At the beginning of last year, predictions for the heavy machinery industry were positive. Growing markets and innovation such as artificial intelligence, cloud technology, smart cities, and more developments were leading the way in 2020. However, things have changed since the COVID-19 pandemic started.
The peak of heavy equipment market growth was between 2018 and 2019. 2020 as well started positively with stable growth, yet in the second quarter, the industry faced a downturn. Global heavy machinery sales downturn went from planned -5% to -15%. The good news is that the sector is gaining its momentum again, and according to experts, it is predicted to stabilize and expand.
However, there are some important differences between farm machinery trends and other heavy equipment. The agriculture sector has always been the primary driver of technological innovation in heavy industries. In fact, the mechanization of agricultural production and the prosperity of a company may be heavily tied together. Therefore, it’s reasonable to expect that the market forecasts will be somewhat different with agricultural machinery.
6 key industry trends in agricultural machinery
Adoption of sustainable mechanization
Issues surrounding natural resources, water supply, and soil degradation has caused manufacturers to look towards more advanced technologies that are more sustainable. Major players in the agricultural machinery market have put out calls to the UN Food System Summit to make production more efficient.
It is likely that the trend will continue for a significant amount of time. Accommodating for the growing demand for food in the coming years is likely to be significantly more difficult due to numerous environmental effects on farming. Thus, agricultural machinery will likely go over a small revolution, favoring different equipment than before.
Additionally, government initiatives are likely to subsidize the change to sustainable farm equipment. Agriculture remains at the forefront of most countries and governments as the industry props up nearly everything else. Therefore, looking into sustainable farm equipment is definitely the right way to go.
Precision agriculture
As the agricultural machinery industry stands at the forefront of technological innovation, it’s no surprise that precision agriculture is one of the key trends. While implementing precision farming requires high-tech equipment, farmers are not scared away.
Tools like in-field sensors and unmanned aerial vehicles (frequently known as drones) allow farmers to really focus on the minute details and requirements of particular crops. Additionally, data fed from those tools can deliver insights into possible improvements in plant allocation and other factors.
Precision farming is likely to become the future of agricultural production. Major companies like Monsanto and Agco Corporation have begun implementing precision farming and prescriptive-planting that allow them to optimize the cultivation of food crops.
Interest in robotics
While widespread adoption of robotics by major companies in the agriculture industry has been slower compared to others, there is reason to believe that the interest will surge quickly. Farming machinery has reached size limits in many countries, limiting further improvements. Thus, farmers will have to turn to machine learning and artificial intelligence solutions.
Additionally, robotic devices and machines can perform in adverse conditions, increase operations efficiency, and agricultural output, making them a desirable choice. Robotized equipment can perform during night hours and weekends, speeding up manufacturing processes and saving production costs.
It’s expected that the rising market demand for agricultural products will more or less force many farmers into adopting robotics for their operations. Due to the highly competitive landscape of the industry, lagging even slightly behind can cause farmers to go out of business.
Autonomous workforce and remote solutions
The pandemic put a strain on many industries with heavy machinery being no exception. Nearly every company, regardless of industry, started looking into ways to perform its operations remotely. These technologies enabled them to discover new management principles.
One of these principles that has become a highly industry trend is the creation of autonomous workforces. Essentially, major companies in North America and other places across the globe have realized that more overhead isn’t necessarily better. Employees can perform complex tasks on their own as long as the correct data and tools are provided.
Field service solutions and other technologies can provide field workers and farmers with all the data they need in real time.
Thus, businesses across many industries are looking towards remote workforce solutions that can empower their employees. Field service solutions and other technologies can provide field workers and farmers with all the data they need in real time. Instead of having to constantly communicate or do other low-quality tasks, workers can fully focus on delivering value.
Supply chain adaptations
With countries closing their borders and industrial efforts, the global supply chain of heavy machinery and other industries have been hindered. Global supply chains have many weaknesses, one of the examples is what happened at the beginning of the pandemic when China closed borders and obstructed the medical supply chain.
The economic revival will be scattered around the world and depend a lot on how severe was a country or region was hit by the pandemic and how fast it manages to recover. In order to avoid a similar event in the future, heavy machinery and other supply chains are likely to be more adaptable and resilient. As a result, global supply chains are predicted to go more regional to be less dependent on global production.
While the world at large is still rebounding from the pandemic (as evidenced by the sharp rise in the cost of raw material), there are likely many lessons that have been learned. As the global agriculture equipment market has such a high importance for governments and countries at large, we can expect more fail safes in supply chains implemented.
Faster than ever mechanization
Developing countries haven’t been keeping up with all the technological changes in farm machinery. Usually, they are still employing a significant number of manual labor instead of using agricultural machinery. However, it seems the market dynamics are changing.
While farm tractors have been the primary commodity of the agricultural machinery market, heavier and more in-depth changes are to be expected, especially in the developing world. Mordor Intelligence predict that India will experience a sharp drop in manual labor used in farms and a surge in the use of advanced equipment. Additionally, they predict that the Asia-Pacific region will overtake North America and other agricultural machinery markets as the fastest growing region.
Thus, the machinery market is likely to look for more clients in the Asia-Pacific region as business is likely to surge there. As farmers still have a lot of room for growth, we can expect companies like John Deere to market themselves more aggressively.
6 key farm machinery industry trends
Tractors are expected to be the most popular
Out of all farm machinery, tractors have reigned supreme for numerous years now. Farmers have employed tractors of varying levels of horse power for agriculture. However, due to numerous factors at play, the renting market is likely to experience the biggest surge.
As machines like farm tractors are immensely expensive, they prohibit smaller farms from utilizing them as effectively. As a result, businesses in the agricultural machinery market are scrambling to look for ways to rent out tractors. That way manufacturers can take up a larger market share and deliver the necessary tools for smaller farms without compromising the company bottom line.
Finally, the >250 HP farm tractor market is expected to experience a surge of growth. As the demand for crop yield grows, higher power tractors are expected to be better at keeping up. Additionally, some farms may benefit significantly by the higher load capacity, better traction and control, and numerous other benefits provided by such agriculture equipment.
Digitization of machines
Data has been the primary growth driving force of many industries. The machinery market isn’t that different. In fact, as agriculture is such a fickle process, gathering more information than ever before is likely to become one of the key market trends.
Information acquired from on-field equipment and machinery will be utilized to develop future growth plans. As data allows farmers to take into account more crop-related factors, they will be using such equipment to keep up with demand.
Agriculture has the added benefit of being a technologically dependent business. Agricultural fields are already filled with equipment. In order to process large amounts of data about crops, all they need to do is implement simple technologies instead of doing complete overhauls.
Development of better irrigation systems
Irrigation is probably one of the most important inventions in agriculture, allowing everyone to keep up with rising food demands. It’s nearly impossible to overstate the importance of irrigation across the globe.
Unfortunately, such importance comes often with overuse. The agriculture industry is expected to look for significant advancement in irrigation due to global warming increasing water needs. As food demand is estimated to only rise in the coming years, farmers will have to strike a delicate balance.
As a result, manufacturing businesses are looking for ways to create equipment such as tractors that would manage water use more effectively. Luckily, the development of better water use for food production is likely to experience exponential growth as other advancements such as digitalization of equipment will provide the necessary information for optimization.
Interest in large-scale equipment
High-powered farm tractors are not the only source of business for the machinery market. The manufacturing industry players understand that agriculture has been undergoing massive consolidation. Thus, in the long-term the demand for large-scale equipment in areas like North America will skyrocket.
We are already seeing some evidence for the machinery market shifts. High-powered equipment like tractors and combine harvesters take up an increasingly large market share. Market share of smaller-scale equipment this year fell even during those months that are usually the strongest for smaller players in the agriculture industry.
Thus, agriculture equipment will tend towards the manufacturing of tractors and combine harvesters for large-scale farming. While the effect is already noticeable in North America, other regions will likely follow suit after innovation in the industry catches up.
Complete service-based solutions
Agriculture is an industry like any other. Farmers are always looking for ways to optimize their business. Depending on the level of technology optimization can go up to highly advanced ideas like the implementation of machine learning.
As such, the demands for service providers for the agriculture industry are likely to change. Currently, “service” usually means maintenance and repair of agricultural equipment. However, market trends are telling us a different story.
Technologies will eventually become so complex that farmers might have trouble doing repairs, buying upgrades, updating software, and interpreting data. The manufacturing industry will have to pivot to being more of a trusted advisor, providing information on repairs, upgrades, and possible routes of optimization.
Development of such tools as field service management software is a good indicator that the market is bound for some changes. Farmers will have to simply relent some power to the manufacturing industry which will provide more opportunities for the industry.
Overhauls in fertilizer equipment
Fertilization technology has been overlooked nearly globally, even including highly developed areas such as North America. However, there is reason to believe that there will be changes happening as a result of the rising popularity of precision agriculture.
In the past, fertilizer mixtures were usually broadcasted over a large field instead of being targeted. Due to the lack of a detailed approach to fertilization, farmers were forced to either overuse or underuse if they had different crops. Additionally, following regulations might have been slightly more difficult.
However, the market is changing slightly. As new technologies are implemented, fertilizer equipment can use data derived from other sources to predict the exact requirements and provide adjustment recommendations. Additionally, highly advanced modeling available through some equipment can allow farmers to take into account different geometries such as slopes.
Conclusion
The equipment market has been shaken up a little by recent events. While the COVID-19 will have a lasting impact on supply chains across the globe, environmental change will likely change the global market even more. Global warming, possible water shortages, and sustainable government initiatives will be the primary drivers of change in agriculture.
Additionally, optimization has been one of the growth strategies employed by the bigger players. Most of these strategies rely on the extraction of information from the field. It is then analyzed to derive possible insights for growth.
Finally, the growing importance of software is one of the key drivers as well. As evidenced by the changes in global working conditions, in depth remote monitoring can bring immense benefits. As such, businesses are turning to solutions such as field service management software.
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