Tractor- Defeating the lockdown

 

It’s a regular Saturday morning and Uday Raj Singh, a tractor dealer from Jaunpur in Uttar Pradesh, who is in this trade for over 19 years, is receiving phone calls without a break. Although he is happy with the nonstop phone calls from customers enquiring for their tractor delivery, he is equally surprised about such a rise in sale of tractors, despite the ongoing Covid-19 pandemic. Uday is just one of the many tractor dealers across the OEM’s in Uttar Pradesh, Bihar, West Bengal, Madhya Pradesh & many stretches across the country who have witnessed a huge increase in demand for tractors, along with restricted supply, during the Covid times.

 

Tractor, a product placed at an interjection of Automobiles & Agriculture industry, has shocked all trade pundits as it became probably the only product of its type that saw a huge uprise in sales, while the rest of the automobile sector, from two wheelers to four wheelers, reeled under severe pressure due to lack of demand.

 

"Why Tractors Only Got Traction"

There are many reasons attributed to the growth in tractor demand in the last 3-4 months, but before sharing about the reasons, one needs to understand the basic nature of tractor selling that many people not associated with the sector are unaware of. Tractors are the only product of its type, which despite being placed in the range of Rs. 4.5-7 lacs, gets “Advanced(i.e sold without giving full price of it)” in the market. The term Advancing means the tractor is sold to a customer through a dealer network to customers / farmers on the basis of the relationship, acquaintances and deep trust between the dealer and the farmer. This trust is core to tractor selling and a tractor buyer may pay anywhere between Rupee 1 to full cost of the tractor initially.

 

For taking delivery of the tractor, the customer has to usually pay around 30-40 per cent of the cost and the rest of the amount gets financed in a period of 0-3 months from the date of sale or if bought in cash sale, the rest of the amount is returned with the selling of the next crop or getting returns from tractor deployment into various commercial activities. As per my observations, this easy nature of the product selling was the underlying reason, along with a few other reasons, which propelled the sale of tractors despite the ongoing pandemic.

 

The Bunch Coming Together

For a big trend to click out like this, there must be various reasons that played their role and which included a good return on rabi crops harvest (with a 3-8 per cent increase in the minimum support price and satisfactory management of ad hoc purchases at mandis in bulk on major crops, among others. The satisfactory onset of southwest monsoon also gave impetus that a good kharif cropping season was ahead and mandated that farmers will start timely preparation of their fields for puddling and intercultural operations for major crop of paddy.  The government initiatives to keep the essential tractor workshops open at heartlands along with inputs such as seed and fertilizer shops paved the way for people to focus on their core agricultural activities -- agriculture.

 

Migration Exodus Settling down "Playing a Part"

In initial days of lockdown, we saw the biggest under estimation that our leaders creating ruckus with extreme level of tough migration exodus from South West metro cities to Hindi heartlands of UP, Bihar, MP at a large chunk throughout whole (march to may). There was a sense of restlessness starting May with people who returned from cities, looking at barren lands in their villages as a small hope for survival. This inclination of people again giving a try to farming looks like a farfetched reason for the growing tractor need, but it was one of the reasons and this was reflected in one of the conversations with Mr Ashutosh Kumar, Regional Head - Cholamandlam Finance (Tractor Loan Division- UP East), who said, "During the beginning of June, he was getting case proposals of tractor loans with borrowers having a local ID proof to show, but was not having the residence stability in the region / town from where he bought the tractor. Mostly these people were having a residence stability of one-two months. Upon going on the field investigations there, he found out that there was a small chunk of people who were buying tractors after returning from cities to work on their land, which earlier sometimes were given on batai / lease and they feel tractors are an earning product which will help them in agricultural operations and help them in any work of brick clin / crusher / or any commercial deployment going forward and giving them an earning in the long term.”

 

This was the situation with other financers too, though not in very small numbers, but there was a small trend setting in with same.

 

The Season Ahead and the Sustainability 

With the Pitra Paksha ending with Vishwakarma Diwas late September, the onset of better days will be arrived with an eye on the peak season starting from Navratri in October to Mega Dhanteras and Diwali brightening lights of tractor manufacturers and dealers with a hope of highest ever sale till the sowing time of Rabi crops. Tractor manufacturers are already getting inbound inquiries for the season time and that is reflected in bookings with dealers. The big question still remains around the sustainability of agriculture in the long term as the cost of agricultural production has not gone down for farmers. The government’s claim of doubling MSP is still a distant dream and the high dependability on weather still plays a big role in determining the fortunes of the farmers. The investment and physical strain that a farmer goes through is huge, and a tractor just provides some support and eases the work of farmers. Hope this tractor gives farmers the hope, the cushion and the required support in their long road ahead towards sustainability of their farm incomes.