Market Trends of Irrigation Machinery Industry
This section covers the major market trends shaping the Irrigation Machinery Market according to our research experts:
Subsidies from Governments and Support from Financial Institutions
Government organizations are promoting irrigation machinery in various countries to encourage the adoption of advanced irrigation technologies by providing multiple benefits or subsidies to farmers. These subsidies are helping farmers buy irrigation machinery to simplify the irrigation practices on the farm, thereby aiding the increased land under irrigation around the world. For instance, according to the World Data Atlas, the total irrigated area worldwide increased by 74,613 thousand hectares from 2019 to 2020. Additionally, in the United States, increasing water conservation and subsidies for drip irrigation are anticipated to enhance water consumption and crop yield. This is expected to augment the demand for drip irrigation machinery.
Along with this, Uganda is a region primarily dependent on agriculture. Still, the lack of water infrastructure and increasingly erratic rainfall due to climate change are just two of the challenges faced by its farmers. To help ease the hardships of farmers, the World Bank is supporting the Ministry of Agriculture and 40 local governments across Uganda as part of the Uganda Intergovernmental Fiscal Transfers Program for Results (UgIFT). In Sep 2020, the Board of Directors approved USD 300 million in additional financing to the UgIFT to boost local government (LGs) service delivery in education, health, water and environment, and micro irrigation, including in areas hosting large populations of refugees. This initiative helped farmers buy irrigation equipment at a lower cost, learn to use the irrigation equipment, and understand when and how to water crops.
The Indian government, under the Per Drop More Crop scheme, offers subsidies or financial assistance at a rate of 55% of the indicative unit cost to farmers and a rate of 45% to other cultivators in order to encourage farmers to install drip and sprinkler irrigation systems to promote the water use efficiency. This is expected to strengthen the market. Owing to favorable government policies regarding low-interest loans and subsidies for implementing modern and advanced irrigation systems, the irrigation machinery market is likely to witness significant growth worldwide.
North America Dominates the Market
The rate of adoption of irrigation systems in North America has increased over the past few years. Water scarcity is a significant challenge and a key driver for using irrigation machinery systems. Micro irrigation systems, such as drip and sprinklers, reduce water wastage and increase productivity.
The growing sophistication of equipment and government initiatives in the form of subsidies is driving market growth. Water development programs at the federal, state, and local levels and improvements in groundwater pumping technologies are contributing to the expansion of the irrigated area in North America. Farmers in the region have been able to avail themselves of timely subsidies in the form of agriculture equipment loans at flexible interest rates and repayment schedules. This has helped even small-scale farmers invest in agricultural irrigation equipment, thereby expanding the market of irrigation systems.
For instance, the US government extends loans on farm equipment through USDA Direct Operating Loans, USDA Operating Microloans, and USDA Guaranteed Operating Loans. The 2018 Farm Bill further increased the farm loan limit for US farmers to better access credit for high capital costs related to agriculture systems, including irrigation systems. The availability of loans and subsidies is propelling the demand for agricultural irrigation machinery, resulting in the growth of the market studied in the country.
As reported by Statistique Canada, the total irrigated area in the country in 2020 was 605,907 hectares. With 345,581 hectares, the field crops contributed to most of the irrigation, while the forage crops accounted for 205,866 hectares. The large, irrigated area in the country is driving the market for irrigation machinery subsequently in the region.
