Growth in South Africa’s agricultural equipment industry revenue in future shall be facilitated by growth in population, higher demand for agricultural produce and rise in farm area under crop production.
Countries such as South Africa are expected to cater to a large proportion of the growing population due to the expandable arable land available in the country. Some of South Africa’s most produced crops include sugarcane, corn and soybeans which will continue to expand the agricultural market. The cost and quantity of soy and maize produced are expected to rise in the coming years thereby increasing the demand for tractors and its implements used for its production.
The market is likely to be driven by rise in demand for multifunctional machinery. Manufacturers are expected to tie up with finance companies and provide efficient credit and repayment schemes in order to further stimulate demand of equipments in the future. Agricultural Robots are likely to perforate the market in the upcoming 5 years.
The South African government has supported large and medium scale farmers to a considerable extent thus elevating the agricultural machinery market over the last five years. This is expected to improve in the future. To increase the overall demand for agriculture and thus agricultural machinery, the government has extended support through financial institutions like Development Financial Institutions (DFI) to the black producers. This is an incentive to provide access for small, medium and large scale black producers in the sector.
South Africa is likely to experience an increase in research funding and thereby the research conducted in agriculture in order to pave way for a successful and rapid uptake of digital technology in farming. The economy will promote research funding in the most promising technology areas, notably automation, robotization, and digital connectivity.
Ken Research in its latest study suggests that the growth key is in the hands of South African government to unlock financial barriers restraining the industry. This would lead the market to grow registering a CAGR close to 2% during the year 2018-2025.
It is expected that by the end of 2023, tillage equipments would continue to lead the market share capturing over 27% and registering a CAGR of close to 2% during 2018-2023. Tractors market is likely to expand with a CAGR close to 4% and planters & seeders are expected to register a CAGR around 2%. Precision Farming is likely to showcase the highest CAGR close to 7% with rise in demand by various entities. Combine harvesters are expected to showcase a CAGR close to 6% while tractors would register almost 3% CAGR during the forecast period.
Free State would continue to generate highest market share of close to 26% in terms of sales volume by 2023. KwaZulu Natal, Western Cape and Mpumalanga are likely to showcase a CAGR of close to 2% each depicting a moderate growth rate during 2019-2023. Overall, the country is likely to experience growth in intensive farming techniques which would be well facilitated by higher mechanization & better adaptation observed.
In the next 5-7 years, the market growth is expected to be fueled by rising demand & prices of agriculture produce, better government regulations, rise in mechanization rate and with the introduction of Agricultural Robots.