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The agricultural equipment finance market size is forecast to increase by USD 182.8 billion, at a CAGR of 6% between 2023 and 2028. The market is experiencing significant growth, driven by several key factors. Firstly, the quick and easy access to credit is enabling farmers to invest in new equipment, thereby replacing outdated machinery with advanced technology. This trend is particularly prevalent in developing economies where agriculture remains a significant contributor to the GDP. However, the market is not without challenges. The demand for farm mechanization is on the rise due to the need for farm efficiency and productivity enhancement in smart farming and crop production. Agricultural equipment rental is another popular financing solution, allowing farmers to rent utility vehicles, agricultural tractors, combines, harvesters, planters, and other machinery for specific periods. The turbulent economic and political environment poses risks to the growth of the market. Economic instability can lead to decreased demand for credit, while political instability can disrupt supply chains and increase operational risks. Despite these challenges, the market is expected to continue its growth trajectory, driven by the increasing adoption of technology in agriculture and the need for farmers to modernize their equipment to remain competitive.
The market is experiencing significant growth due to the increasing trend of farm mechanization and the adoption of precision agriculture techniques. Online finance service platforms are revolutionizing the way farmers access financing for equipment acquisition, offering quick loan approvals and real-time information transparency. Blockchain technology is also being explored to enhance the security and efficiency of these transactions. Farm loan waivers and alternative finance options, including unsecured loans, are catering to the credit demand of small and medium-sized agricultural enterprises. Farm service agencies (FSA) play a crucial role in facilitating equipment financing and providing maintenance services. The integration of drones and other advanced technologies in agriculture is further boosting the demand for financing in large-scale farming operations. Overall, the market is expected to grow steadily, driven by the need for productivity enhancements and the availability of innovative financing solutions.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion " for the period 2024-2028, as well as historical data from 2018 - 2022 for the following segments.
The lease segment is estimated to witness significant growth during the forecast period. The market is witnessing significant growth, with online finance platforms and alternative financing options gaining popularity. Blockchain technology is being integrated into finance companies' systems for quick loan approvals, enhancing transaction security and transparency.
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The lease segment was the largest segment and valued at USD 342 billion in 2018. Agricultural equipment rental is becoming increasingly common, particularly in North America, Western Europe, and APAC, due to its flexibility and cost-effectiveness. Lease financing is the largest segment in this market, allowing farmers to acquire agricultural machinery such as tractors, combines, harvesters, planters, and utility vehicles through flexible payment plans based on the residual fair market value. Hence, such factors are fuelling the growth of this segment during the forecast period.
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APAC is estimated to contribute 48% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market caters to the financing needs of large-scale farming operations, offering flexible repayment terms and seasonal payment options to accommodate the unique cash flow patterns of the agricultural industry. Specialized loan programs are available for various types of equipment, including planting and automatic irrigation equipment, tailored to the specific requirements of small, medium, and large farms. Hence, such factors are driving the market in APAC during the forecast period.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Quick and easy access to credit is notably driving market growth. Agricultural equipment finance plays a crucial role in facilitating the acquisition of essential machinery and utility vehicles for farming enterprises. Traditional financial institutions often have lengthy loan approval processes, taking more than a day to complete paperwork. In contrast, online finance platforms utilizing blockchain technology offer quicker loan approvals, enabling farmers to rent or purchase agricultural equipment in a timely manner.
Finance companies also provide financing programs for farm equipment, including unsecured loans and leasing options for tractors, combines, harvesters, planters, and utility vehicles. These financing solutions contribute significantly to farm mechanization and efficiency, allowing farmers to engage in contract farming, precision agriculture, and crop production with advanced technology such as smart combine harvesters and drones. Thus, such factors are driving the growth of the market during the forecast period.
Replacement of outdated agricultural equipment with advanced equipment is the key trend in the market. In the agricultural sector, the timely acquisition of updated and efficient equipment is crucial for maintaining farm productivity and reducing carbon emissions. However, the replacement cycle for agricultural machinery varies depending on its usage and condition.
While some equipment, such as forklifts and tractors, require more frequent replacement due to maintenance costs, others can last up to 12-15 years. In countries with less stringent replacement policies and emission norms, such as India, Bangladesh, and Pakistan, agricultural equipment may not be replaced as frequently as in other regions. Thus, such trends will shape the growth of the market during the forecast period.
Turbulent economic and political environment is the major challenge that affects the growth of the market. Amidst the economic and political uncertainties globally, the market is experiencing challenges. These disruptions are negatively impacting the growth of agricultural equipment finance businesses. Furthermore, several countries are grappling with economic imbalances, leading to insufficient economic growth and instability in the banking sector.
This situation restricts capital flow and creates exchange rate volatility. In response, financial institutions must adapt and devise strategies to navigate unexpected market events. They should strengthen their internal processes and controls to minimize the disruption caused by such occurrences. Online finance platforms, employing blockchain technology, are revolutionizing agricultural finance by offering quick loan approvals for farm equipment acquisition, rental, and lease. Alternative finance solutions, such as unsecured loans and financing programs, cater to the increasing credit demand in the agricultural enterprise sector. Hence, the above factors will impede the growth of the market during the forecast period.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Adani Group: The company offers agricultural equipment finance services for tractor loan through its subsidiary Adani Capital.
The market research and growth report also includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is witnessing significant growth due to the increasing adoption of online finance platforms and blockchain technology. These platforms offer quick loan approval for agricultural equipment rental, farm loans, and unsecured loans, making it easier for agricultural enterprises to acquire necessary machinery and utility vehicles like tractors, combines, harvesters, planters, and smart combine harvesters. Financing programs for farm equipment loan and agricultural enterprise development are also driving the market. Alternative finance options like equipment leasing and agricultural insurance are gaining popularity among farmers.
The integration of blockchain technology in agricultural finance ensures secure and transparent transactions. Farm loan waivers and kisan credit cards (KCC) are government initiatives to support farmers, further boosting the market growth. Precision agriculture and the use of drones in agriculture are expected to create new opportunities in the market. Financial institutions are offering innovative financing solutions to cater to the increasing credit demand in the agricultural sector.
Market Scope |
|
Report Coverage |
Details |
Page number |
183 |
Base year |
2023 |
Historic period |
2018 - 2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 6% |
Market growth 2024-2028 |
USD 182.8 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
5.3 |
Regional analysis |
APAC, North America, Europe, South America, and Middle East and Africa |
Performing market contribution |
APAC at 48% |
Key countries |
US, China, UK, Germany, and India |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Adani Group, AGCO Corp., Agricultural Bank of China Ltd., Argo Tractors SpA, Barclays PLC, BlackRock Inc., BNP Paribas SA, Citigroup Inc., Deere and Co., ICICI Bank Ltd., IDFC FIRST Bank Ltd., IndusInd Bank Ltd., JPMorgan Chase and Co., Key Corp., Larsen and Toubro Ltd., Mahindra and Mahindra Ltd., Rabobank Group, State Bank of India, The Capital Group Companies Inc., and Wells Fargo and Co. |
Market dynamics |
Parent market analysis, market report, market forecast, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Product
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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