The world's largest tractor manufacturer by volumes foresees a sustained growth in tractor off-take on the back of festive season along with recently introduced farm bill.
Accordingly, auto major M&M's Farm Equipment Sector President Hemant Sikka predicts the farm bill to usher in higher income for farmers, thereby, allowing greater farm mechanisation levels.
"These reforms are positive, and we await on-ground execution of various elements of this bill to better realise its effectiveness," he told IANS.
"Higher productivity and better farm incomes being a paramount objective of this bill will improve the farmers ability to purchase a better class of equipment, ensuring optimal utilisation of resources, along with better management of crop lands," said Sikka.
According to Sikka, farm mechanisation has seen a secular growth this year. "In certain states, where there was a huge dependence on migrant labourers, the Covid-related exodus resulted in acute spike in mechanisation," he said.
"In other states, where the dependence on migrant labourers were not as much, the demand for farm machinery was still there but not as acute."
For instance, some state governments are incentivising farmers to go in for greater farm mechanisation, so as to maintain the agriculture sector's growth rate during the Covid era.
Besides, Sikka noted that demand for higher HP tractors continues to grow.
"The overall industry has grown by around 12% in H1 FY21, whereas the over 40HP segment industry has witnessed much higher growth at 27.4%," explained Sikka.
"The contribution of over 40 HP segment in the industry has increased from 54.2% to 61.7%."
Furthermore, he expects rural sentiments to remain positive and translate into robust demand for tractors as "we move into the festive period".
"Concurrence of Kharif harvesting season and auspicious days of Navratri, Dussehra, Dhanteras and Diwali in October and November will support the demand trend."
He pointed out that the MSP measure, bountiful monsoon along with healthy water reservoirs' levels has led to an accelerated pick-up in tractor sales, so much so, that the company is barely managing to meet the demand.
"Starting with single-digit growth in May followed by double-digit growth in all subsequent months, we witnessed healthy demand during the Kharif harvesting season," he said adding: "We are operating at the lowest inventory levels ever."
Consequently, the demand supply mismatch has led to lower than usual inventory levels at the dealerships.
"We are trying to restore dealer inventory so that our channel partners are well equipped to cater to the festive demand," he said.
"Our factories continue to operate at peak or near peak capacity."
(Rohit Vaid can be contacted at email@example.com)