‘Agri focus, rising mechanisation will boost tractor market’

G Balachandar N Madhavan Chennai | Updated on October 17, 2018 Published on October 16, 2018

Mallika Srinivasan, Chairman & CEO, TAFE, India   -  Bijoy Ghosh

The eastern region is doing particularly well, says TAFE chief Mallika Srinivasan

The tractor industry has hit a sweet spot. For the third year in a row it is expected to post double-digit growth, thanks to increased thrust on the agriculture sector by the government and growing farm mechanisation. Mallika Srinivasan, Chairman & CEO, TAFE, India’s second largest tractor-maker, spoke to BusinessLine on industry growth, mechanisation and new initiatives. Excerpts:

How was the first half of the fiscal for the tractor industry amid some moderation in September?

Overall, the tractor market has been quite robust so far amid some differences regionally. The industry grew about 10.6 per cent in the first half of this fiscal. Till August (from April), the industry was growing faster. But in September, sales saw a seasonal correction due to Diwali getting pushed to November this year. It will get adjusted in this quarter.

Is the growth outlook for the full year robust?

In 2017-18, total tractor volumes — both domestic and exports — stood at 796,873 units, according to Tractor Manufacturers’ Association (TMA) data. Domestic tractor sales alone crossed 7 lakh for the first time in the country and stood at 711,478 units. With strong fundamentals, the industry may end this fiscal with 10-12 per cent growth. We are certainly expecting the total volumes, including domestic and exports, to cross 870,000 units in FY19. So, the tractor industry will end the fiscal with a double-digit growth for the third consecutive year.

What have been the key drivers of tractor growth?

A lot of things are positive for the agriculture sector. GDP growth, increasing use of tractors for commercial operations, a good monsoon, healthy storage levels of water in many parts of the country and bigger thrust on the agriculture sector, both by the Centre and State governments. I would say the agriculture sector has received stronger focus now than a few years ago.

In the past three years, the Centre’s budget allocation excluding subsidy schemes for the agriculture sector has risen by 9 per cent. Also, if you look at 21 major States, their allocations to the agriculture sector have gone up by about 47 per cent. The financing landscape too has improved for the tractor industry.

How have different regions/States performed?

The success story is the East, which is doing well for tractors now. Factors such as infrastructure focus, electrification, improved financing and other programmes have been helping spur tractor volume growth in the eastern region. In Assam, the Chief Minister (Sarbananda Sonowal) has come up with a plan to ensure at least one tractor per village. The State plans to procure 25,000 tractors to give a fillip to farm mechanisation.

Some States have recorded significant growth in tractor sales. They include Bihar (39 per cent), Jharkhand (29 per cent), West Bengal (35 per cent) and Assam (120 per cent). Sales in Uttar Pradesh, the largest market for tractors, also grew 10 per cent. Haryana, Tamil Nadu and Andhra Pradesh are also doing well.

How is farm mechanisation progressing in the country?

There are many States below the national average in terms of farm power availability, which is directly connected to yields and incomes. It needs to go up. The number of tractors per 1,000 hectares is much lower than the global average. Also, the commercial use of tractors plays a significant role in boosting a farmer’s income. Wherever States promoted commercial use, benefits have been seen.

What are the unique features of your JFarm initiative?

Doubling farm income, which is the Prime Minister’s vision, is the need of the hour. About 50 per cent of the farmers are in debt since their income is lower than expenditure. A primary factor in this is yield. Through JFarm services, we are trying to create an agriculture platform that will be a one-stop shop for rental and agriculture advisory services for farmers.

Today, over 20 crore farmers have no or limited access to farm mechanisation and on another side we have 45 lakh tractors that are significantly under-utilised. So, as part of our CSR initiative, we are attempting to empower them to deal with each other directly. Both the sides will benefit.

How many farmers have come on board the programme?

We have so far brought in more than 65,000 farmers. We have also created 260,000 hours of rental income for farmers under this platform till now. We are now inviting like-minded partners to join this. People working in the areas of mapping and yield and those who provide village-level alerts on pests or crops, among others, could join us to strengthen the ecosystem.

Published on October 16, 2018

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