Agriculture holds immense importance in Pakistan as it is a major contributor to the country’s economy and a primary source of livelihood for a large portion of the population. It contributes around 20% to the national GDP and employs nearly 38% of the labour force.
Major crops like wheat, rice, cotton, and sugarcane not only ensure food security but also support key industries such as textiles and sugar. In rural areas, agriculture remains the main source of income, helping reduce poverty and sustain communities. Agriculture remains a critical sector for Pakistan’s overall development and stability.
Unfortunately despite the importance that the agriculture sector holds in the economy of Pakistan, there has been little progress in the development of this sector over the last few decades. Our farm yields are low and with reducing crop rates, it is becoming increasingly difficult for the farmers to make ends meet.
This is compounded by the fact that land holdings are fragmented with over 92% of the farms being less than 12 acres. These small landholding farmers face numerous issues such as high labour costs, limited access to modern machinery and low productivity leading to high production costs and inefficiency.
Farm Mechanization can play a critical role in supporting the farmers to overcome their inefficien-cies and increase productivity. However unfortunate-ly the mechanization levels in Pakistan are amongst the lowest in the region. The tractor is an essential machine to increase the level of farm mechanization.
In Pakistan, the tractor industry is well established and tractors are being manufactured since 1964 with over 90% localization. The tractors produced in Pakistan are amongst the lowest priced tractors in the world and are adequately fulfilling the needs of the farmers in Pakistan. However due to the small farm sizes, the tractors remain unaffordable for the vast majority of farmers.
If we compare the tractor market with that of India, it presents an interesting scenario. Comparing the agriculture sector of both countries, the landholding and crop patterns are similar whereas the average farm size of India is half of that of Pakistan. The total number of new tractors sold per million hectares in both countries in 2001 was around 800 tractors per million hectares.
The market grew rapidly in both countries at the same pace till 2009 to around 2400 tractors per million hectares. The number of new tractors sold in that year in Pakistan was over 71,000 units. In the following years, the Indian tractor market kept growing and has reached a level of over 5,000 tractors per million hectare. However the Pakistan market shrunk after hitting a peak of 71,000 units and currently stands at 40,000 units per annum equating to around 1300 per million hectares.
In the Pakistan tractor sector, the government policies were consistent in the first decade of this century leading to sustained growth. However since 2011 there have been many abrupt policy changes including changes in sales tax rates a staggering 9 times in the last 15 years. There had been no tractor subsidy schemes offered to the farmers for more than a decade till the Green Tractor Scheme offered this year by Punjab Government.
In contrast, India continued with their policies of various subsidy schemes and promotion of subsidised Customized Hiring Centres providing entrepreneurs an opportu-nity to offer rental services for agricultural machinery to farmers. Other countries in the region such as Bangladesh and China have also increased their mechanisation levels through continued mechaniza-tion programs.
To safeguard the future of Pakistan’s agriculture and strengthen rural economies, there is an urgent need to develop a comprehensive, long-term National Tractor Policy. With the aim of increasing mechaniza-tion levels and agricultural output through support of small and marginal farmers, such a policy should provide long term targeted subsidy and affordable financing to eligible farmers.
It should provide a direction to the federal government as well as all provincial governments to work in unison to achieve a common objective. Such a policy would help to avoid market disruptions caused by politically motivated short term schemes. It would also promote local manufacturing of tractors and their parts bringing additional employment in the country.
The policy should also provide incentives for farm machinery rental services across the country. Without such a policy, Pakistan risks further falling behind in agricultural productivity, rural incomes and food security.
The government must act swiftly to introduce an agriculture-friendly, long-term National Tractor Policy. The revival of Pakistan’s tractor industry is about safeguarding the livelihoods of millions, ensuring national food security, and driving sustainable economic growth.