“Source:- Economic Times”
MUMBAI: Tractor makers Mahindra, Tractors and Farm Equipment (Tafe) and Sonalika that have been struggling with customised hiring schemes are looking to cash in on rising demand as the migrant workforce scramble back to their homes in other states.
So far, 65-70% of the districts remain Covid-19 free, fuelling belief that agricultural activities will see an uptick.
“As the agri economy grows, ownership of tractors in the rental segment will get stronger. It is making entrepreneurs of small and marginal farmers through this model while increasing farmer productivity”, says Hemant Sikka, president of Mahindra’s tractor division. Sikka added that the migrants would have less cash in hand to own a tractor and renting it will increase productivity immediately.
Incidentally, Mahindra’s tractor rental project, Trringo, more an experimental model to bring entrepreneurs on one platform, has not done as well as expected.
Tractors are usually bought directly from dealers with the farmer paying 25-30% of the price upfront and the rest financed by specialised rural banks and NBFCs. The average price of a tractor is ₹6-7 lakh. A farmer shells out around ₹2 lakh as down payment. The final quantum of financing and repayment depends on the relationship between the dealer and the farmer.
Loans taken by the farming community primarily from micro finance companies are for tractor and pick-up vehicles, says Paul Thomas, managing director of ESAF, a small finance bank in Kerala that funds tractor hiring.
“What is important is that the harvest has been good for wheat, sugarcane, pulses and the government will buy and warehouse these products. Demand for tractor hiring has since opened up and we are getting close to 20 financing requests daily,” said Thomas.
With the country seeing a good rabi crop and a bumper harvest in the offing, workers see a future for themselves in the agriculture space. Some industry experts think labourers will stay back even for sowing and not come back till November.
“We need to support farmers to increase farm productivity while ensuring reduced operational cost and affordable agri machinery,” said Raman Mittal, executive director, Sonalika Group. These centres, besides renting out high end agri machinery to needy farmers, would also act as ‘agri machinery clinics’ for repairs of implements, adds Mittal.
Manufacturers are looking at multiple models to rent out tractors with TAFE launching a free tractor rental service in Tamil Nadu, Rajasthan and Uttar Pradesh. “The scheme received a good response from farmers and in 60 days, over a lakh acres have been cultivated and rental service has been provided in this crucial cropping season” said TR Kesavan, president, TAFE, who is also the president of tractor association, TMA.
Massey Ferguson last week announced a scheme of owning a tractor on an initial payment of only Rs 5,000.
TAFE manufactures a range of tractors with brands like Massey Ferguson, TAFE Eicher, and the recently acquired Serbian tractor and agricultural equipment brand – Industrija Mašina i Traktora.
The domestic tractor sector has managed to enter positive territory at a much faster pace due to timely relaxation of the lockdown for the agricultural sector. Experts expect the second half to be better for the tractor industry, projecting a surge in demand post the rabi season and a normal monsoon. A significant growth in demand for food grains will drive the farm equipment rental market for the tractor companies.