Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 73
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Deprecated (16384): The ArrayAccess methods will be removed in 4.0.0.Use getParam(), getData() and getQuery() instead. - /home/brlfuser/public_html/src/Controller/ArtileDetailController.php, line: 74
 You can disable deprecation warnings by setting `Error.errorLevel` to `E_ALL & ~E_USER_DEPRECATED` in your config/app.php. [CORE/src/Core/functions.php, line 311]
Warning (512): Unable to emit headers. Headers sent in file=/home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php line=853 [CORE/src/Http/ResponseEmitter.php, line 48]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 148]
Warning (2): Cannot modify header information - headers already sent by (output started at /home/brlfuser/public_html/vendor/cakephp/cakephp/src/Error/Debugger.php:853) [CORE/src/Http/ResponseEmitter.php, line 181]
Notice (8): Undefined variable: urlPrefix [APP/Template/Layout/printlayout.ctp, line 8]latest-news-updates/tractor-sales-mirroring-the-rural-distress-harish-damodaran-4676120.html"/> LATEST NEWS UPDATES | Tractor sales: Mirroring the rural distress -Harish Damodaran | Im4change.org
Resource centre on India's rural distress
 
 

Tractor sales: Mirroring the rural distress -Harish Damodaran
-The Indian Express

While tractor sales trebled during FY04-14, the last year saw a reversal in the trend with the agri industry facing multiple issues.

If there is one indicator capturing the changes that took place in rural India over the past decade, along with the emerging signs of distress in the last year, it is the sales of tractors. Between 2003-04 and 2013-14, domestic tractor sales more than trebled from under 1.9 lakh to over 6.3 lakh units, after averaging about 2 lakh units annually through the nineties and the early part of the last decade.

The above surge had mainly to do with rising farm incomes underpinned by a global commodity boom, resulting in higher crop realisations and also forcing hikes in official minimum support prices to align them with world prices.

Higher incomes and improved terms of trade for farmers reversing the decline from the mid-90s to the early-2000s – as confirmed by a recent agriculture ministry-appointed working group’ report — meant more money to enable purchase of tractors.

But better crop price realisations and higher farm incomes weren’t the only reason for tractor sales shooting up in the last ten years. No less important a factor was labour shortages and rising rural wages, according to Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices.The last decade witnessed high overall growth rates for the Indian economy, leading to large-scale job creation in construction, manufacturing and the services sector. Between 2004-04 and 2011-12, an estimated 37 million people were pulled out from farms. “This (movement of labour from agriculture) had never happened before in India’s history. But it also gave rise to labour shortages in the countryside, which in a way also spurred greater mechanisation of agricultural operations”, notes Gulati.

Labour shortages were also reflected in rural wages, which started growing at double-digit annual rates in nominal terms from mid-2008 onwards, crossing 15 per cent by 2009-10 and peaking at 20 per cent-plus in 2011. They remained at over 15 per cent right until early 2014. This again was favourable for substitution of capital for labour and sales of tractors.

The last one year has, however, seen a reversal of all these trends, starting with the drop in crop price realisations following the end of the global bull run in commodities and aggravated by crop damage from monsoon failures in combination with untimely rains and hailstorms. Besides, rural wage growth, too, has slowed down to 5 per cent to 6 per cent as non-farm job opportunities have dried up amid general economic sluggishness.

All these have, in turn, impacted tractors sales that fell to 5.5 lakh units in 2014-15. As the accompanying table shows, almost every tractor maker recorded lower sales compared to the previous year.

“The last six months in particular have been bad for the industry. And that obviously is related to the rural economy itself not doing too well after a sustained period of MSPs and crop realisations going up”, admits T.R. Kesavan, chairman (technical committee) and past president of Tractors Manufacturers Association (TMA).

In fact, a recent survey of farmers, tractor and agri-input dealers, and agriculture department officials across Uttar Pradesh, Rajasthan, Gujarat and Madhya Pradesh done for TMA by Francis Kanoi, a market research agency, has revealed a not-so-encouraging outlook in the near term.

54 per cent of the survey respondents felt that the demand for tractors has decreased, while another 11 per cent said it was static. The bulk of those who painted a bleak picture said that tractor purchases were affected because of problems faced by farmers during the last one year. These pertained to un-remunerative crop prices, poor yields from less rains and overall lower farm incomes.

This, even as there was general acknowledgement of the need for tractors keeping in view labour shortages and also to facilitate timely agricultural operations and transport of produce.

“Farmers buy tractors usually in March, before harvesting of the wheat crop and planting/nursery preparation for the next season. This time, hardly anybody purchased because they did not get good prices for last year’s crop. Everyone is saying let’s us make do with our existing tractor and defer purchase of a new one till things improve”, notes Pritam Singh, a 107-acre grower from Urlana Khurd in Madlauda tehsil of Panipat, Haryana.Singh isn’t sure of things improving immediately either: “Last year, farmers paid Rs 55,000-56,000 per acre for leasing in land, encouraged by the high prices for basmati paddy in 2013. But thanks to prices crashing, annual lease rents this time have been entered at Rs 42,000-43,000 per acre”.

That feeling of uncertainty among farmers is, of course, not good news for the tractor industry.