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Old 23rd November 2015, 10:57   #1
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Default Tractor sales remain weak for second consecutive year

In FY 2015, tractor sales in India fell by 13% compared to FY 2014. According to a statement by ICRA, the sales of tractors are likely to remain weak in FY 2016 as well. The agency has forecast a further fall 7-8% for the year. In August 2015, tractor sales saw a year-on-year decline of 21% and the period April - August 2015 saw a year-on-year decline of 16.4%.

Tractor sales remain weak for second consecutive year-arjun-novo-605-dii-4wd.jpg

The tractors market was already sluggish and a poor monsoon has made matters worse. While late rainfall could reduce the damage, the market for tractors is expected to remain weak over the short term.

In 2014, the kharif harvest was unfavourable and heavy and unseasonal rain during February - March 2015 all over the country, damaged crops. In the first quarter of FY 2016, the rabi harvest was weak and there is uncertainty regarding the kharif crop as well due to the weak south-west monsoon.

According to ICRA, the market will maintain a compounded annual growth rate of 8-9% in the long term (5 years). A commitment from the government towards rural development and agri mechanisation, low penetration and falling replacement cycle are likely to fuel growth. Other factors that could aid growth are increasing rural wages, scarcity of farm labour as well as long term trend of improvement in MSPs.

Source: Money Control, Economic Times
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Old 23rd November 2015, 13:27   #2
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There is no money in rural areas. Banks don't give out loans for agricultural equipment as they know the MSP s are down and there is Crop failure. Real estate transactions which is another source of income in rural areas is also alarmingly low.

No alternative sources of income. Vegetables, poultry, dairy are a good source of alternative income but there is no system /infrastructure for proper training and off take of products.

Failed monsoon two years in a row is another cause for rural slowdown.

Lack of Sarkaari /infrastructure/factory jobs to augment income.

Our agricultural system needs to consolidate and become more mechanised and more efficient in water use and fertiliser /chemical use.

But there are so many people (Politicians /Banks/Bureaucracy /Business) profiting from the existing circumstances that change is tough. Corporate contract farming is a good solution for helping the farmers but the existing beneficiaries refuse to allow it.

It will be a slow and gradual process. At least 5 years after a concrete policy is formed to address the issue.

The single biggest issue for next year tractor sales seems to be a good monsoon.

A third failure in a row would be disastrous for the economy as a whole too.
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