Tillage Equipment Market Analysis

Part
01
of four
Part
01

Tillage Equipment Market - Farmers' Needs and Expectation

The needs and expectations of tillage equipment for farmers include technological improvements that provide all-in-one-solutions, trade-war-resistant equipment, and more repair options.

TILLAGE EQUIPMENT: NEEDS AND EXPECTATIONS

IMPROVED TECHNOLOGY PROVIDING ALL-IN-ONE SOLUTIONS
  • Farmers expect that tillage equipment will incorporate the necessary technology to provide multiple solutions in a single platform, which would reduce costs. Combined with their growing needs, farmers now expect the availability of advanced tillage equipment that is capable of variable-rate seeding (i.e., precision technology), RTK-level correction, real-time data collection and reporting (e.g., field scouting and soil sampling), and GPS systems. Another expectation of tillage equipment is that it be able to handle variable site conditions (e.g., sites with cold, wet weather).
  • Most importantly, farmers expect that tillage equipment will reduce costs.
MORE AFFORDABLE EQUIPMENT
  • Retail unit sales of 2WD and 4WD farm tractors increased between 2017 and 2018. There was a similar increase between 2018 and 2019. However, there has been a steady decline in those same sales from Q2 to mid-Q3 2019.
  • Analysts attribute this decrease as the result of increases in tillage equipment prices arising from the current trade war between the U.S. and the People's Republic of China. In practical terms, farmers have seen a reduction in earnings and are increasingly unable to purchase needed tillage equipment. Farmers require new equipment at reduced costs but are unlikely to see it soon.
MORE AFFORDABLE REPAIR OPTIONS
  • Farmers have little to no choice regarding tillage equipment repairs due to manufacturer monopolies. Manufacturers like Deere & Company produce equipment that requires diagnostic testing from specially trained technicians. These technicians can have hourly service rates in the hundreds of dollars.
  • To cement their monopoly over repair services, manufacturers have used copyright laws to eliminate independent mechanics and local repair shops. Farmers require alternative repair options, and they expect that the current debate (led by organizations like the National Farmers Union) over their right-to-repair will move in their favor.

NEEDS AND EXPECTATIONS NOT BEING MET

  • Farmers need technologically-advanced tillage equipment capable of providing complete solutions (e.g., real-time field scouting, sensors, and soil sampling). While farmers currently have access to software tools that can cover these areas, they are becoming more interested in all-in-one solutions. Ultimately, farmers are more interested in tillage equipment that helps them make immediate bottom-line decisions.
  • Farmers are also interested in tillage equipment that can establish cover crops. Some manufacturers (e.g., Gandy, Hagie, and Montag) have started to work directly with farmers to provide customized tillage equipment that caters to the farmers' specific needs.

RESEARCH STRATEGY

We began our investigation with an inquiry into industry and market reports. This approach yielded the majority of the requested information. While we also sought the specifications of tillage equipment, most of the information discovered in our inquiry was concerned with issues related to tillage equipment. More detailed information outside the subject of the technological advancement of tillage equipment appears to be limited.
Part
02
of four
Part
02

Tillage Equipment Market - Expected Growth Trends

Throughout an exhaustive research, no specific information could be found on the expected growth trends, as well as the expected growth areas regarding tillage equipment in the US. Below are some useful insights gathered during the research process.

USEFUL INSIGHTS

  • In 2017, the US farm tractors and self-propelled machinery expenditure was $12.6 billion. The expenditure on trucks and autos was $5.5 billion, while for other farm machinery, it was $5.9 billion.
  • As of 2018, the global agricultural equipment market had a size of $139 billion and is projected to grow from2019 through 2025 at a Compound Annual Growth Rate (CAGR) of 8.9%.
  • The adoption of modern farming technologies for increased farm yield is expected to be a key driving factor for the global agricultural equipment market. Tractors had the most revenue share of 2018, accounting for 25% of revenue, while harvesters are expected to account for a share of 21% by 2025.
  • The North American region held a share of 22% in the global agricultural equipment market in 2018.
  • During the forecast period for the global agricultural equipment market (2019 through 2025), tractors with power rating of less than 30 hp are estimated to hold the largest market share, in terms of volume. According to the Association of Equipment Manufacturers, the US and Canada together accounted for between 62% and 64% of the global market of tractors with less than 40 hp, in 2017.
  • In 2015, the US exported agricultural equipment worth almost $10 billion, according to the Department of Commerce’s International Trade Administration. This made it the top exporter of farm machinery at that time.
  • In 2017, about 24,000 units of High HorsePower (HHP) tractors were sold in North America.
  • In a 2019 survey of farm equipment suppliers and dealers, the top 5 farm equipment projected to have the highest sales are lawn/garden equipment (53.6%), 2WD tractors (40 -100 HP) (45%), 2WD tractors (less than 40 hp) (44.1%), GPS/Precision equipment (40.4%), and 2WD tractors (greater than 100 HP) (33.1%).
  • The US farm, lawn, and garden equipment industry has a 2019 size of $66 billion.

RESEARCH STRATEGY

Your research team commenced by consulting credible industry reports and media such as BusinessInsider, Statista, Euromonitor, Grand View Research, MarketWatch, etc. These sources yielded information on the US farm equipment expenditure in 2017, the size of the global agricultural equipment market, and the US farm, lawn, and garden equipment market. We had hoped that these reputable and credible industry data sources could provide specific and pre-compiled data that presents the growth trends and expected growth locations. However, these sources were unsuccessful in yielding any information regarding farmers’ needs and expectations concerning tillage equipment in the US.
Going further, we searched through the websites and databases of regulatory organizations such as the US Department of Agriculture (USDA), farmers.gov, as well as farmers’ networks such as the Farmers Business Network (FBN) for corporate releases, studies or estimations that may be insightful in identifying the needs and expectations of US farmers as regards tillage equipment. Unfortunately, these sources were only able to yield information on a 2019 survey of farm equipment dealers which did not provide enough data to provide or estimate the required information.
Furthermore, we switched our efforts to searching for studies or interviews by third party or independent organizations, for farmers and agricultural professionals. We had hoped that if available, data from such surveys and interviews would yield enough insights or statistical findings from which we could deduce any insights regarding farmers’ needs and expectations from tillage equipment. Unfortunately, this approach yielded no survey that would be useful to the fulfillment of the research. An example of a survey found from this attempt is a survey of machinery dealers and equipment manufacturers to determine the state of their inventories. Such information however, could not be used to provide the required information, or to estimate it.

Part
03
of four
Part
03

Tillage Equipment Market - Market Trends

Five trends in the US tillage equipment market are, the increasing use and development of autonomous tillers, the use of data driven tillage equipment, dealers expectant of increase in new used equipment revenue, farmers’ loyalty to their tillage equipment brands, and farmers embracing conservation cropping.

INCREASING USE AND DEVELOPMENT OF AUTONOMOUS TILLERS

  • The use and development of autonomous tillers is increasingly being adopted.
  • AGCO Fendt developed a programmable and autonomous seeding unit that can work in synchronization with other autonomous field machines.
  • ASI, in partnership with CNH Industrial, developed an automated steering system for a driverless tractor that is designed to perform a wide range of tasks. The tractors can be remotely monitored, commanded, and controlled via a computer or a tablet interface.
  • Escort, in partnership with Microsoft, Bosch, AVL, Reliance Jio, etc. developed an autonomous tractor for the practice of precision farming operations.

THE USE OF DATA-DRIVEN TILLAGE EQUIPMENT

  • Case IH developed the AFS Soil Command technology that leverages a data-driven approach to carry out tillage. The system agronomically optimizes soil conditions by measuring, monitoring, and controlling tillage tools.
  • BlueRiver uses artificial intelligence and computer vision to build smart machines that can detect, identify and make management decisions about every single plant in a field.
  • Trimble leverages real-time data-driven decisions to connect and control tillage equipment, as well as make intelligent controls and commands

DEALERS EXPECTANT OF INCREASE IN NEW AND USED EQUIPMENT REVENUE

  • In 2017, 67% of tillage equipment dealers forecast an increase in revenue from the sale of new tillage equipment.
  • In 2018, 83% of dealers anticipated an increase in new equipment sales revenue, and 87% of dealers anticipated an increase in used equipment revenue.
  • In 2019, 86% of dealers were expectant of an increase in revenue generated from the sales of new tillage equipment, and 87% of dealers were expectant of an increase in revenue generated from the sales of used tillage equipment.
  • The anticipation of revenue increase from the sale of new equipment is a trend because for 3 consecutive years, tillage equipment dealers have consistently upheld the expectation that there would be an increase in the sales revenue from new and used equipment.
  • Tillage equipment dealers are handling this trend by prioritizing the hiring of technicians and personnel, with 92.2% of dealers saying they are either very concerned or concerned with the availability of technicians, while 95.2% of dealers said they are concerned with hiring and retaining employees.
  • This trend is deduced from an annual survey of North American farm equipment dealers, by Farm Equipment.

FARMERS’ LOYALTY TO THEIR TILLAGE EQUIPMENT BRANDS

  • In a Farm Equipment survey that involved 276 agricultural products producers from across the US, 79% of producers indicated that they are loyal to their tillage equipment brand, up 69% who indicated so in 2014.
  • Compared to five years ago, 21% of producers felt more loyal to their equipment brand, while 56% felt the same about their brand.
  • The increasing loyalty of farmers to their equipment brands is a trend because for over 3 consecutive years, the percentage of producers who reported being loyal to their equipment brand has steadily been increasing.

FARMERS EMBRACING CONSERVATION CROPPING

  • In 2017, conservation tillage was used on 67% of wheat acres in the US, 65% of corn acres in 2016, and 40% of cotton acres in 2105.
  • This trend has been identified by Farm policy news, FarmProgress organization, and Successful Farming magazine, as well as data from the Federal Census on Agriculture
  • As a result of this trend, producers are beginning to embrace conservation cropping that require no tilling operations due to its effect on soil health.

RESEARCH STRATEGY

After an exhaustive search through industry media and publications, news media, and academic publications, we could not find any precompiled listing of trends regarding the US tillage equipment market. So, we went ahead to analyzed the launches of various manufacturers of tillage equipment in the last few years. Accordingly, we analyzed commonalities in those launches, determining trends. Here were some trends we found: Increasing use and development of autonomous tillers, and data driven tillage. At least three manufacturers, AGCO Fendt, ASI, and Escort launched tillage equipment that touted autonomy and smartness in their descriptions. Case IH, BlueRiver and Trimble launched products that emphasized the leveraging of data driven tillage and equipment actions.
Also, we consulted some annual industry surveys, interviews and studies targeted at producers who use tillage equipment and the manufacturers and distributors of the tools themselves, in order to identify some more trends. We used data from annual surveys carried out by Farm Equipment (FE), the Federal census on agriculture, FarmProgress, etc.
From these sources, we were able to deduce the five trends outlined above.
Part
04
of four
Part
04

Tillage Equipment Market - Organic Agriculture Growth

The expected growth for organic agriculture in the US and the regions where this growth is expected to occur could not be determined after a detailed and wide reaching research. Details of the research process along with the insights found are below.

USEFUL INSIGHTS

  • By the end of 2017, North America had 3.2 million hectares (5% of the global area) of organic agricultural land.
  • The US had 2.03 million hectares of organic agricultural land by the end of 2017.
  • From 2017 to 2027, the North American organic agricultural land area is projected to increase by 25% or 645,554 hectares.
  • The US organic market had a size of $52.5 billion in 2019, up 6.3% from the previous year.
  • As of 2016, there were 14,217 certified organic farms in the US, representing a 56% increase from 2011. California had the highest number of organic farms — 2,713, which represented 21% of all US certified organic farmland.
  • As of 2016, Wisconsin and New York had the second and third highest number of organic farms: 1,276 and 1,059 respectively.
  • Albeit not having as much organic farms as other regions, the southern part of the US saw the most growth in organic farming from 2011 to 2016. For example, the number of organic farms in Arkansas increased from 10 in 2011 to 64 in 2016, an increase of 540%.
  • In 2016, US farms and ranches generated a revenue of $7.6 billion from certified organic goods.

RESEARCH STRATEGY

Your research team commenced by consulting credible industry reports and media such as BusinessInsider, Statista, Euromonitor, Grand View Research, MarketWatch, etc. Statista provided a report on the share of organic agricultural land available globally. Oceania was first with 51% share, Europe followed with 21%, Latin America was third with 11%. Latin America was closely followed by Asia with 9%, before North America with 5%, and finally, Africa with 3%. However, these sources were unsuccessful in yielding any information regarding the growth of the organic agricultural industry in the US.
Going further, we searched through the websites and databases of regulatory organizations such as the US Department of Agriculture (USDA), farmers.gov, and the Organic Trade Association for industry releases, studies, and estimates that may be insightful in identifying the future growth rate or the region projected to grow the most. Unfortunately, these sources only yielded the same findings that had been gotten from previous searches. The sources included the publication, The World of Organic Agriculture 2019, from Organics International (IFOAM), and the Certified Organic Survey from the Organic Report. These sources could not yield the required information nor did they contain enough data to calculate an estimate.
Furthermore, we switched our efforts to searching for media publications, academic publications and industry releases that contained any information regarding the current and past states of the organic agriculture market in the US, from which we would be able to estimate the future growth rate of organic agriculture in the US. This approach led us to a publication from US News that provided data on the 5 states in the US with the most organic farms. Unfortunately, this information was not sufficient to provide any useful estimate of the future state of the US organic agricultural industry.

Sources
Sources