LAHORE: The tractor sales witnessed 25 per cent decline during the ongoing fiscal year to 30,000 units compared to over 40,000 tractor sales in the previous year.
“Tractor sector is the only segment of the auto sector, which will be in recession,” said Paapam Chairman Mumshad Ali. He stated that 3-4 factors contributed to this drop in sales: mainly the overall financial position of the farmer in the last year; due to drop in prices of farm produce; non implementation of Rs5 billion tractor subsidy scheme announced in the finance bill by the Punjab government to subsidise 10,000 tractors by Rs200,000; delay in the launch of the Sindh Tractor Scheme due to corruption allegations and scandals related to such schemes in the previous years, and the high interest rates of ZTBL recovery based loans for tractors.
Tractor business remains a volatile business and while the tractor assemblers are able to take the beating, the 300 odd SME auto part makers cannot carry on if such bouts of boom and bust continue, and it would mean more and more vendors will begin to go under.
Giving details on the criticality of the situation, Ali said that 100 percent of the vending units associated with tractor parts would be closing this year at a loss, and around 10 percent had been forced to close down their facilities already.
“Inconsistent government support plays a major role in this cyclic pattern of tractor sales,” he said, and urged the federal and provincial governments to replace the erratic short-term tractor subsidy schemes with long-term interest free loans for the farmers. Despite being an agri-driven economy, the agriculture sector of Pakistan ranks fairly low as per global standards when it comes to the use of tractors.
Pakistan produces the best value for money tractor in the world, with 95 percent local content, creating 300,000-500,000 direct and indirect jobs.
