High-priced imported tractors causing woes to farmers
By Mushfiq Ahmad
KARACHI: The agriculture sector of the country still faces huge difficulties in obtaining tractors, as the government’s decision to allow import of tractors in the budget for the current fiscal has not helped matters because of high prices of imported tractors.
According to industry players, only around 10,000 tractors have been imported so far while there is still a gap of tens of thousands of tractors. It was estimated after the announcement of the budget that around 30,000 tractors would be imported during the year. They say the reason for this little import is the high price of imported tractors.
The imported Belarus tractor is priced at Rs 510,000-530,000 while the local tractor is priced from Rs 320,000 to Rs 439,000. This price difference is the reason why agriculture sector goes after local tractor although it is either supplied eight to 12 months after booking or on payment of premium.
Despite this little import of tractors and huge demand and supply gap, the two major tractor-manufacturing companies of the country have proposed to the Central Board of Revenue to levy 10 percent customs duty on the import of tractors.
At the beginning of this fiscal, it was expected that the local industry (two main players Millat and Al-Ghazi) would be able to produce 60,000 units in 2006-07. However, they seem to be failing to achieve this target.
During the first ten months (July 2006 to April 2007) of the current financial year, the tractor-making members of the Pakistan Automotive Manufacturers Association sold 43,365 units, rising by 10.61 percent from 39,203 units sold in the same period last year.
Sale of Fiat stood at 22,016 units during the first ten months, higher by 9.94 percent than 20,024 units sold in the same period of last year.
Sale of Massey Ferguson stood at 21,349 units in the July-April period of this fiscal, higher by 11.31 percent than 19,179 units sold in the corresponding period last year.
Production of GM Tractors, which is not a member of PAMA being a new entrant in the market, stood at 1100 units during this period. Besides, they imported 600 units, its director Yaseen GM said.
The government had frozen the prices of locally produced tractors in 1998, and only minor adjustment in prices was allowed since then. For the last two years, prices have not been changed. There is, however, no sale price restriction on the imported tractors.
Although imported tractors are readily available, booking for tractors with the local manufacturers has witnessed no decline ever since the government allowed import of tractors to help the farming community and boost agriculture production.
Pakistan is a big market for tractors and there is no dearth of buyers. There is a huge gap of 15,000 to 20,000 units in the demand for and supply of tractors. In this situation, import of tractors has not hurt the business of domestic manufacturers.
Local manufacturers claim that farmers prefer to buy from those who provide after-sales service in rural areas and that dealers of imported tractors have no such service. The agriculture sector has performed relatively better in recent years, producing bumper crops of cotton and wheat. Moreover, the government has been fixing support prices of crops on the higher side. These two factors are believed to have enabled the poor farmers to buy tractors.