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September 21, 2020
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Agri Machinery

TRACTORS IN PAKISTAN LOW OUTREACH IN AGRICULTURE MARKET

Tractor refers to Farm Vehicle that provides power and traction to mechanize agricultural tasks. (Wikipedia).

TRACTORS IN PAKISTAN

In Pakistan Tractors are still considered as a symbol of Farm Mechanization in Agriculture/ Farming. Still a large number of farmers don’t have their own tractors. Although the manufacturing/ cost of tractor production in Pakistan is quite low as compared to production costs in neighboring countries. This low production cost also enables the tractor manufacturers to export tractors to countries like Afghanistan, Africa, Indonesia etc. Government has imposed ban on the export of used tractors in Pakistan and now there is a consideration to uplift this ban. Currently, following five major tractors brands are leading in Pakistan are

  • Millat Tractors Limited
  • Al Ghazi Tractors Limited
  • Belarus
  • IMT (Orient Automotive Industries Pvt Limited)
  • Euro Ford Tractors

In addition, John Deer and New Holland imported tractors are also available in local markets.

TRACTORS MARKET SHARE IN PAKISTAN

At present, mostly two main tractor manufacturing brands holds the majority of market share and there role is of monopoly in nature. Millat tractors has the maximum market share of about 59-60 % and Al Ghazi tractors has 33-35 % of market share; IMT has about only 1 % and other brands have about 4-5 % of Pakistan Agri market share. In last financial year tractor prices were increased twice. Last year about 59000 to 60000 tractor units have been sold and demand is increasing further. In addition, farmers have to wait for months for delivery of a tractor as the demand keeps on increasing.

TRACTORS DEMAND

From last two years tractors demand has increased and keeps on increasing because of following factors:

  • Good cash returns of Agri commodities in last two years;
  • CPEC Projects;
  • Non availability of rural labor;
  • Allied Source of Income for Farmers (Multiple usage, lease, commercial transportation etc);
  • Used as an asset (As price inflation trend is very high from last ten years).

LOW OUTREACH OF TRACTORS IN PAKISTAN AGRICULTURE

Tractors are still considered as a symbol of Farm Mechanization in Pakistan Agriculture. At present tractors are mainly utilized for traditional farming and tillage operations or to run the Tube wells in rural areas. In addition, during non-operational days in fields, are mostly used commercially for transportation of goods, specially the bricks and construction material. In spite of being an agricultural country, tractors have a very low outreach in Pakistan Agriculture Market. Main reasons for this low outreach of tractors in Pakistan Agriculture Market are

  • LOW BUYING CAPACITY OF FARMERS

A large population of farming community has subsistence and below subsistence agriculture land cultivation and is not in a financial position to buy tractors. In addition, tractor handling and operations in small land holdings are also not economically feasible. Local tractor manufacturer companies have limited production lines and don’t have a product diversity which limits the tractor usage in small land holdings. In addition, a large number of farmers are tenants and don’t have enough financial resources to buy a tractor.

  • NON EFFICIENT TRACTOR SUBSIDY SCHEMES BY GOVERNMENT

In the last decade both federal and provincial tractor subsidy schemes were initiated but that resulted in an extra ordinary increase in tractor prices and had a very low economic impact and outreach penetration in farming community. However the local tractor manufacturers are denied this base of increasing tractor prices.

  • LOW AGRICULTURE FINANCING OUTREACH BY COMMERCIAL BANKS

Tractor financing facility is provided by specialized agriculture banks and also by most of commercial banks in Pakistan. But agriculture financing outreach of these banks is not consistent across the country. Moreover, terms and condition to avail tractor financing are complicated involving revenue procedures and string financial worth which is not likely to be met by most of the farmers.

  • LACK OF INNOVATION

At present, the local tractor manufacturing companies have the traditional product lines of tractors without any advance farming/ operational features. Progressive farmers have lost interest in similar product lines that are being used by them for years.

  • BAN ON IMPORT OF USED TRACTORS

In Pakistan import of used tractors is banned, resulting in limited options to buy only high cost new imported tractors or to buy locally manufactured tractors.

By: Yasir Habib Rana

Edited by: Zulfiqar Haider

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