Indonesia Agriculture Equipment Market Outlook to 2029

The report titled “Indonesia Agriculture Equipment Market Outlook to 2029 - By Market Structure, By Manufacturers, By Types of Equipment, By Age of Equipment, By Type of Farming, and By Region” provides a comprehensive analysis of the agriculture equipment market in Indonesia. The report covers an overview and genesis of the industry, overall market size in terms of revenue, market segmentation; trends and developments, regulatory landscape, customer level profiling, issues and challenges, and comparative landscape including competition scenario, cross comparison, opportunities and bottlenecks, and company profiling of major players in the Agriculture Equipment Market. The report concludes with future market projections based on sales revenue, by market, product types, region, cause and effect relationship, and success case studies highlighting the major opportunities and cautions.

Indonesia Agriculture Equipment Market Overview and Size

The Indonesia agriculture equipment market reached a valuation of IDR 50 Trillion in 2023, driven by the increasing mechanization in farming, government support, and the growing demand for efficient farming solutions. The market is characterized by major players such as Kubota, Yanmar, John Deere, and New Holland. These companies are recognized for their extensive distribution networks, diverse equipment offerings, and customer-focused services.

In 2023, Kubota introduced a new range of compact tractors specifically designed for small to medium-sized farms, aiming to enhance efficiency and productivity. This initiative seeks to cater to the rising demand for more adaptable and effective agricultural equipment in Indonesia. Jakarta and Surabaya are key markets due to their high agricultural activity and well-developed infrastructure.

Market Size for Indonesia Agriculture Equipment Industry on the Basis of Sales Volume in Units, 2018-2024

Source: TraceData Research Analysis.

What Factors are Leading to the Growth of Indonesia Agriculture Equipment Market:

• Government Support: The Indonesian government’s initiatives, including subsidies for purchasing agricultural machinery and favorable financing options, have significantly boosted the adoption of modern equipment. In 2023, these programs were instrumental in driving a 15% increase in equipment sales across the country.

• Rising Labor Costs: As labor costs continue to rise and the availability of agricultural workers decreases, farmers are increasingly turning to mechanization to maintain productivity. In 2023, approximately 60% of farms in Indonesia utilized mechanized equipment, highlighting the growing reliance on technology in farming operations.

• Technological Advancements: The introduction of advanced agricultural equipment, such as GPS-guided tractors and precision farming tools, has attracted farmers looking to enhance efficiency and yield. These technologies offer more accurate and efficient farming solutions, contributing to the market’s growth as farmers seek to maximize output and reduce waste.

Which Industry Challenges Have Impacted the Growth for Indonesia Agriculture Equipment Market:

• High Equipment Costs: The significant upfront cost of agricultural equipment remains a major barrier for many farmers, particularly smallholders. A recent industry analysis revealed that approximately 40% of farmers in Indonesia are hesitant to invest in new machinery due to its high cost, which restricts the adoption of advanced farming technologies and limits market growth.

• Lack of Skilled Labor: Operating and maintaining modern agricultural equipment requires specialized skills, which are often lacking in rural areas. This skills gap has led to underutilization of equipment and reduced productivity, as many farmers are unable to fully leverage the benefits of their machinery. This challenge has affected about 30% of equipment owners in 2023.

• Supply Chain Disruptions: Global supply chain issues, exacerbated by the pandemic, have caused delays in the delivery of agricultural machinery and spare parts. These disruptions have resulted in significant downtime for farmers, with approximately 15% of equipment deliveries being delayed in 2023. Such delays can lead to missed planting seasons and lower agricultural output, negatively impacting market growth.

What are the Regulations and Initiatives which have Governed the Market:

• Subsidy Programs for Equipment Purchase: The Indonesian government offers subsidies to encourage the purchase of agricultural machinery, particularly for small and medium-sized farms. These subsidies help reduce the financial burden on farmers, making modern equipment more accessible. In 2023, these subsidies contributed to a 15% increase in the sales of agricultural machinery, highlighting the program's effectiveness in promoting mechanization.

• Import Regulations on Agricultural Machinery: Indonesia enforces strict import regulations on agricultural machinery to ensure compliance with local safety and environmental standards. These regulations include tariffs and quality inspections. In 2023, there was a 10% increase in the import of agricultural equipment, reflecting strong demand despite the stringent regulations.

• Environmental Standards for Equipment: New environmental regulations require that agricultural equipment in Indonesia meet specific emission standards. These standards are aimed at reducing the environmental impact of farming practices. In 2023, approximately 30% of the equipment in the market was upgraded to comply with these new standards, indicating a shift towards more sustainable agricultural practices.

Indonesia Agriculture Equipment Market Segmentation

By Type of Equipment: Tractors dominate the market due to their versatility and essential role in various farming activities. Combine harvesters and plows are also significant segments, reflecting the diverse needs of Indonesian agriculture. 

Indonesian Tractors Market: Due to factors such as small landholding size, limited access to credit and financial institutions, and a depleting resource base that collectively impede the growth of tractors, Tractors Sales Volume and Revenue fell during the 2018–2023 outlook periods at a negative CAGR of 6.8% and 4.6%, respectively. Based on power, 4W tractors were divided into categories, with less than 40 HP being the most popular in Indonesia. Conversely, 2W tractors are becoming more popular because of an increase in the overall number of farm households and agricultural cooperatives.

Indonesian Combine Harvesters Market: Over the forecast period of 2018–2024, the market's value and volume demonstrated a consistent upward trend, with a positive compound annual growth rate of 8.1%. The biggest total sales of combination harvesters were made by combine harvesters with horsepower of no more than 70. The goal of several government initiatives, such as the seed development program and fertilizer subsidy policy, was to support the recovery of displaced farmers.

Indonesian Rice Transplanters Market: During the 2018–2023 forecast period, the market's value and volume demonstrated erratic growth patterns. Since they demand a lot of capital and extensive operating experience, rice transplanters are not very common in the retail sector.

Competitive Landscape in Indonesia Agriculture Equipment Market

The Indonesia agriculture equipment market is relatively concentrated, with a few major players dominating the space. However, the entrance of new firms and the expansion of local dealerships and online platforms have diversified the market, offering farmers more choices and services. Key players in this market include Kubota, Yanmar, John Deere, and New Holland, which have established a strong presence through extensive distribution networks and customer-focused services.

Some of the recent competitor trends and key information about competitors include:

• Kubota:  Known for its reliable and efficient equipment, Kubota reported a 20% increase in sales in 2023. The company’s focus on small to medium-sized farms, coupled with its innovative product offerings, has strengthened its market position in Indonesia.

• Yanmar:  Yanmar saw a 15% growth in sales, particularly in the tractor segment. The company’s emphasis on fuel-efficient and environmentally friendly machinery has resonated well with the Indonesian market, driving its popularity among eco-conscious farmers.

• John Deere: John Deere's strong market position is attributed to its commitment to innovation and superior customer service. In 2023, the company recorded a 10% increase in sales, bolstered by its extensive after-sales service network, which ensures high customer satisfaction.

• New Holland: New Holland has made significant strides in expanding its market share by focusing on offering versatile and durable machinery. The company reported a 12% increase in sales in 2023, with a notable rise in demand for its combine harvesters and plows, especially in regions focused on plantation crops.

What Lies Ahead for Indonesia Agriculture Equipment Market?

The Indonesia agriculture equipment market is projected to grow steadily by 2029, exhibiting a respectable CAGR during the forecast period. This growth is expected to be driven by increasing mechanization, government support, and the rising need for efficient farming practices.

• Shift Towards Precision Agriculture: As the Indonesian government continues to promote agricultural modernization, there is anticipated to be a gradual increase in the adoption of precision agriculture technologies, such as GPS-guided equipment and IoT devices. This trend is supported by government initiatives aimed at improving farm productivity and sustainability.

• Integration of Advanced Technologies: The integration of advanced technologies, such as AI and big data analytics, in equipment operations and farm management is expected to provide farmers with more accurate and actionable insights. These technological advancements will enhance farm efficiency, boost crop yields, and streamline farming processes, making agriculture more profitable and sustainable.

• Expansion of Equipment Rental Markets: The market is seeing a growing trend towards equipment rental services, where farmers can access modern machinery without the high upfront costs. This trend is particularly strong among smallholder farmers, who seek cost-effective solutions to increase their productivity. The increasing availability of rental services is expected to attract more farmers who prioritize flexibility and cost-efficiency.

• Focus on Sustainable Farming Practices: There is a rising trend towards sustainable farming practices within the agriculture sector. This includes the adoption of environmentally friendly equipment, the use of renewable energy sources, and efforts to reduce the carbon footprint associated with farming activities. These practices are becoming more important to environmentally conscious farmers and are expected to influence equipment purchasing decisions.

Future Outlook and Projections for Indonesia Agriculture Equipment Market on the Basis of Sales in Units, 2024-2029

Source: TraceData Research Analysis

Indonesia Agriculture Equipment Market Segmentation

• By Type of Agricultural Equipment:

  • Tractors

  • Combine Harvesters

  • Rice Transplanters

  • Implements

• By Tractor Type:

  • Two Wheel Tractors

  • Four Wheel Tractors

• By Tractor HP:

  • Less than 40 HP

  • 40-70 HP

  • Above 70 HP

• By Tractor Regional Demand:

  • Java

  • Sumatra

  • Kalimantan

  • Sulawesi

  • Papua

• By Combine Harvester HP:

  • 70 and Less than 70 HP

  • Above 70 HP

• By Implements:

  • Rotavator

  • Plough

  • Harrow

  • Fertilizer Spreads

  • Others

Players Mentioned in the Report:

• PT Kubota Indonesia

• Yanmar Indonesia

• PT Pindad (Persero)

• PT Rutan

• Mitra Agro

• PT United Tractors Tbk

• PT Trakindo Utama

• Satrindo Mitra Utama

• PT Altrak 1978

• New Holland Agriculture (CNH Industrial)

Key Target Audience:

• Agriculture Equipment Dealers

• Online Equipment Marketplaces

• Agricultural Financing Companies

• Regulatory Bodies (e.g., Ministry of Agriculture)

• Research and Development Institutions

Time Period:

• Historical Period: 2018-2023

• Base Year: 2024

• Forecast Period: 2024-2029