Sharp decline in sales: Paapam demands launch of tractor subsidy schemes

A delegation of Paapam led by Senior vice Chairman Mumshad Ali called upon Federal Minister for National Food Security & Research Sikandar Hayat Bosan and appraised the minister about the critical situation the tractor part makers are facing due to the delay in the launch of the provincial tractor subsidy schemes.

Talking to Business Recorder here on Monday, Mumshad Ali recalled that Paapam had hailed tractor subsidy schemes announcement by Punjab/Sindh governments in their respective finance bills some two months before, as it was expected to give a boost to tractor production which had seen a declining trend in the last few years due to GST rate changes, floods, and commodity price crashes particularly rice, potato, and cotton.

Soon after the announcement of the provincial tractor subsidy schemes, local tractor assemblers and their associated suppliers made preparations for gearing up of their productions to meet the impending demand. He said as the buying season approached there was still no news from both the provincial governments ie Sindh and Punjab on the time line for launching of schemes nor on the amount of subsidy per tractor and the number of tractor units that will be subsidised.

SVC Paapam Mumshad Ali informed this scribe that schemes should be tailored keeping in mind the actual shortage of farm tractors in the country and local tractor production capacity. “A long-term national programme of farm mechanisation should be launched to fulfil the gap of tractors in Pakistan rather than short-term limited quantity schemes which score more political mileage rather than getting the benefit of the tractor to the needy farmer.”

Such schemes are open to misuse where the rich and powerful can purchase tractors in bulk quantities, using the schemes and then sell them in the market at below factory prices, and make a business out of the schemes. Tractor importers also get benefit from this scheme by importing expensive tractors and using the subsidy to sell it at par with local tractors, thus hurting the industry.

“Such delays and last minute changes to subsidy per tractor, and number of tractors to be subsidized are common and have resulted in severely affecting the supply chain in the past also,” commented Saeed Iqbal, a senior member of Paapam involved in the manufacturing of tractor parts. The Association proposed to the minister that funds for such schemes should be diverted to ZTBL to reduce loan mark-up so that farmer could buy those tractors on lower mark-up and in that way the subsidy would go direct to the small farmer, and larger number of farmers would be benefited from the government support.

The delegation also appraised the minister about the quality initiative being taken by the Paapam members in improving the quality of tractors, and the contribution of Paapam members in export of tractor parts from the country. Due to concerted efforts by Paapam, Pakistan is now getting recognition as a tractor part producing country.

Syed Mansoor Abbas Shah, another veteran tractor part producer, said that last year tractor production was relatively stable as no such schemes were announced and market demand drove production. Tractor business is a cyclic business and such schemes disrupted this cycle and government should take the supply side of this business on board before launch of such schemes.”



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