Tractor, Farm Equipment Sales Could Remain Buoyant Until Year-End On Hopes Of Better Kharif Crop Harvest

The surge in tractor and farm equipment sales in the country could extend beyond the traditional Diwali season to at least until the end of this year, thanks to hopes of a better harvest of the standing kharif (summer) crop in the farms now.

The hopes come on the heels of tractor manufacturers reporting numbers better than last year. Sales of tractors, in particular, continued to be buoyant in July and were nearly 38 per cent higher than the same period a year ago.

One of India’s leading tractor makers Mahindra and Mahindra reported its best ever sales in July, while another important player Sonalika said its sales recorded a 70 per cent jump.

Giriraj Singhania, managing director of Raipur-based Shivalik Engineering Industries Limited, told Swarajya that farmers continue to buy tractors even now. This has left the manufacturers without any inventory.

Hopes of tractor and farm equipment sales continuing until the year-end have been kindled by higher kharif sowing, a good monsoon and better storage in the major reservoirs. In fact, rains across the country now are seen as a booster for the rabi crop, sowing for which will begin in October.

According to the Ministry of Agriculture and Farmers Welfare, kharif sowing is 8 per cent higher with 101.56 million hectares (mh) being covered until 14 August against 93.57 mh during the same period a year ago.

Paddy, pulses, coarse cereals, cotton and oilseeds have all seen higher acreage this year. Paddy and oilseeds have seen the highest increase at 14 per cent, followed by cotton.

The south-west monsoon, which is the key for Indian farmers and kharif crop production, has witnessed a 1 per cent higher rainfall this year compared with the normal rainfall.

This is because there has been a let up in the rainfall, that was in excess of 10 per cent at the beginning. However, with rains resuming in the last few days, the situation will likely improve.

The let-up in the monsoon’s fury has led to the water storage level in major reservoirs across the country dropping by 12 percentage points compared with the same period last year. Until 6 August, the storage was better than last year.

Currently, the water storage level in 123 major reservoirs in the country is 92.916 billion cubic metres (BCM) against 105.856 BCM during the same time a year ago.

With the India Meteorological Department predicting heavy rainfall in Gujarat, Rajasthan, central Maharashtra and parts of central India, the situation will likely improve.

The Economic Times quoted T K Kesavan, president, Tractors Manufacturers Association as saying that all tractor makers were running to full capacity.

Singhania, who supplies components to major tractor manufacturers, said that manufacturers had ramped up their capacity but they were hampered by supply of components.

“But rural India continues to remain vibrant and purchases continue. This could be because the novel coronavirus pandemic had not affected them badly,” he said.

In states such as Chhattisgarh, the rural people are not following physical distancing or wearing masks. That leaves them open to getting infected, particularly with state governments being a little lax in implementing the precautionary measures.

“Normally, tractor sales will continue till Diwali. But this time, we expect it to continue past November and continue till December,” Singhania said.

According to the Tractor Manufacturers Association, the August-November period generally accounts for 45 per cent of the total tractor sales in the country.

Along with tractors, the industry expects demand for other farm equipment such as harvesters to be good. Details of their sales are not available yet.

“Farmers are getting remunerative prices and should continue to get them for their kharif crops too. That will keep the momentum in the economy continuing,” an analyst said.

However, some are cautious especially with onion prices in Maharashtra crashing. The Centre would have to continue procurement of foodgrains as after rabi harvest if farmers had to be assured good returns.

On its part, the Centre has raised the minimum support prices for kharif crops between Rs 53 and Rs 755 a quintal. The hike is expected to ensure better returns to farmers and this, in turn, could leave them with more money to spend for white or fast moving consumer goods.

The only caution now, though, is that the weather should hold good until harvest as any adverse condition, particularly rains, can play a spoil sport.

Farmers hope of a better kharif harvest has been raised due to timely onset of monsoon and early sowing of the crops.