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“There is still tremendous space for growth in the tractor sector”

Sakib Eltaff, CEO, Al-Ghazi Tractors, speaks to Uzma Khateeb-Nawaz about his organisation’s evolution over the years and the potential for growth in the agricultural equipment sector.
Updated 06 May, 2024 12:17pm

UZMA KHATEEB-NAWAZ: What is the story behind Al-Ghazi Tractors?

SAKIB ELTAFF: Al-Ghazi Tractors is a Pakistan Stock Exchange-listed company that was established in 1983. It was privatised in 1991 when the Dubai-based Al-Futtaim Group, along with Case New Holland and several other investors, took over the management of the company. It is now over 93% foreign-owned. We have a manufacturing facility in Dera Ghazi Khan and we produce New Holland tractors using technology from Case New Holland, which is one of the leading equipment and services companies in the world. We also produce an array of agricultural equipment, such as diggers, hoes, forklift sprayers, front-end loaders and hydraulic tipping trolleys.

UKN: How important is localisation for Al-Ghazi?

SE: Ninety-two percent of our manufacturing processes and spare parts are localised, and it took us decades to reach this point. Today, we collaborate with local vendors to ensure we use locally procured equipment with the right quality standards. We are looking for ways to increase localisation further in order to manage costs better. The fact that we are mostly localised gives us an advantage because fluctuations in exchange rates do not affect us as much as they do other companies.

UKN: Are your products priced competitively?

SE: Compared to the global tractor industry, Pakistan has some of the most affordable farm equipment and we are quite competitive in that arena.

Sakib Eltaff, CEO, Al-Ghazi Tractors, speaks to Uzma Khateeb-Nawaz about his organisation’s evolution over the years and the potential for growth in the agricultural equipment sector.

UKN: Who is your target audience?

SE: Mostly farmers, although our equipment (tractors, for example) is also used in the construction and haulage sectors.

UKN: How do you market to farmers?

SE: Although we use conventional media such as newspapers and radio, our primary means to reach farmers is by arranging demonstrations. Most of our activities centre on product awareness, educating our customers on the most efficient way to use our equipment, advancements in our existing products and how their longevity can be increased. Recently, we introduced free clinics to provide health checks on equipment and conduct repairs when required. Such complimentary services allow us to engage with farmers while ensuring that their equipment is working at peak efficiency.

UKN: Do these free-service clinics operate throughout Pakistan?

SE: Yes, but they are not held simultaneously; we move from one region to another.

UKN: What challenges do you face in connecting with your TG?

SE: The biggest challenge is reaching out to the farmers and making them aware of our product range because of the travel needed to do so. Another challenge is understanding the needs of farmers within their particular locality. We can run a lot of campaigns and ads on social media and other platforms, but they do not always connect with our target customers because they may not meet their requirements. The challenge is to fully understand their needs and we are doing this via our free clinics and events.

UKN: Who are your main competitors?

SE: Pakistan has two major tractor manufacturers: Al-Ghazi and Millat Tractors and between the two of us, we meet the expectations of the agricultural sector, which has grown significantly in recent years. Our market share ranges between 35 and 40%.

UKN: What is the market size for tractors in Pakistan?

SE: The annual market size varies between 30,000 and 35,000 tractors. When you look at past trends, you see that the market has gone up and down. The crucial part to remember is that there is still tremendous space for growth in the tractor sector, especially because Pakistan’s farm mechanisation rate is currently 0.9 horsepower per acre and the government’s aim is 1.4 horsepower per acre. Furthermore, agriculture accounts for approximately 22% of Pakistan’s GDP and is expected to increase by at least 3.5% this year. Corporate farming is also on the rise, and these factors will drive up the market size for tractors and other agricultural equipment.

UKN: Does Al-Ghazi provide training to farmers?

SE: I don’t think we do enough to educate our farmers. Some of them are following the same farming practices their forefathers followed. Therefore, there is a significant opportunity for companies like ours to engage with farmers and showcase our equipment, as well as educate them about practices such as sustainable farming. However, this is only part of the process. We need to collaborate with other organisations and encourage farmers to adopt sustainable agricultural practices.

UKN: For example?

SE: Many farmers use cows to plough their fields, even if this reduces the soil’s water content. Using a ripper to perform the same task causes the overall soil health and therefore, farm output, to improve because the water content is maintained in the soil. This is just one example. Farmers need to be engaged on a larger scale, and this will require more organisations to step in.

UKN: Are other stakeholders making similar efforts to improve the agricultural sector?

SE: Some of them include banks, service providers and NGOs. The government recently launched two schemes – the Prime Minister Youth Scheme and the Farm Mechanisation Scheme – aimed at providing capital to farmers to purchase equipment at low-interest rates. These are important initiatives because, apart from helping farmers financially, they increase the pace of mechanisation. Used in the right way, these schemes will have a long-lasting impact on improving mechanisation levels and the adoption of machinery in farming practices. We also need initiatives that encourage sustainable farming practices and the use of techniques that can improve outputs and yields.

UKN: Are there any universities offering agriculture-related education programmes?

SE: I believe several universities do, but I’m not sure what programmes they offer. This year, we are hoping to start an initiative aimed at bringing people working in agriculture to our factories to train as apprentices, and this will require collaborating with the universities. The goal is to transfer knowledge so that we can teach farmers as well as the larger community of mechanics, dealers and support structures about best practices in mechanisation.

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