| | JUNE 20228AGRICULTURE EQUIPMENT MARKET - AN OUTLOOK/NEW PERSPECTIVEWell experienced in driving Product, Process and Customer Service improvements, Arvind is an Innovative and Result Driven Leader focused on achieving Exceptional results in a highly competitive environment that demands continuous improvement.A ccording to the most recent report by Allied Market research, the global agriculture equipment market size is anticipated to reach $166,491.6 million in 2027. This estimate while positive does not demarcate the various underlying demand drivers that are aiding such volumes. The increase in mechanization of farming activi-ties across the agricultural value chain such as ploughing, harrowing, planting, harvesting, and tilling are all expect-ed to boost the demand for agriculture equipment, which in turn drives the growth of the global agriculture equip-ment industry. Moreover, the implementation of precision farming in the near future will enable increased sustain-ability in farming activities, thereby increasing profitabili-ty, and protecting land resources. This is bound to bring in improved agricultural production essentially required to feed the growing global population and increased food cul-tivation. This upsurge will definitely bolster the demand for agriculture equipment and the growth in the agricul-ture equipment market. A fair number of studies have con-cluded positive outlooks and offer a wide perspective on the global market growth suggesting a CAGR of 4.6 percent ­ 10 percent during 2022-27.The Indian agriculture equipment market already seems to be making headway exhibiting a CAGR of 5.3 percent during last decade itself and touching about Rs.795 billion in FY2021. The estimates suggest that there would be a healthy CAGR of 11 percent to Rs.1689 billion by 2027 (as per IMARC Group). This may however be accompanied with a decline in the share of tractors as other machines would grow at a faster pace, as per ICRA Research. Due to current share of tractors, in India, `Mechanization' is being replaced with `Tractorization'. In case of India specifically, labour shortage, ease of financing, cultivated area under all crops, government subsidy schemes, rising incomes mainly due to change in cropping pattern and emergence of contract farming are some of the key driving factors aiding a considerable progress in agriculture mechanization. However, the mechanization level at each step of the agri-value chain (as depicted in fig 1) shows a different scenario. It remains significantly lower than global benchmarks with tractors as major contributor.Let's Detail out some of the Demand Factors that can Affect MechanisationAt present, one cannot ignore the fact that continued government procurement support through a MSP and subsidies on agriculture equipment immensely increases farm cash flows. However, this demand for equipment can come crashing down if any of these support levers are removed. More structurally though, these subsides are getting wasted because a marginal farmer is able to utilize the equipment only to the extent of 500-600 hours yearly which rarely results in positive cash flows, due to INDUSTRY INSIGHTSBy Arvind Kumar, Business Head-AVD, Force MotorsArvind Kumar, Business Head-
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