2 min read.Updated: 08 Jul 2019, 11:53 PM ISTAmit Panday
Firm says working on localizing farm machines to make them affordable for farmers
M&M is working on the farm machinery ecosystem as it sees a strategic growth opportunity
Mahindra & Mahindra (M&M), India’s largest tractor manufacturer, is now looking beyond tractors to boost its farm equipment business. The company is aggressively working on the farm machinery ecosystem as it views this space as a strategic growth opportunity, said Shubhabrata Saha, chief of operations, farm division, M&M.
The growing focus on farm machinery comes against the backdrop of Prime Minister Narendra Modi’s ambitious plan of doubling the income of farmers by 2022.
It is also a countermeasure to increasing competitive intensity and market forces in the tractor segment amid a slowdown in short-term demand. M&M’s Q1FY20 domestic tractor sales stood at 82,913 units, down 15% year-on-year. The management estimates a subdued FY20 growth of 5% in tractors, which are more profitable than the company’s own vertical.
The focus on improving farm productivity in the foreseeable future comes from the government’s thrust on doubling the income of farmers and from factors such as the shortage of labour, fast-growing population, and depleting groundwater resources, Saha said in an interview.
“Productivity per inch of farmland will have to increase significantly and this will lead to faster penetration of farm mechanisation as a measure to adopt better agricultural practices," he said.
M&M, which is also the leader in the domestic tractor market with a 41.4% share in FY19, sees new opportunities in crop-specific farm machines, products and services around crop care, crop inputs, soil mapping and testing, pestilence protection using drones and other areas.
“In India, the application of a tractor is primarily land preparation. It is hardly used when the plant grows or the crop is harvested. The industry is slated to see an inflexion point soon when application of specific farm machinery will be able to impact farm productivity and farmers’ lives," Saha said. The M&M official quoted examples of crop-specific farm machinery deployed for potato farming, rice transplanters, sprayers used in horticulture and others, to buttress his case.
The use of crop-specific machines such as the ones used for potato farming and rice transplanters are very limited in India and, thus, will see significant growth in penetration in the near future, Saha said. M&M says the company is working on localizing a number of these technologies, including harvesters, to make them affordable for farmers in India.
“We are also working on soil mapping to help farmers estimate the right input of fertilisers. We expect the next 3-5 years to be very exciting for farm equipment. Also, the government is expected to give a fillip to farm mechanisation," he said.
The company has been fast building up its capabilities and portfolio under its farm equipment sector, which covers farm machinery and tractors business. It has made eight acquisitions in four years.
M&M got access to technologies around rice-transplanters and associated value chain, harvesters and farm implements with the acquisition of a 33% stake in Japan’s Mitsubishi Agriculture Machinery (October 2015), 35% stake in Finland’s Sampo Rosenlew (March 2016) and a 75% equity stake in Turkey-based Hisarlar.
M&M’s Belgium-based Dewulf Group exposed it to potato farming equipment, which it plans to offer to Indian farmers.
The company’s latest acquisition of a 11.25% stake in Switzerland’s agriculture technology startup Gamaya SA gives it access to hyperspectral imagery analytics, artificial intelligence and machine learning, which captures and interprets useful information on the state of crops for the farmers.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!