Small tractors, the next big thing

Smaller farmers in Saurashtra and south Gujarat are switching to tractors below 30 hp.

After the Rs 1 lakh car, it is now the turn of small tractor to catch the fancy of auto majors eyeing the Gujarat market.

Unlike the northern states where farmers predominantly use tractors above 35-40 horse power (hp), smaller farmers in Saurashtra and south Gujarat are switching to tractors below 30 hp.

Nearly 75 per cent of the tractor industry in Gujarat is dominated by the 31-40 hp segment, but tractor makers are no longer resting on the segment for sales.

International Tractors, maker of the Sonalika brand of tractors, is mulling introduction of two new models below the 30 hp range mainly to cater to the Gujarat market in collaboration with Japanese farm implements major Yanmar.

"We had recently launched a 30hp tractor in Gujarat, which is already picking up in Rajkot, Palanpur, Anasan and Junagadh. Although the market for lower than 30 hp models is quite small, we see it increasing in a big way in the near future," says PK Daukia, deputy general manager (Gujarat), International Tractors.

Ravindra Kumar, managing director of SAS tractors, which manufactures the Angad brand of 22hp tractors estimates that the market for tractors below the 25-30 hp is nearly 30,000 units per annum in the state.

The company sold 800 tractors in 2007-08 and expects to sell 1,000 units in 2008-09 despite higher interest loan rates for farmers.

Being an industrialised state, Gujarat farmers have landholding of below 5-8 acres, which makes smaller tractors more suitable. Besides, they fit the pocket of farmers for whom finance is the biggest constraint for mechanisation, say tractor makers.

A study by Prachi Singh from Disha Institute of Management and Technology (DIMAT) mentions that on an average around 4,00,000 tractors are produced every year and that the tractor market in India is valued at Rs 6,000 crore. Around 95 per cent of the tractor sales are on credit basis.

Despite the growth in auto finance, Ravindra Kumar says that of the 10 farmers who apply for tractor loan, as high as 8 are turned down. This makes it more convenient for them to opt for small tractors, which are priced in the lower range.

It is for this reason that a mini-tractor of 10 hp created by Bhanjibhai Mathukiya, a small innovator from Junagadh, and priced close to Rs 2,00,000 is seeing interest from a number of investors.

Angad's 22 hp tractor range is priced at Rs 99,000 to Rs 1,80,000. Tractors from local companies like Field Marshal and Captain are also below the Rs 2,50,000-mark.