Agriculture and Tractor
Overview
The tractor industry reported a strong 28.3% growth in sales volumes during 2009-10, thereby ending the phase of cyclical correction that had pulled down tractor sales during the preceding two years (200709). Significantly, the revival of 2009-10 happened despite the droughtlike conditions in many States during the kharif1 season dampening sentiments. The key factor enabling the demand growth of 2009-10 was strong rural liquidity, which in turn was sustained by several factors, including: higher minimum support price (MSP) for crops; greater ability of farmers to make cash purchases (including the usage of Kisan Credit Card which are increasingly being used to part-finance tractor purchases); enhanced employment opportunities (with rural employment schemes being implemented by the Government of India); an improved credit environment; and continuance of replacement demand. These factors apart, non-agricultural use of tractors (for haulage in construction and infrastructure projects) continued to increase, benefiting tractor demand. Also, with infrastructure projects and rural employment schemes increasing employment opportunities, availability of labour for agricultural activities continued to decline, persuading even farmers with medium-sized land holdings to either rent or purchase tractors. On a regional basis, the performance of the eastern, northern and western parts of the country was robust during 2009-10 in terms of tractor demand, while that of the southern region was moderate. A strong growth in tractor volumes, albeit on a low base, was witnessed in the eastern States, including Bihar, Orissa and Jharkhand, which had a good paddy crop. Tractor volumes in the northern and western regions also reported strong growth during 2009-10, especially in the second half (H2) of the year, benefiting from a low base (H2, 2008-09) and a satisfactory kharif crop in some States. The southern region reported moderate performance in terms of tractor demand
The tractor industry reported a strong 28.3% growth in sales volumes during 2009-10, thereby ending the phase of cyclical correction that had pulled down tractor sales during the preceding two years (200709). Significantly, the revival of 2009-10 happened despite the droughtlike conditions in many States during the kharif1 season dampening sentiments. The key factor enabling the demand growth of 2009-10 was strong rural liquidity, which in turn was sustained by several factors, including: higher minimum support price (MSP) for crops; greater ability of farmers to make cash purchases (including the usage of Kisan Credit Card which are increasingly being used to part-finance tractor purchases); enhanced employment opportunities (with rural employment schemes being implemented by the Government of India); an improved credit environment; and continuance of replacement demand. These factors apart, non-agricultural use of tractors (for haulage in construction and infrastructure projects) continued to increase, benefiting tractor demand. Also, with infrastructure projects and rural employment schemes increasing employment opportunities, availability of labour for agricultural activities continued to decline, persuading even farmers with medium-sized land holdings to either rent or purchase tractors. On a regional basis, the performance of the eastern, northern and western parts of the country was robust during 2009-10 in terms of tractor demand, while that of the southern region was moderate. A strong growth in tractor volumes, albeit on a low base, was witnessed in the eastern States, including Bihar, Orissa and Jharkhand, which had a good paddy crop. Tractor volumes in the northern and western regions also reported strong growth during 2009-10, especially in the second half (H2) of the year, benefiting from a low base (H2, 2008-09) and a satisfactory kharif crop in some States. The southern region reported moderate performance in terms of tractor demand