Record water levels in the reservoirs and expectations of a good monsoon is boosting tractor demand
With the exception of two months, tractor sales in June surpassed each of the last 30 months on the back of record improvement in agricultural harvest, government’s rural development schemes and record water levels in the reservoirs.
Domestic tractor volumes, last month, stood at 92,888 units, making it the best June sales in at least seven years. As compared to last year same month, the sector recorded a growth of 22 percent in sales which was much higher than pre-COVID-19 volumes.
October, which typically churns out the highest monthly tractor volumes in a year aided by the festive days, was the only month during the last two years to post better sales than June, 2020, as per data supplied by the Tractor Manufacturers Association (TMA).
Talking to Moneycontrol, T R Kesavan, President, TMA and President & Chief Operating Officer, TAFE said, “Agricultural harvest and procurement has shown record improvements and combined with Pradhan Mantri Kisan Vikas Yojna disbursals to farmers and utilisation of Mahatma Gandhi National Rural Employment Guarantee Act workers in capacity building activities directly and positively impacting agriculture has also given positive boost to the rural sentiments.”
Part of the uptick in demand can also be attributed to the ramp-up in production done by all manufacturers. Tractor production has also hit a 20-month high, according to TMA. COVID-19 has largely affected the urban areas of India leading to calls of lockdowns to control its spread while also hitting the economy hard.
“India is still an agrarian nation with around 60 percent of population depending on rural economy. The COVID-19 pandemic has not hurt the rural economy as badly as it has hit the urban economy”, added Kesavan.
Tractor sales of segment leader Mahindra & Mahindra climbed 12 percent in June to 35,844 units as compared to the same month last year. Sales of TAFE, the country’s second largest tractor maker, surged 35 percent to 19,084 units during the same month.
In a tweet Hemant Sikka, president Farm Equipment Sector, Mahindra & Mahindra, said, “With almost entire India receiving normal to excess rainfall so far there is a surge in kharif sowing. Such favourable farming conditions will increase agri output and farm incomes, providing much needed impetus to a strong rural-led economic growth.”
Better Rabi output in FY20, opening of procurement centers by the government and healthy reservoir levels, which was the best in nine years as per Emkay Research will boost tractor demand for rest of the year. While the research company has predicted a decline of 10 percent in volumes for FY21 compared to FY20, the TMA is confident of posting a growth.“I am expecting tractor and equipment industry to do well in the balance part of the year and look forward to at least 5 percent growth over last year,” Kesavan said.