Ques 1. Good morning, Mr. Shafiq. Please introduce yourself and tell us about your experience in agricultural equipment space.
Good morning to you as well! I’m Shafiq and I have been associated with Sime Darby Sdn Bhd for close to a decade now. I have been into the industry for quite a long time and have always been interested in exploring new opportunities for expanding the scope of agricultural machinery in Malaysia.
Ques 2. Could you give a brief about agricultural equipment industry in Malaysia?
Thanks for that question. The agricultural equipment market in Malaysia is import-dependent for the major segments, like tractors, rice transplanters, and combine harvesters. However, the domestic manufacturing of these equipment is negligible. Only traders and distributor/ dealer are present in the country. However, there are some reconditioned combine workshops that remanufactures discarded tractors or other machinery.
Ques 3. As you mentioned about the three main segments of agricultural equipment, i.e. tractors, combines and rice transplanters, so could you elaborate more on their prevalence in Malaysian market and their respective volume shares?
Right, before talking about the segmentation, I would like to draw your attention about Malaysia’s agriculture industry. Basically, the palm oil plantation is the backbone of agriculture industry with more than 80% of its plantation capturing the share alone. Here, tractors are more common for numerous purposes, including trailers for haulage, sprayer for pest control, with seed spreader for fertilizing, with slasher for grass cutting, etc. So, tractors are widely used in this category in the country.
On the other hand, combine harvesters are used in other plantations, like fruits, vegetables, maize, and others. Having said that, the implementation of combine harvesters is very low in Malaysia due to low mechanization among the farmers. But the rice cultivation is quite advanced and there is growing utilization of rice transplanters on paddy & rice fields. Let’s come to their respective volume shares, I would say, tractors would account for almost 85% of the total market, combine harvesters accounting for 10-12% and the rest goes to rice transplanters.
So, we have talked about all these equipment but I would like to share one more segment which is quite prominent here, which is the implements. There is local manufacturing of implements by players, such as howard, emdek, rb spray, sincosagri, yi ming, etc. So, it would be very difficult to classify them, as there are thousands of equipment types in this. Due to the extensive palm oil plantation in Malaysia, the use of implements is considerably high. It won’t give a correct picture if I give you volume share of implements but in terms of revenues, it would easily take 14-15% of the entire agricultural equipment market in Malaysia.
Ques 4. Since, Malaysia's agricultural equipment industry is highly import dependent, is there any drastic change in the prices of tractors, combines, and rice transplanters in the last 5 year or so?
Definitely, the final prices of these equipment can vary a lot with respect to the country you’re importing from, changes in the foreign exchange rates, rise in the input cost in that country, and likewise. The prices in the last 5 years have rose by 10-12%, most of which was triggered during COVID-19, and continued further due to rising inflation rate here in Malaysia.
Ques 5. What type of tractors are more prevalent in Malaysia? Please give their respective shares as well? Could you share the average selling prices for each of the segment?
The tractor market in Malaysia can be segmented on the basis of horsepower (HP), which can be segregated as: Below 24 HP, 24 HP to 50 HP, 51 HP to 100 HP, and above 100 HP tractors. These all are 4W (Four-wheeler tractors), and there are 2W tractors as well, which can be taken separately. 2W tractors require a lot of man power and are mostly considered by poor farmers due to their cost affordability. These tractors can get in $800 range.
Talking about 4W tractors, I will try to give the nearest estimates as there can be several factors, like brand, order volume size, usability, additional requirements, etc., while determining the final price. For instance, tractors below 24 HP are tagged for $3300; 24 HP to 50 HP for $12,000; 51 HP to 100 HP for $21,000; and tractors above 100 HP for $47,500.
Well, the most selling segment out of all these, are below 24 HP and 80-95 HP tractors, which are priced very strategically by the players. In terms of volume sales, 2W tractors would account for 15-16%, below 24 HP accounts for almost half (50%) of the volume sales; 24 HP to 50 HP with a 5% share; 51 HP to 100 HP for 20-22%; and tractors above 100 HP with the rest left.
Ques 6. Thanks for sharing the insights so deeply. Could you draw some light on the prominent agricultural equipment players in Malaysia? What would be their market share (in %), in volume terms for 2022?
Well, there are many active players in the market competing in various segments. Since, 4W tractor forms the majority of the market, the top 5 players according to me, would be Kubota, Lovol Eurostar, New Holland, Kinta, and Landini, with 40%, 20%, 13%, 5%, and 5% shares respectively. The remaining 17% would be allocated to numerous other brands, like Farmaster, Yanmar, John Deere, Agromax, and others. The 2W tractor market is dominated by Kubota with a 60% market volume share, followed by Yanmar with 19-20%. Yanmar's presence is limited to certain palm oil plantation companies only due to which they have low share, on the other hand, Kubota always go for market share, even if they have to offer tractors at lower price.
Similarly, there are several players competing in Malaysia’s combine harvester market, like Kubota, Farmaster, Thinker Star, CLAAS, and others with estimated shares of 60%, 10%, 10%, 2%, and remaining to others, respectively. In this segment, there is presence of low-cost Chinese manufacturers also, and we have witnessed entry of World Star into Malaysian market, which has launched their 2 variants under 100 HP.
Moving forward is the rice transplanter market, which is again dominated by Kubota with a 70% share, Yanmar with 20%, and 10% for others, like World Star, Thinker Star, and many unbranded Chinese SMEs.
Ques 7. What is your opinion on the future growth of agricultural equipment market, in volume terms?
I don't think there is anything significant going on in this market, although govt is planning to increase rice production but still there is shortage of land here, so the sales will remain constant, growing at an average of 4-5% for rice transplanters. However, in terms of value, the volatility in exchange rates and rising production costs have led to increased costs here (in Malaysia) also. which can be a problem, as people will move towards cheaper Chinese alternatives, which are not that reliable.
Ques 8. Which are the major regions in Malaysia which have high demand for tractors? What would be the approximate regional shares for tractors, combine harvester and rice transplanters?
Sabah, Johor, Sarawak, and Pahang have most of the palm oil estates, accounting for about 75% of the country's production, so you will find many tractor distributors located here. However, for segment-wise share would be difficult to tell, however, you can find precise state-wise crop production data on the government portal, from which you could get an idea about the regional shares.
For more insights on market intelligence, refer to the link below: –
Malaysia Agriculture Equipment Outlook
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