Agricultural equipment market in slow lane amid coronavirus lockdown

The lockdown imposed by the Centre to curb Covid-19 pandemic is weighing on the demand for tractors and other agricultural equipment, say manufacturers.

An acute shortage of labour is prompting farmers to take to mechanisation. But with tractor dealers shuttered and banks and financial institutions snapping the credit lines for purchases, the world’s biggest market for farm equipment is in disarray. Close to 95 per cent of tractors in India are bought on credit.

While the government has exempted the agri-machinery and spares from lockdown, the sale of tractor remains locked out as they do not fall within the essential category, said Shenu Agarwal, chief executive at Escorts Agri Machinery.

“The local authorities aren’t allowing the dealers to operate,” said Agarwal, adding that the government should implement the notification already out before coming up with a new one.

Hemant Sikka, president farm and equipment sector at Mahindra & Mahindra (M&M), echoed the similar sentiments. “This will be a peak season for farmers and we await a direction from the government on opening of dealerships. There are already permissions to provide service and spares for farmers, but it’s hardly getting implemented due to the strict lockdown measures.” During these tough times, the key objective is to enable the farmers to be productive as the entire country is dependent on them, he said.

Local deliveries of tractors at M&M fell 27 per cent to 13,418 units in March over the same period a year ago. At Escorts, the fall was sharper — its domestic sales dropped 54.8 per cent to 5,288 units over a year ago.

“Machinery without a tractor is of no use because most of the implements draw power from the tractors,” said A S Mittal, vice-chairman at International Tractors that makes Sonalika brand of tractors.

To be sure, the problems facing the agri sector is not confined to harvesting alone.

The lockdown has completely disrupted the supply chain. Fearing police harassment and scared of the unknown, several truck drivers and migrant labourers have left for their native places. As a result, there is an acute shortage of driver in the road transportation sector, which has led to an increase in freight rates.

Freight rates on key trunk routes have increased by up to 80 per cent in April over the previous month, according to a recent report by the Indian Foundation of Transport Research & Training. It’s not just the high transportation costs, the closed APMCs and mandis are another issue facing them, said an official at a tractor firm.

With banks having completely stopped lending for tractors, farmers are highly unlikely to buy even when outlets are allowed to open, said Agarwal of Escorts. He attributed it to a recent circular by the Reserve Bank that makes it mandatory for the banks to take a physical signature of the borrower and undertake a field inspection before lending.