Covid-19 failed to deflate demand for tractors in 2020 as sales hit an all-time high and beat 2018 volumes, the best so far for the industry.
Tractor sales in the domestic market closed at 802,670 units in 2020, 11 percent higher than 2019 volumes and 1 percent more than 2018, according to data supplied by the Tractor and Mechanisation Association, the apex industry lobby.
Best-ever volumes were not the only reason 2020 stood out. The year also witnessed the lowest monthly sales total recorded in recent history. The nationwide lockdown in April crippled tractor demand bringing down sales to just under 12,000 units, which was more than five times lower than the monthly volume average of 2020. That makes the full-year’s sales figure all the more creditable.
Responding to a query from Moneycontrol, Hemant Sikka, President – Farm Equipment Sector, Mahindra & Mahindra, said: “This growth has been on account of several positive factors in the rural economy leading to growth of the domestic tractor industry, also resulting in a very good festive season.”
A record improvement in agricultural harvests, the government’s rural development schemes, higher Minimum Support Price (MSP), higher than normal rains and record water levels in reservoirs, helped push tractor demand in 2020.
The year also saw higher manpower availability for agricultural purposes as a result of reverse migration from urban to rural areas after the imposition of the lockdown. Governmental support schemes such as MGNREGA and PM-KISAN helped bring fresh liquidity to rural incomes, noted a report from ICRA.
“Successive bumper Rabi and Kharif crop harvests, coupled with timely procurement of crops, ensured seamless circulation of money in the rural economy. Government spending on agriculture and rural development, and the MGNREGA outlay this year have increased substantially,” added Sikka.
While the country saw a bumper crop output, the price realisation for the farmer has also been very good, said industry watchers. As per the Directorate of Economics and Statistics, the MSPs for 2020-21 were revised upwards in the range of 2.1 to 12.7 percent across Kharif and Rabi crops compared to 2019-20.
Between June and September, the monsoons were also higher than the long period average by 9 percent. The year also saw the third-highest cumulative rainfall in 25 years, making two back-to-back above average monsoons for the first time since 1960.
How they stack up
M&M closed 2020 with a market share of 39 percent and sales of 310,908 units across its two main brands, Swaraj and Mahindra. The Mumbai-based company clocked growth of 6.55 percent in 2020 and remained the largest manufacturer of tractors in the country.
Chennai-based TAFE finished 2020 with sales of 145,861 units and a share of 18 percent. With 15.6 percent growth in sales in 2020, the company remained the second-largest manufacturer of tractors in India.
Sonalika Tractors, a brand of International Tractors, saw sales of 120,733 units in 2020 and a share of 15 percent of the domestic tractor market, with 40.5 percent growth. Sonalika is the third-biggest tractor maker in India. Escorts closed last year with sales rising 3.4 percent to 90,040 units and a share of 11 percent.
“We expect this demand to continue in FY22, with lower-double-digit growth. However, this depends on the monsoon and the post-Covid recovery in the economy,” added Sikka.