LIFTING THE BAN ON IMPORT OF USED TRACTORS
Government of Pakistan is considering lifting the ban on import of used tractors with the aim and objective of ensuring maximum outreach of tractors in Agriculture market of Pakistan. Farming community and related stake holders are in difference of opinion on this issue.
SUPPORTING IMPORT OF USED TRACTORS
Mostly progressive farmers and other related agriculture/ farming stake holders favoring import of used tractors have described the following constraints for the import of used tractors in Pakistan’s Agriculture market.
- MONOPOLY OF TWO TRACTOR MANUFACTURERS
The two main tractor manufacturers have a monopoly in Pakistan’s Agriculture market both in terms of production and price control as both major contributors have about 95 % of the market share.
- LACK OF INNOVATION
Local tractor manufacturers are still producing the same traditional units with no advancement in new features. Progressive and advanced farmers are against this limited product choice. Both tractor manufacturing players have product line with limited traditional features.
- NEGATIVE ROLE DURING GOVERNMENT SUBSIDIES
Most farmers from the rural community have this opinion about the negative role played by tractor manufacturers during tractor subsidy schemes. However the tractor manufacturer companies are of the opinion that price inflation are subject to market factors.
Most farmers are of the belief that Since 2008, Millat and Al Ghazi tractor manufacturers have played a negative role during Government tractor subsidy schemes initiated by both federal and provincial governments and tractor manufacturers have raised tractor prices equal to the subsidy amount and farming community didn’t get any economic impact from these schemes. These schemes are limited to a small number of farmers who also have to pay the same price of tractors as was before initiation of subsidy schemes and the majority of farmers have to pay additional prices to purchase the tractors.
- LIMITED PRODUCTION CAPACITY
Majority of farming community are of opinion that current tractor manufacturers have limited production capacity which results in months of delay in delivery of tractors and also during the cropping time tractors prices are inflated up to one hundred or one hundred fifty thousand rupees per unit. Import of used tractors will help in filling the supply gap and will also prevent monopoly control on tractor supply.
- FUEL EFFICIENT
Farmers favoring import of used imported tractors are also of opinion that present product line of local produced tractors are not environment friendly and fuel efficient in performing farming operations as tractor operation have major share in the production cost of crops, fruits and vegetables.
- BUYING CAPACITY OF FARMERS
The majority of farmers have subsistence and below subsistence holding and are usually not in a good financial position to buy a new tractor to perform agricultural/ farming operations effectively and efficiently. Import of used tractors will provide an opportunity to a large number of farming community to adapt farm mechanization.
DRAWBACKS OF IMPORTING USED TRACTORS
Tractor manufacturers, related industry people, farmers and other stake holders that are against the government decision of lifting the ban on used tractor addresses the following issues:
- INCREASE IMPORT BILLS
Import of used tractors will increase the import bill and it is not a right time to lift the ban on import of used tractors as government is already struggling to maintain a healthy balance of foreign reserves.
- DECREASE IN GOVERNMENT TAX INCOME
Local tractor manufacturers are contributing a significant amount in shape of different taxes that are supporting economy. Tractor manufacturing industry is growing on a rapid pace and it will further contribute to local economic activities.
- RESTRICTS GROWTH OF ALLIED INDUSTRIES
At present, about three hundred local manufacturers are manufacturing different tractor parts and giving the employment to about more than fifty thousand individuals. Dealer’s network and their staff are additional to this.
- PROVISION OF LOW COST TRACTOR PARTS AND THERE AVAILABILITY
Most of the auto parts of locally manufactured tractors are locally manufactured and easily available on low cost. Farmers will face difficulty in accessing auto parts of imported used tractors.
- PROVISION OF LOW COST TECHNICAL SERVICES
Technical support and after sale services are provided to farming community purchasing locally manufactured tractors and farmers will face difficulty in getting these services for used imported tractors.
- PROVISION OF BUSINESS & JOB OPPRTUNITIES
Growth and development of local tractor manufacturing industries will be a source of job provision to our youth and can provide business opportunities to local people.
After considering all the facts, we request the Government to have a strong check on local tractor manufacturers to avoid their monopoly (if any) and also take necessary measures to introduce more players in Pakistan Tractor Market and have a strong strategy to establish local tractor industry which should be competitive, innovative and will play an effective and efficient role in increasing tractor outreach all over Pakistan.
By: Yasir Habib Rana
Edited by: ZulfiqarHaider