A sub-sector picks up steam
The growing interest of farmers in mechanised cultivation has opened a window of opportunity for imports and locally-made machinery and spare parts.
Overwhelmed with responses, marketers and manufacturers said demand for farm implements are rising by the year.
“The overall market for farm implements and spare parts stood at Tk 3,000 crore in 2009 and it is growing,” said FH Ansarey, executive director for ACI's Agribusiness Division.
Power tillers, tractors and engines account for almost half of the total market, he said.
Industry insiders said the market for farm machinery began in 1990. Since then, sales of irrigation pumps, engines, power tillers, sprayers, paddy and wheat threshers, and above all, tractors have increased.
To feed demand for spare parts, repair and maintenance services for agri-equipment, along with the establishment of a foundry industry, around 10,000 engineering workshops have been set up around the country, analysts said. This resulted in the creation of tens of thousands of jobs.
Imported engines, tractors and power tillers meet almost all of domestic demand.
Demand for paddy and wheat threshers and maize shellers is met by local manufactures. Also, locally manufactured spare parts of power tillers and engines are competing with imported counterparts.
However, about 40 local foundries, which are concentrated mostly in Bogra, meet demand for centrifugal pumps for shallow tube wells and low lift pumps, and liners and pistons.
“We (local foundries) meet around 80 percent of the demand for spare parts of agricultural machinery,” said Ainul Hoque Sohel, president of Foundry Owners Association of Bangladesh (FOAB).
He said most foundries were developed to focus on the need for spare parts in the farm sector.
One factor behind the rise in demand for agricultural machinery is the availability of spares parts and maintenance in suburban areas, said Md Abul Kalam Azad, general manager of Chittagong Builders and Machinery Ltd, one of the oldest importers of power tillers and engines.
“When we began, power tiller importers could sell around 5,000-6,000 units a year. Now, annual sales are close to 40,000 units."
Demand for tractors is also on the rise, said Sadid Jamil, managing director of The Metal (pvt) Ltd, a leading seller of tractors in Bangladesh.
In line with a rise in sales of imported farm machinery, the sales of locally assembled power tillers and other equipment are also registering growth, thanks to around 500 manufacturing workshops.
Gulam Rabbani Chowdhury, managing director of Alim Industries Ltd, one of the oldest farm machinery makers, said the company has scaled up production of farm implements, such as assembling of power tillers and threshers.
“Initially, we used to make less than 100 threshers a year. Now, we manufacture over 6,000 closed drum threshers a year."
Rabbani said there is huge domestic demand for implements but local manufacturers face difficulties in tapping the potential due to high import duties on some machinery inputs.
“As a sub sector of agriculture, we also cannot enjoy low cost bank finance," he said.
Ainul Hoque Sohel, president of Foundry Owners Association of Bangladesh (FOAB), also said import duties and taxes on raw materials for spare parts hurt the competitiveness of locally made spare parts against imports.
“We have to bear additional costs to pay duties, VAT and taxes, whereas the import duty on spare parts is nominal,” he said, urging the government to develop the local foundry industry.
The next story in the series comes out tomorrow.