Role of local tractor industry

Agriculture is the back bone of Pakistan’s economy as it contributes 19.2 percent to GDP, employs 42 percent of the country’s labour force, provides food security and raw material to various industries. The growth in agriculture sector not only stimulates domestic demand for industrial goods and other services but also supports considerably in foreign exchange earnings as share of food and cotton based items in our exports are 20 percent and 53 percent, respectively.

It is a hard fact the that performance of this sector is not satisfactory in terms of global competitiveness as our yields are very low vis-à-vis global benchmarks despite an increase over the years. For example sugarcane’s yield is 40 percent lower, wheat’s and cotton’s 20 percent lower, non-basmati’s 40 percent lower and milk’s 90 percent lower. Pakistan’s agriculture sector also faces over 40 percent to 80 percent post-harvest losses, if compared with global standards. Thus low output and high losses are adversely hurting farmers and national economy.

Moreover, the area under cultivation is also decreasing on account of urbanization and failure to bring the additional areas under cultivation from the available cultivable area of (8.25 million hectares), mainly due to water scarcity. As per the Economic Survey 2015-16, current area under cultivation is 22.67 million hectares as against 22.85 million hectares in 2002-03.

Currently, our GDP growth is not matching with the fast growing population, thus poverty level is increasing day by day and today Pakistan is ranked 146th in the world in relation to per capita income. Thus accelerated growth of both agricultural and industrial sector is need of the hour to create jobs and ensure food security.

Considering the aforesaid scenario, we have no other option but to improve the crop yields and reduce the pre- and post-harvest losses. This would only be possible by adopting latest technologies; increased availability and efficient use of biological, chemical and hydrological inputs;whereas role of mechanisation would be pivotal in farming operations starting from field preparation to crop harvesting and storage.

In this respect, the role of the local tractor industry needs to be reviewed by all stakeholders, particularly the government, further boost its effectiveness. So far, the industry’s performance has been quite satisfactory.

This self-reliance in production of indigenously built tractors has been achieved through a very long journey spread over a period of five decade. The industry holds a distinctive and unique position in the automobile sector as it has played a fundamental role in the transfer of technology and transformation of the fledging local light engineering sector into a robust, vibrant and quality conscious Auto Vending Industry which comprises more than 250 units. These vendors besides being helpful to the local tractor industry are also vital to the entire automobile sector and even to the Defence Industry of Pakistan.

Today, a local content of more than 90 percent has been attained in tractors, which is the highest in the automobile sector of Pakistan. The industry and associated vendors are also supporting the national economy by paying taxes and duties up to the tune of Rs 4.5 billion, exporting tractors, implements and spares of $100 million and creating job opportunities for 500,000 families.

The industry has proved its production capacity by over 70,000 units per annum and is offering a wide range of models from 50hp to 85hp to cover the entire spectrum of local customers as per their needs and affordability. Presently, tractors produced in Pakistan are cheapest in world. The current price of competitive tractor models of Pakistan is $130/hp, against Indian’s $200/hp, China’s 150/hp and Japan’s $900/hp.

On the basis of its core strengths, the industry has also diversified its business for other products such as Prime Movers, Diesel Generating Sets, Forklift Trucks and Agri-Imlpements. New Projects are also under way to address the emerging needs like Combine Harvesters, Fodder Harvesters, Balers for bio-mass handling, Green engines for international markets and future conformity to local emission standards compliance, development of new tractor models in 100 hp and above ranges, etc.

There are some new business avenues in agriculture sector, whichhave tremendous economic potential and can be grasped with the help of mechanisation. For example, dairy sector is becoming more viable after introduction of Fodder Silage technology. The export of grasses and fodders to Gulf countries is increasing and bio-mass waste (straw, cotton sticks etc) is generating revenue to farmers as a fuel for power generation. These new avenues are yet at their primitive stage and need support of both private and public sector. The local tractor industry has the technical and financial muscles for R & D in these areas to offer economical solutions and equipment. But it will not be possible without policy support of the government to ensure a conducive environment for investment.

There is no doubt about the fact that non-friendly government policies have adversely impacted the pace of the Industry’s progress towards greater diversification and technical enhancement, eg, import of CBU tractors had been allowed at zero duty till recently while the import of second-hand combine harvester is still allowed, which is hampering the investment prospects of the industry in this sector.

Thus in order to boost the potential of our agriculture and related farm machinery sector to its right output level, a firm commitment from all stakeholders duly initiated and guaranteed by the Govt.with the objective to especially attract and protect the investment is essentially required.