1. Indonesia Tractors Segment to showcase positive outlook over long term as the government is pushing for mechanized farming systems.
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The tractor sales volume is expected to witness an uptick in the sales volume growing at a CAGR of 5.6% during the forecasted period 2020-2025F. It is predicted that 2W tractors will dominate the segment in the longer run. Agriculture sector currently accounts for 14% of nation’s GDP. The proportion is expected to increase in future leading to higher demand for agriculture equipment including both 2W and 4W tractors. Furthermore, Mechanization is also anticipated to increase the welfare of farm households & create employment opportunities in the rural areas. In terms of challenges posed by the segment, factors such as small land holding size, poor access to credit & financial institution and deteriorating resource base are obstructing the growth of agriculture tractors.
2. Favorable credit policies towards machinery purchase adopted by the government & other regulatory authorities; coupled with the ability to increase farm productivity are driving the market growth over long term.
Farmers are increasingly adopting agricultural mechanization as a substitute for manual labor since they are more cost-effective, easily available, and more efficient means of agricultural operation. Manufacturers have invested into R&D of combine harvesters in order to minimize post-harvest loss and reduction in grain damage during harvesting season. When it comes to challenges faced by the market, scattered land holdings and small farm sizes are creating concerns amongst farmers regarding usage of CHs. Factors such as shortage in farm labor along with rising urban population and industrialization is pushing the farmers to employ machinery for harvesting. In order to tackle it, government institutions are setting up training camps for farmers for operating & maintaining farm machinery. Moreover, emergence of compact solutions & skill development programs are collectively anticipated to overcome these challenges.
3. Papua and East Kalimantan have been mapped as major regions for demand of agriculture equipment.
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Rental market for Agriculture Equipment is dominated by unorganized players in Indonesia. Farm Machinery Hire Services are represented by small businesses managed by farmer groups operated within village area. Farm Machinery is majorly concentrated on rice production areas such as South Sumatra, West Java, Central Java and East Java. Land Preparation, Water Pumping, Threshing, Harvesting and Milling are the major purpose for which equipment are rented.
For more insights on the market intelligence, refer to the link below:-
Indonesia Agriculture Equipment Market