Daily Times

The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has said that the country’s agricultural sector is facing a severe crisis, as plummeting wheat prices exacerbate the existing economic challenges. The situation has further worsened due to the adverse effects on agricultural machinery, including tractors, heightening concerns about national food security.

These views were expressed by Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Chairman Abdul Rehman Aizaz, Senior Vice Chairman Mumshad Ali, and Vice Chairman Toufiq Sherwani in a joint statement issued here on Wednesday.

They said that changes in the GST regime have historically affected the vendor industry. Natural disasters such as floods have also impacted the sector, and the withdrawal of subsidies has compounded these issues. The importation of wheat and the resulting lower prices have strained the industry, increasing unemployment. Currently, underpriced wheat is disappointing farmers, indicating a compounded impact on the industry and food security. Rumors of imposing further taxes on the industry are further increasing apprehensions among farmers and the tractor and aftermarket sectors. If these rumors prove true, the industry will undoubtedly suffer, and unemployment and public unrest will arise.

The PAAPAM officials emphasized the sensitivity of the farming sector, noting its wide-reaching implications for food security, the tractor and vending industries, and the livelihoods of hundreds of thousands of families. They urged authorities to abandon plans for further taxation of this industry to avoid ongoing uncertainties. A prosperous farming community is a key indicator of national prosperity. The misguided decision to import excessive wheat should not lead to farmer suffering.

The PAAPAM officials stressed the importance of long-term, farmer-friendly policies to build trust and achieve high yields. They also highlighted the need to increase tractor exports to stimulate industrial activities and boost GDP.

It is to be noted that the tractor parts industry is bracing for a downturn in sales after a stable year of tractor sales in the outgoing financial year. The previous financial year i.e. 22/23 was also a year of low sales due to poor economic condition in the country. Tractor sales this year are likely to touch 40,000 units, thanks to the low markup tractor loan scheme of the government. This year sales are still 50% lower than the tractor production capacity in the country, observed Chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), Abdul Rehman Aizaz,

The Punjab governments historically lifted substantial quantities of wheat at an announced support price, however due to paucity of funds and lack of storage capacity due to heavy imports of grain from Ukraine, this has not happened this year. This has forced the farmers to sell the bumper wheat crop in the market at lower prices. A drop in income of the farmer directly affects the tractor parts industry which prides itself in making a highly localized and therefore the most affordable agriculture tractor in the world. As the farmer income drops so does tractor sales and the parts that go into these tractors.

Changes in the GST regime have historically affected the vendor industry. Natural disasters such as floods have also impacted the sector, and so has the withdrawal of subsidies. Rumors of imposition of GST on the sale of tractors are further increasing apprehensions among farmers and the tractor and tractor parts sectors. If these rumors prove to be true, this will undoubtedly impact tractor sales volume in the coming year.

In the past, tractor subsidy by both federal and provincial governments and zero rated GST regime has resulted in tractor sales crossing 70,000 units in a year. These subsidies come and go and so does the GST regime resulting in a boom and bust cycle for the highly indigenous tractor and parts industry, and these policy shifts need to end, said Mumshad Ali, SVC of PAAPAM.

Taufiq Sherwani VC PAAPAM emphasized the sensitivity of the farming sector, noting its wide-reaching implications for the tractor and vending industries, and the livelihoods of thousands of families. He urged authorities to abandon plans for the imposition of GST on tractor.