has been gradually expanding in the country, which makes it possible for farmers to get temporary access to tractors in demand.
Over the next five years, through a public-private partnership, John Deere plans to deploy 10,000 tractors in Nigeria, selling them to contractors, who then rent them out to small farmers using a platform from a company called Hello Tractor.
Asia Pacific Dominating the Farm Equipment Rental Market
Mechanization in the agricultural sector has already transformed the high-income countries. Additionally, the adoption rate of mechanization in the agricultural sector in the emerging markets, (includes African countries, ASEAN countries, and other developing countries) has been gradually increasing.
One of the key factors contributing to the growth of the global farm equipment rental market is the need to reduce the financial burden on farmers. Farm equipment, especially larger equipment such as forage harvesters, mower conditioners, and tillage equipment are expensive to buy and require more time to make the farming business profitable. Renting farm equipment allows the farmers to harvest their crops on time by avoiding large sums of money as a down payment on farm equipment, it also provides them a convenient way of enhancing their operations.
The majority of farmers in the predominantly agrarian societies, such as India and ASEAN countries, have less than five acres of land and can barely afford high-cap equipment. However, this was not the first such service to be offered in India. Firms like EM3 Agri Services and Trringo, owned by Mahindra’s Farm Equipment Sector, have been offering tractor-on-call services in different States in the country.
- In September 2018, TAFE, India’s second largest tractor maker, has launched the JFarm Service APP, a tractor aggregation platform that aims to help farmers achieve optimal utilization of their tractors. The application works as an interface between farmers who want to hire and those who want to let out equipment.
India's leading tractor maker, Mahindra & Mahindra, iwith its in-house startup, Trringo, has helped small farmers connect with tractor owners in the hinterlands of India through a call center or smartphone app.
Deere & Company, JFarm Services (TAFE), Messick's, Pacific Tractor, Premier Equipment Rentals, and The Pape' Group are the dominant players in the market studied. However, in developed countries, there are several small companies that offer farm equipment rental services. With the existence of several such players, the market has become highly fragmented.
- TAFE has launched free of cost tractor rental platform in partnership with Tamil Nadu government’s Uzhavan App. This app offers 12 major agricultural services to the farmer that include real-time information on crop prices and weather updates, subsidy and government schemes forms, crop insurance and compensation.
- Over the next five years, through a public-private partnership, John Deere plans to deploy 10,000 tractors in Nigeria, selling them to contractors, who then rent them out to small farmers, using a platform from a company called Hello Tractor. Farmers can request a tractor via a text message to an agent, who aggregates requests. A tech platform pairs the availability of tractors with jobs, and then tracks each tractor as it is being used.
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