According to PAAPAM former chairman Mumshad Ali, tractor bookings have dropped sharply after posting a strong growth in the last two years. “Previously, the industry was producing 60,000-70,000 tractors annually.”
This growth came at the back of Pakistan Muslim League-Nawaz (PML-N) government’s support to the agriculture sector and the China-Pakistan Economic Corridor (CPEC). As CPEC projects are put on hold and rupee devalues leading to price increase, drop in sales was eminent. Tractor sales are a good indicator of the health of the country’s economy in general and agri-economy in particular, Ali added.
Industry insiders believe the current financial year will close with a sale of less than 50,000 units compared to 70,000 plus units in the last financial year as investors pull their money out from this industry to invest elsewhere.
Tractor sales have two seasons a year and investors are needed to purchase tractors all year round to meet the demand surge after the Rabi and Kharif crops are harvested and agri economy cash cycle revolves.
The industry has faced a drop in demand in the past as well for different reasons, such as imposition of GST, tractor subsidy schemes, news of new and old used tractor imports, commodity price crashes, floods, and crop failures.
This boom and bust cycle is a big impediment in the growth of this sector in terms of volumes and quality. The industry holds great potential for exports to Africa due to the price, design and durability of the Pakistani tractor. If the industry is to rebound back, CPEC projects have to restart again and the government must support Pakistani farmers, he added.