This is a best prospect industry sector for this country. Includes a market overview and trade data.
|Total Local Production||229.70||248.07||1,190.73||1,200.85|
|Imports from the US||5.70||5.98||6.25||7.30|
|Total Market Size||344.80||373.52||1,325.26||1,328.02|
* Sources: Pakistan Economic Survey 2017-18, Ministry of Finance, Government of Pakistan
Pakistan Bureau of Statistics, Government of Pakistan
Local trade associations and market experts
Pakistan’s agriculture sector is the mainstay of the economy and a primary source of livelihood. During FY 2018-19, the agriculture sector contributed 18.9 percent to the country’s GDP and employs 42.3 percent of the total workforce. During the 20118-19 fiscal year, the sector grew 0.85 percent in comparison to 3.8 percent growth last year. This declining growth trend is mainly attributed to overall country’s macroeconomic situation and inward pressures on the fiscal and trade fronts. According to the Pakistan Agriculture Machinery Census, the total land area under cultivation is 79.6 million acres, which has increased 5.8 percent over the last year. According to industry sources, the total size of the agricultural machinery sector is approximately $1.3 billion, consisting of a combination of tractors, harvesters, and other small-scale agricultural machinery. According to the Economic Survey, Pakistan Vision 2025, food security is one of seven top priority action areas. Among the top five objectives for achieving food security are, “Create a modern, efficient and diversified agricultural sector that can ensure a stable and adequate provision of basic food supplies for the country’s population and provide quality products for export.” The provision of modern agricultural machinery and equipment is essential to the government’s plan.
In terms of market share, there are five countries that supply more than 70 percent of the total imported agricultural machinery and equipment. These include the United States, China, Japan, Italy and Germany – with U.S. market share around 30 percent.
Machinery and Equipment
Pakistan’s domestic production of tractor units increased approximately 14.6 percent during FY 2017-18. Production grew 19.6 percent to 63,054 tractor units as compared to 54,992 units last year. Tractors produced locally are under license agreements with foreign companies from the United States, Belarus, Turkey, and China. In addition to tractors, the United States and EU export used agricultural machinery to Pakistan, including harvesters. Domestic industry has the indigenous capacity to produce agricultural machinery and equipment to meet only 15 percent of the country’s total requirements. Production is expected to increase by 8 percent to 10 percent annually over the next 4 to 5 years as local manufacturers, spurred by the increase in demand, gear their output and diversify their product lines. Most of the locally produced machinery is based on outdated technology and its efficiency is low. A wide variety of more sophisticated equipment is imported, but agriculturists prefer replacement and spare parts manufactured locally due to the relatively low cost of domestically-manufactured equipment.
To better develop the agriculture sector, the Government of Pakistan, both at the federal and provincial levels, has launched several programs and incentives to modernize and expand existing capacity. These initiatives include easy and long-term credit facilities, farmer education programs, and subsidized inputs. In addition, the government through budgetary support programs offers low taxation programs on agricultural machinery to boost agricultural modernization.
The most promising agricultural machinery export prospects for FY 2020 are:
- Combine Harvesters
- Broadcast seeder
- Seed Driller
- Fertilizer Spreader
- Drip Irrigation Systems
- Weight Sorter
- Round Baler
- Irrigation Pumps
- Pickers, Fruits, Hand, Base Metal
- Diggers, Seeders
- Cotton Gins and Parts
With 79.6 million acres of arable land, there is a great potential for improving efficiencies and productivity of the agriculture sector with better equipment and machinery. The Government of Pakistan is committed to support this sector, with the hope that Pakistan can increase yields and exports of primary crops – fruit and vegetables, poultry and dairy products - and in doing so become an important supplier for the region. To achieve this objective, the government is encouraging investment by offering low-interest financing. Both the public and private sectors have or are in the process of taking advantage of these incentives by setting up small- to large-scale projects. According to industry experts, the local market will continue to offer sizeable business opportunities for local and foreign companies for the next several years.