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Last Updated : Aug 12, 2019 10:54 AM IST | Source: Mint

Tractor sales fall 14.4% in April-July as monsoon plays truant and crop prices fall

Representative image
Representative image

Highlights:
- Domestic sales of tractors in India fell 14.4 percent between April and July, reflecting the agricultural stress in many states
- Sales of tractors are unlikely to see a recovery until October

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A crash in potato prices has meant sleepless nights for Anubhav Kumar. A young sales executive with a tractor maker, Kumar is not a farmer, but five years into the job he knows it too well that his prospects are closely tied to that of growers. “Potato is the main cash crop here in Mathura and Agra, and since farmers are selling at a loss, most have postponed their plans to replace their old farm machinery or purchase new ones,” said Kumar.

At the tractor showroom in Raya town of Mathura, where this conversation took place, the owner of the shop, Narendra Singh, sat quietly next to Kumar. His only customer for the day is a small farmer, who wants to buy a 12-year-old used tractor for a little over Rs 1 lakh, about a fifth of what a new one would cost. “Usually I sell between six and seven tractors every month. In July, not a single piece was sold… this has never happened before,” said Narendra Singh.

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As the discussion progressed, more details emerged on the agricultural stress that has also engulfed the tractor industry.

At least a fifth of the farmers who have bought tractors in Kumar’s sales territory of Agra are unable to repay their loans. In the past few months, tractor sales have plunged by more than a third from a year earlier. “Farmers are even postponing replacing tyres, which cost Rs 12,000 a pair,” said Singh.

The current wholesale potato rates of Rs 250-300 (compared to about Rs 350 it costs a farmer to grow a 50 kg bag, plus storage costs) means no one is making money, contends Kumar. His maths is simple: “When prices cross Rs 500, they replace tyres; when it crosses Rs 700 per bag, they consider purchasing costly equipment like tractor.”

A little distance from the shop lives Balram Singh, a 30-year-old farmer from Agra. He now works at the house of the sarpanch of Suraj village in Raya and prefers staying away from his village in Agra. “I purchased a tractor in early 2018, but that was a mistake. For the past few months I have not paid the loan instalments… the financiers keep visiting my home, so it is better to live here,” said Balram Singh.

The sliding demand for tractors is not restricted to the potato belt of Uttar Pradesh. Numbers from the Tractor Manufacturers Association showed that domestic sales across India fell by 14.4 percent between April and July, compared to those the year before. After registering a robust 24 percent growth in 2017-18, tractor sales slowed down to 7.8 percent in 2018-19.

The delay in arrival of the monsoon, coupled with deficit rains, dampened farmer sentiment leading to a lull period for the tractor industry, said Raman Mittal, Executive Director at Sonalika International Tractors, a leading manufacturer. According to Mittal, sales were impacted in eastern and southern states as well as Uttar Pradesh and Maharashtra.

Image source: Mint

Image source: Mint


The June-to-September south-west monsoon, which irrigates nearly half of India’s crop area, witnessed a delayed onset with highly deficient rains in June and early July, the main planting months for rain-fed kharif crops. Following a 28 percent rainfall deficit between June 1 and July 3, planting of crops was 26 percent lower year-on-year.

By August 9 as the monsoon gained momentum, planting had picked up pace, narrowing the area deficit to five percent.

Sales of heavy farm machinery like tractors are unlikely to see a recovery till harvesting begins in October, when such equipment is required.

We can expect (sales) growth to stabilise in the next few months beginning with festivals in the September quarter, said Mittal from Sonalika Tractors. “But much will depend on how prices of key crops like soybean, cotton and pulses fare.”

At Dilupatti village in Mathura, a group of 10 farmers says none of them has bought a tractor in the past five years. “Even the television and fridge in our homes are more than 15 years old and you’re asking about tractors,” said 64-year old Vijay Pal, a small farmer from the village.

A small farmer from Suraj village burst out laughing while dragging out a rickety bicycle from inside his home: “I have no money even to repair my old TV, which I got as a wedding gift.”

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First Published on Aug 12, 2019 10:49 am
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