Farmers and tractor producers watched on as officials in Pakistan’s high commission in Kenya facilitated the export of Pakistani tractors. These tractors are headed to their new home in Tanzania: Masai Trekta Company Ltd’s tractor depot.
The export deal marks a significant moment for ATS (ATS tractors), which does not operate on the same scale as other tractor giants in the industry, such as Millat and Ghazi tractors, which have a 70 per cent and 29 per cent market share, respectively. Aside from ATS, other tractor manufacturers are likely to benefit too.
This is because the tractor manufacturing industry has seen a great decline in the recent past, with some plants even shutting down across the country. The situation was so serious that even the Minister for Industry and Production, Rana Tanveer, referred to it as “the sinking tractor manufacturing industry”.
However, experts predict the demand for tractors will increase, not just from Tanzania but also from other neighbouring African countries. This spells great news for tractor manufacturers as they will be able to increase their profit levels due to the increased sales volumes.
Additionally, the sale of tractors will also open up further export avenues for Pakistani businesses. This could include – but is not limited to – the export of tractor spare parts by the 400 companies that produce them. Currently, 90 per cent of all parts used in local tractors are sourced internally, which means that Pakistan is capable of providing international customers with service parts for their tractors.
If these tractors experience problems abroad, Pakistani tractor technicians and mechanics will be paid to fix them. This is bound to create additional skilled labour jobs in Pakistan.
Moreover, tractor manufacturing plants that were previously shut down are expected to reopen and operate closer to full capacity. The result will be an increase in the hiring of unskilled employees at these plants. This is expected to ease the current unemployment rate, which stands at 5.5 per cent.
While tractor manufacturers are expected to benefit, the same can’t be said for business owners in the agricultural sector. The fact of the matter is that a rise in international demand for Pakistani tractors will hurt agricultural landowners and farmers in Pakistan. This is because the price of tractors will rise alongside the demand. As a consequence, Pakistani farmers are expected to suffer as the higher price tags will make it tougher to purchase them.
Lawmakers in Islamabad are undoubtedly elated, though, as tractor exports will help bring in valuable foreign reserves for the cash-strapped country. The export deal is likely to be a cause of relief as just last month alone, the trade deficit rose by 20.4 per cent to an alarming deficit of $1.78 billion.
While further exports are not guaranteed, experts speculate that new export deals are on the horizon. Only time will tell if tractor exports can save the “sinking industry”.
