Import taxes needs to be reduced for local players to engage in agri machinery

Agriculture is the cornerstone of Bangladesh's economy; therefore the role of mechanisation in revolutionising farming practices cannot be overstated. 

The Business Standard recently had a conversation with Sadid Jamil, the Managing Director of METAL, a prominent agro-machinery company that has been at the forefront of transforming Bangladesh's agricultural landscape since its inception. With nearly four decades of experience under its belt, METAL has been instrumental in introducing modern farming technologies to the masses.

METAL has been the sole distributor of M/S Tractors since 1987. After nearly four decades, how do you evaluate your contribution to agriculture mechanisation in Bangladesh?

Our contribution in agriculture mechanisation is monumental. METAL pioneered the introduction of tractors to Bangladesh, making them a familiar sight in our fields. We began by importing TAFE Brand tractors from India in the early nineties, effectively kickstarting the mechanisation movement in the country. When we came to the scene, apart from a few two-wheeled tractors or power-tillers, the cultivation was conducted with a manual system.

How big is the agro-machinery business in Bangladesh? 

When we started in the early nineties, the demand for tractors was nascent, but it has grown exponentially over the years. In the first year, we sold 5 tractors, 17 in the next year, and the number stood at 85 in the third year. Currently, the market size stands at 8500 units of tractors per year, and it is still growing.

How is the growth of this sector, and what are the prospects?

The growth potential of this sector is significant, and it is expanding rapidly. Farmers are increasingly recognizing the necessity of adopting mechanised methods in agriculture.

In Bangladesh, 90% of cultivation is mechanised, but at the harvesting level. Merely 12-15% of crops are harvested using machines, while the rest are manually harvested, presenting a substantial opportunity for expansion.

Adopting harvester machines offers several benefits, including a 30-40% reduction in costs and a decrease in grain loss by more than 10% compared to traditional methods, where farmers typically experience 13-15% grain loss.

Furthermore, mechanisation addresses challenges such as the labour shortage during harvesting. In the future, agriculture without mechanisation is unimaginable.

Additionally, mechanisation plays a crucial role in mitigating crop loss due to natural disasters like floods. With access to weather forecasts and the use of harvester machines, crops can be swiftly collected, highlighting the indispensability of mechanisation in modern agriculture.

Who is the market leader?

Despite being pioneers in the sector, METAL is not currently the market leader. ACI holds that position at present.

Farm mechanisation is still low in Bangladesh compared to many other countries. Why? 

Although the government offers cash support to farmers, the high cost of agricultural machinery often exceeds their purchasing power, despite subsidies ranging from 40-70%. Even with this assistance, the remaining cost remains high for many farmers. Offering soft loans could significantly alleviate this financial burden, enabling them to invest in necessary equipment.

Unfortunately, banks have been slow to adapt to the changing landscape of agriculture. Traditional thinking persists, with loans typically limited to small amounts, such as Tk20,000-Tk50,000. However, the agricultural sector has undergone a significant revolution and is now commercialised. As such, access to larger loans is necessary to support farmers in this evolving environment

How can Bangladesh reduce import dependency for larger farming machines?

While reducing import dependency entirely may be challenging, transitioning towards local assembly could be a viable solution. Government support, particularly in the form of tax incentives, would facilitate this transition and make locally assembled machines more affordable.

What policy support do you need to assemble and produce farm machines locally and make them affordable to farmers?

Reducing taxes and VAT on imported parts would incentivize local assembly, ultimately driving down costs for farmers.

How is METAL helping farmers build capacity?

METAL operates a dedicated training centre in Ashulia, offering programs to enhance the skills of mechanics and farmers alike. Additionally, we provide tractors to farmers on credit, making mechanisation more accessible.

What is the future plan of METAL?

We want to expand our business in the agriculture sector. Now, we have two kinds of business here: one is machines and another is different types of seeds. We are thinking of expanding our business to pesticides. 

With our two brands, TAFE and Eicher, we want to be the market leader in the agrimachine sector. To this end we emphasise after sales service. We are trying to give spare parts at a lower price and keep the parts available.

We have 38 outlets across the country now. We may not increase our own outlet. But we will go with the dealership in the country. 

Shed light on your seed business!

We have established our own seed development program, supported by a dedicated research centre. To date, we have successfully developed 30-40 hybrid vegetable seed varieties, primarily sourced from local grains. Additionally, we import seeds from colder regions for crops such as cauliflower and cabbage.

Our products are not only distributed within Bangladesh but also exported on a modest scale to several countries, including Pakistan, Oman and Malaysia.

Moreover, we are actively enhancing our capabilities in rice seed development, collaborating with organisations in the Philippines for this purpose. Furthermore, we are striving to create resilient vegetable varieties capable of withstanding saline conditions, thereby addressing a critical agricultural challenge.