Bumper Crops And Soaring Credit Drive Pakistan's Tractor Sales Boom
First seven months of the current fiscal year have seen tractor sales soar 45% to 38,173 units, according to data of the Pakistan Automotive Manufacturers Association. This is good news for Pakistan's tractor industry that has been in slump for several years as the agriculture output was stagnant.
Pakistani farmers use tractors for a variety of usual tasks ranging from tilling and planting to harvest and transport. Tractor owners recover their costs from more efficiently working their farms and renting out equipment when they are not in their own use.
Agriculture Credit Growth:
Pakistani banks provided Rs 500 billion (nearly $5 billion) worth of agricultural credit during the first seven months, July-January period, of current fiscal year. It represents a 45% jump from the same period last year, according to media reports.
According to State Bank of Pakistan (SBP), commercial banks, specialized banks, Islamic banks, domestic private banks, microfinance banks and other microfinance institutions have together disbursed Rs 499.645 billion during the period under review, up Rs. 351.358 billion in the same period of last fiscal year.
Top Three Crops:
Wheat output is expected to be near all time high of 26 million tons. Cotton production is forecast to exceed 11.5 million bales, up from 10.6 million bales last year.
|Source: FAO via Kleffmann Group
Pakistan rice exports have reached 2.59 million tons worth US$ 1.224 billion in the first 7 months, up from 2.27 million tons worth US$.961 Million last year, recording growth of 27% in value and 14% quantity.
Pakistan ranks among the world's biggest producers of a variety of crops including wheat, cotton, rice, corn, sugarcane, onions, chickpeas and fruits, according to Food and Agriculture Organization Stats (FAOSTAT).
Crops vs Livestock:
Livestock farming contributes 53% while crops make up about 42% of Pakistan's agriculture output. The rest comes from fishing and forestry.
Pakistani livestock sector has growing much faster than the crop sector and more recent estimates show its contribution has increased to 56.3% of the value of agriculture and nearly 11% to the agricultural gross domestic product (AGDP). It's driven by growing domestic demand for meat and dairy products.
Pakistan's crop yields are comparable to India, among the lowest in the world, according to FAO (Food and Agriculture Organization) data.
|Source: FAO via Kleffmann Group
World's highest crop yields are seen in Europe while the lowest are in Africa.
|Maize, Potato, Rice and Wheat Yields in Hectograms/Hectare. Source: FAOSTAT
Value Added Agriculture:
Livestock revolution enabled Pakistan to significantly raise agriculture productivity and rural incomes in 1980s. Economic activity in dairy, meat and poultry sectors now accounts for just over 50% of the nation's total agricultural output. The result is that per capita value added to agriculture in Pakistan is almost twice as much as that in Bangladesh and India.
Although Pakistan's value added to agriculture is high for its region, it has been essentially flat since mid-1990s. It also lags significantly behind developing countries in other parts of the world. For example, per capita worker productivity in North Africa and the Middle East is more than twice that of Pakistan while in Latin America it is more than three times higher.
Beyond the current phase of China Pakistan Economic Corridor (CPEC) focus on energy and infrastructure projects, there is a long term plan that deals with modernizing Pakistan's agriculture. CPEC LTP outlines a more comprehensive effort involving the entire supply chain from agriculture inputs like seeds, fertilizer, credit and pesticides to logistics such as storage and transportation systems.
Pakistan ranks among the world's top producers of a number of major crops including wheat, cotton and rice. Soaring tractor sales are being driven by a combination of rising credit availability and bumper harvests of major crops in the country this year. But the farm productivity and yields are still among the lowest in the world. CPEC LTP (long term plan) offers hope of significant improvements in agriculture sector to reach its full potential.
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