Tractor & Agri Equipment Sector: Silver Lining in the Corona Cloud
Industry stalwarts feel that growth in Tractor and Agri Equipment Sector is robust and structural demand driven by various factors such as monsoon, government policies and focus on Agriculture is here to stay for another 12 – 18 months.”
On 17th September 2020, the team at CVF Off Highway conducted a live panel discussion titled “Tractor and Agri Equipment Sector: Silver lining in the Corona Cloud” from 12 pm – 1pm. The webinar had a total registration of over 800 attendees with a healthy mix of OEMs, Component Suppliers, Dealers, NBFC and Investment Houses thus wholly representing the full ecosystem of the Tractor & Agri Equipment Space.
The live webinar session had a phenomenal speaker line up including Mr. Shailendra Jagtap – MD and CEO at John Deere India, Mr. Shenu Agarwal – Chief Executive Officer at Escorts Agri Machinery, Mr. Sriram Kannan – MD at CLAAS India Pvt Ltd, Mr. TR Kesavan – Chair National Agri Committee at FICCI and Mr. GS Grewal – SVP Sales, Marketing and CS at Kubota Agriculture Machinery India.
Moderating the session, Mr. Pushan Sharma – Associate Director at CRISIL, touched upon the unprecedented times industry at large is facing, with agriculture being the only sector showing 3.4% growth owing to monsoons, bumper harvest and policy changes. However, few concern areas remain such as increasing cases of COVID in rural area and ancillary agriculture such as dairy not doing as well as other segments. Since we had on board panellists with immense experience, having seen many business cycles such as what the industry is facing today, Pushan initiated the discussion by posing pointed questions to panellists to demystify the road ahead.
Mr. Jagtap highlighted that when we look at agriculture there are two ways we can do it. Monsoon last year was good as water reservoirs were full and last year also India witnessed a record production. Then March onwards COVID happened, nevertheless harvest in April was very good – a bumper crop. Government also came up with structural changes such as one nation one market. MSPs were good for crops and procurements were also good. Overall it set a strong foundation. Given the COVID crisis, border and food security of the country became the priority from Government standpoint and that’s what the Govt. immediately acted upon. Thus the faster revival. He expects demand to continue and expects a bumper crop. While there could be an impact on storage and supply chain side, however, he felt that the government will put together an adequate solution.
Mr. Kannan also shared that the on ground demand is the actual reality. Unfortunately when COVID hit, it had its own set of challenges on production side but the industry has overcome that. Demand has infact sustained itself during COVID as well. When unlock commenced the Government provided on ground support. And being a German company, CLAAS India followed all the guidance and best practices. Since there has been positive momentum of demand he expects it to continue.
Mr. Kesavan mentioned that Government MSP has never been more than 67%. Even couple of percentages more will derive a lot of value in the rural economy. Secondly, he spoke about migrant labourers. He picked the example of Kerala which has been very careful in handling COVID, with the state allowing labour to come and work. Even though COVID cases are increasing it’s on a very small base. COVID may not be as big a problem in rural as it is in urban. He also mentioned that MNREGA money is going into the rural area and hoped that COVID will stabilise by November – December.
Mr. Agarwal mentioned that in terms of demand, there was definitely a pent up demand which has played out now. Growth in demand is for real now and not the pent up demand. In the entire country sentiment is very positive. He felt that the banks and NBFC have played a good role as they captured on the agri lending at the right time through innovation. Everything integrated well, and in the next 12 – 18 months the positive cycle should continue if not more. He further stated that the GST cycle will not have any impact on the Agri sector. And mentioned that due to good monsoon and water level, everything looks positive going forward as well. He also felt that this could be 1991 kind of moment for the agriculture sector.
Mr. Grewal spoke about the dealer ecosystem and “ruralisation”. He felt that focus has been back on rural India. And the second thing he has observed is that disposable income has gone up. Farmers have lesser social events happening so less money is being spent on those engagements, thus farmers have more disposable income at hand. Another trend is farmers who were doing allied business are now totally focusing back on agriculture. From Jan to Sept, growth has opened their eyes, it’s not huge growth but it is changing the dynamics. He feels that agriculture shall be in demand in the coming 18 – 24 months as well with the dealerships having being able to capture the wave as well.
In fact the webinar participants largely agreed with the panellists through online polls indicating that the growth phase will continue till the end of the next calendar year as well.
The session ended with a Q&A segment with the webinar receiving a total of 79 questions! While the speakers couldn’t answer all the queries of the participants but they did manage to answer their questions pertaining to emission norms, electrification, connectivity etc.
In case you missed the live session, you can view a recording of the session by clicking here. And to view our post webinar report you can click here. If you want to be a part of our next session, please get in touch with Mr. Raghav Shankar on +91 9599881027 or email him on raghav@threefold.in