Indonesian government initiatives to promote the use of agricultural equipment

AdobeStock 208496484According to Ken Research, the Indonesian government intends to increase national production of local agricultural machinery and has set aside US$538mn for machinery development in Indonesia

In a new report, titled Indonesia Agriculture Equipment Market Outlook to 2025, the Indonesian government plans to invest in R&D - Rice science to further improve yields on available favourable land, while expanding rice production to frontier areas, where the rice plant must withstand harsher environments. Indonesian farmers are likely to increase the usage of disc plough on the farms over long term. Working capacity of less than 40HP tractors with single plough is gaining traction for both dry and wet fields.

Agriculture sector currently accounts for 14% of nation’s GDP in accordance with Indonesia’s statistical department. The proportion is anticipated to increase in future leading to higher demand for agriculture equipment including both 2W and 4W tractors.

Demand for four wheel tractors will continue to arise from Sumatra and Kalimantan in the future, due to the above average farm holding size in these regions. Among product segments, combine harvesters are mainly demanded by a limited target audience and farmers and agricultural cooperatives and this particular trend is expected to continue in the near future. Manufacturers have invested into R&D to minimise post harvest loss and reduction in grain damage during harvesting.

COVID impact on Indonesia agriculture equipment market sales value and volume: Restrictions were put in place thereby, causing delay in the harvesting of major staple crops such as rice and further halt in farm operations. Due to the COVID-19 outbreak, the companies are now focusing on new strategies of assembling and producing machineries locally. Lowering trade barriers can also aid the country to diversify import sources to hedge the trade risks from other countries.

The report suggested that the overall agriculture equipment market is further expected to grow in the near future as both existing companies and new entrants can focus on investment in 2W hand tractors/tillers; expansion in dealer network to widen their service capabilities; tie-ups between banks and private finance companies/institutions; focus on after-sales support services to gain customer attention; participating in agricultural exhibitions and other marketing initiatives. The market is expected to register a positive six-year CAGR of 6.1% and 5.7% in terms of sales value and volume respectively during the forecast period 2020-2025. Tractors market, combine harvesters market rice transplanters market and implements market in Indonesia is further expected to grow at revenue CAGR of 6.0%, 7.5%, 4.7% & 3.8% respectively and volume CAGR of 5.6%, 7.5% & 4.7% respectively during the forecast period 2020-2025.

To read the full report click here!


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