PRESENTATION

ON

FARM MACHINERY SECTOR

Presented by: Patil Arjun Shatrughan (1110) Remya Rajan D.(1111) Satabdi Mohapatra(1112)

Overview
Introduction History Industry overview Indian scenario Trade Policy & Subsidies Key Players Challenges Areas of Concern Future Prospects

Farm Machinery
Consists of farm field and farmstead machinery used for the production of crops and agricultural livestock. Industry is classified as Farm Machinery (NAICS).

Different Farm Machineries:

Preharvest Tractors Levelers Ploughs Drill Seeder Harrow Tiller sprayer Harvesting & Threshing Harvester Thresher Reaper Digger Sheller Sickle Postharvest & Agroprocessing Seed extractor Dehusker Huller Grader Mill Dryer

Advantages of efficient mechanisation:

Increases productivity to 12-34 %
Saving in seeds : 20%

Saving in fertilisers : 15-20%

Enhancement in cropping intensity : 5-22%

Increase in gross income of farmers : 29-49%

Source: Report for formulation of 11 th five year plan, Govt. of India

History
Horse drawn and steam operated machines were imported during late 19th century. Developmental activities were accelerated during 1940s. Green revolution has brought marked change in mechanisation

Contd..
Farmers could produce higher yields and better economic returns. In 1947 Central& State Tractor Organisations were set up to develop & promote the supply & use of tractor.

Until 1960, the demand was met through imports. And import continued until 1977 to meet the additional demand.

Contd.
Indian company Eicher Tractors Ltd. started manufacturing equipments in 1961. Gujarat Tractors Ltd. (1963), Escorts Ltd (1966), International Tractors(India) Ltd (1966), Hindustan Machine Tools Ltd. (1977) started manufacturing tractors with foreign knowhow.

Punjab Tractors started functioning with indigenous

technology in 1977.

Industry Overview
Farm income is the leading influence on the sales of the farm equipments. Growth in global demand has outpaced supply in recent years. Replacement part industry constitute a significant segment. Overall world agricultural equipment market is expected to grow at a rate of 4.8%

World Agriculture Equipment Market 2006

3.20% 8.80% 30% 24% North America Asia Pacific Western Europe Others Africa/Middle East 34% 10%

Market break up

Factors affecting agriculture equipment sales in India include Monsoon, MSP for crops, commodity price, production cost, Credit policies announced by the bank.
90%

Rest of the world India

Data: Zinnov Analysis

World agriculture equipments market growth rate @ 4.8%

90 80 80 70 60 50 40 30 20 10 66 69 72 76

X-axis: year Y-axis: in dollars

0
2006 2007 2008 2009 2010

Source: Zinnov

Indian scenario
Contribution of different power sources:

Human Power: 342 m economically active workers, 224 m

(66%) agricultural workers 15.7 mkW.

Draught Animal Power: 64 m draft animals.

Electromechanical Power: tractor population is 2.8 million.

Contd.
year Agri.workers Draught % animal % 10.92 5.77 5.09 27.23 8.02 6.37 Tractor % Total power kW/ha .471 1.502 1.91

1981-82 1995-95 2011-12

19.95 46.7 51.08

Contribution by agri. Workers & draught animals are found decreasing whereas that of agriculture equipments are found increasing. And the total power is increasing. ie the major contribution is by the machines.

Dr. S. D. Kulkarni, CIAE

 Agriculture equipment in India is valued at Rs.299.1 billion

in 2010 and there is enormous potential for growth.

Agriculture machinery is a major thrust area in the 11th 5YP. Strategies are directed towards promotion of eco friendly and selective agriculture equipments. Farmers with small landholdings also own farm

equipments.

Availability of Agricultural Equipments in India

(Upto May, 2007)

Type of Equipment Manual Seed Drill/Seed Cum Fertilizer Drill Animal Drawn Seed Cum Fertilizer Drill Tractor Drawn Seed Cum Fertilizer Drill Animal Drawn Leveller Tractor Operated Levellers Manually Operated Plant Protection Equipment Power Operated Plant Protection Equipment Drip & Sprinkler Equipments Horticultural Tools (Power Operated) Tractors Power Tillers Tractor Operated Dise Harrow Tractor Operated Cultivator Tractor Operated Rotavator Potato Digger Straw Reaper Forage Harvester

Availability in Numbers Per 1000 Hectare Net Area Sown 153.2 36.1 7.2 84.8 6.2 28.5 4.3 8.3 8.9 16.7 2 6.6 12.5 0.9 2.1 18.8 18.2

Source: indiastat.com

 Indian industry is mainly driven by tractors and accounts for

1/3 rd of global production. Tractors are being used for tillage of 22.78% of total area and sowing of 21.3% of total area. Intense competition has led to rapid advances in design and

quality of tractors.
Saturation achieved in Punjab with tractor density as high as 82/1000 ha against Indian average of 12.4 and world average of 17.4.

 Tractors have been in the mainstay of the Indian agriculture

equipment market and are driving the overall sales.

Break up of sales in 2006:

33% tractor trailer reaper 57%

thresher
others 2% 3% 4%

Source: TMA

Tractor industry in India,

Grew at a CAGR of 16.5% until 1998, reached a plateau in 9901. Negative CAGR in 2001-03. recovery phase in 2004 with a CAGR of 19.5%.
30% growth in agri.&allied activities

25%
20% 15% 10% 5% 0% 0 -5% -10% -15% 1 2 3 4 Year

change in retail tractor sales

-20%

Source: TMA

Trade
Market for agriculture equipment Total export market for Agriculture equipment Total import market for Agriculture equipment Total domestic market for Agriculture equipment 185-225 Mn $ 9-14 Mn$

7-9 Mn $

200-250 Mn$

Source: Italia (Italian trade commission) 2010

Market overview of major agricultural machinery

Machinery Tractor Combine harvester Thresher Rotavetor Self propelled vertical conveyer reaper Zero till seed drill Multi crop planter Power tiller Laser land leveler Rice transplanter Power spray/manual spray Power weeder Drip irrigation equipment Sprinkler irrigation equipment Marketsize()(units Annual Growth rate Price range($) anually) (%) 3,70,000 4-5 Depend on HP(800012000 ) 3000-4000 40 30,000-65,000 20,000 10 1600-2700 50,000 50 1700-2700 1200 1700-2500

15,000 300-400 60,000-70,000 2000 600-800 10,00,000 25,000 25000

5 10 10 20-25

600-800 1000 3000-3150 8000 3700-5000 50-500 650-800 670-700

27500

10

550/ha

Policy
No separate National Policy on Agricultural Mechanisation, but covered under the Agriculture policy of the National Government. The major features are: Agricultural mechanization should lead to a sustainable increase in yields and cropping intensity with the objective of meeting the planned growth rate in agricultural production and maintaining it. The income of agricultural workers should rise at a satisfactory rate so that the disparity between urban and rural incomes is contained and they get opportunity to lead a dignified life.

Contd.
The benefits of agricultural mechanization should apply to all types of farmers including small and marginal ones in different regions of the country, particularly rain fed areas. Agricultural mechanization should create a worker friendly environment especially for women workers by lessening hard labour, health hazards and improve safety in production operations. Agricultural mechanization should lead to a reduced cost of production agricultural thereby increase the income of farmers and impart a price advantage while competing for export contractsin the international market.

Subsidy on agricultural machinery

Schemes National food security mission Machinery covered Cono weeder Zero till seed drill rotavetors Rashtriya krishi vikas yojana(RKVY) Power reaper Power thresher spray Power tiller Tractor(up to 40HP) Rice transplanter Subsidy amount 50% of the cost or $70 per farmer whichever is less 50% of the cost or $650 per machine whichever is less 50% of the cost or $1300 per machine whichever is less 50% of the cost or $1600 whichever is less 50% of the cost or $50 whichever is less 50% of the cost or $ 50 whichever is less 45% of the cost or $1000 per farmer whichever is less 10% of the cost or $ 1000 per farmer whichever is less 25% of the cost or $900 per farmer whichever is less

Contd.
Schemes ISOPOM(Integrated Scheme of Oilseeds, Pulses, Oilpalm& Maize) Machinery covered Manually operated plant protection equipment Subsidy amount 50% of the cost or $20 whichever is less

Power operated plant protection equipment Drip irrigation set Diesel pumpset Macromode scheme Tractor (upto 35HP),Power tiller(>8HP),Transplanter,Self propelled reaper Zero till seed drill,raised bed planter,sugarcane planter,potato planter,harvester Sprinkler irrigation set

50% of the cost or $45 whichever is less 35-50% of the cost with a ceiling of $115-210 50% of the cost or $220 whichever is less 25 % of the cost or $670 whichever is less

25% of the cost or $450 whichever is less

25% of the cost or $225 -335 whichever is less

Custom hiring
Under this programmes tractors with matching implements for deep ploughing, rotavation, reapers, threshers, combines, drilling and boring machines, dozers, ditchers etc. are being given to farmers on subsidised hire charges.

Keyplayers
Tractor market in India is mainly contributed by Mahindra & Mahindra
7%
4% 5% Mahindra & Mahindra Ltd. Tractors & Farm Equipments Ltd. 14%

44%
International Tractors Ltd. Escorts

11%

New Holland John Deere 23% Others

Source: Federation of Indian Chambers of Commerce & Industries,2009

Challenges
Fuel Shortage Competition from low cost products from other countries Requirement of enhancement of farm machinery technology

Problems in testing and certification facilities

Areas of concern
Reliability and quality of agricultural machinery. Availability of products, spare parts and aftersales-services in close proximity. Availability of Bank credit on terms where currently the farmers have to mortgage both the equipment purchased and his land. Lack of effective consumer protection in rural areas for redressel of cases of product problems, and poor after-salesservice etc.

Future drivers of growth

Growing economy of India which would require efficient mechanisation for improving the food grain yield Improvement in the standard of living

Increasing government subsidies

MGNREGA-shortage of labour Decrease in population involved in agricultural activities Availability of cultivable land in the country

THANK YOU