Agriculture Implements Manufacturing [2019]

Agriculture Implements Manufacturing [2019]
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04 September 2019
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Agricultural Implements are any kind of machinery and equipment used on a farm to help with farming. Around 500 units are producing agriculture implements in Pakistan out of which 200 units are registered with the trade bodies or chamber of commerce & industries. Majority of the agriculture implements manufacturing units are concentrated in the Punjab region. Sargodha, Faisalabad, Daska, Okara and Hafizabad are the major agricultural implements manufacturing cities in Pakistan. The units are categorized into Large, Medium and Small-Scale Units as per their production capacity.

This particular study entails to analyze the financing requirements and major issues in access to finance of the agriculture implements manufacturers in Punjab. The information is collected through primary survey as well as secondary sources. Presently, industry is operating at 50% of installed production capacity due to high production cost of implements and lack of appropriate financing facilities. The financing need of Agriculture Implements Manufacturer can be categorized into three major categories of Working Capital, Technology Upgradation and Leasing Facility for Farmers.

The major problem faced by the industry is access to finance, in order to meet the working capital requirements and technology upgradation, lack of research & development for product development and designs, low-quality steel and casted products, lack of participation in trade shows, and non-availability of leased implements to farmers. The financial products available in the market are not geared to cater the requirements of the cluster.

A detailed financial model has been developed to analyze the viability of discussed financing options for the industry as well as financial institutions. The findings of the study reveal that large scale industry is feasible if it avails loan for working capital but this type of financing is not feasible for medium and small-scale units as the interest rate is high and volume of sale is not up to the level, which covers the cost of financing. The industry directly needs to upgrade the existing machinery and modernized production to increase production efficiency and cost optimization. According to Industry representatives, CNC Machines, Laser Cutters, DC Welding Plants need to be updated on urgent basis. Subsequently, financial institutions also need to lease the agriculture implements to the farmers in order to increase the sale of the units.

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