How tractor and fertiliser sales data act as a mirror for farm sector growth

TABLE TRACTOR & FERTILISER SALE

Sales of tractors…

Sales of these machines, which provide motive power for on- and off-farm operations, rose by 8.4% to reach 9.40 lakh units in 2024-25, a shade below the all-time-high of 9.45 lakh units achieved in 2022-23.

Tractor sales more or less mirror official agricultural growth numbers.

Thus, 2014-15 and 2015-16 registered double-digit negative sales increases, matched by poor farm output growth of minus 0.2% and 0.6% respectively. These years also witnessed back-to-back El Niño events, the abnormal warming of waters in the central and eastern tropical Pacific Ocean that is generally associated with monsoon failures in India.

Tractor sales bounced back in 2016-17 and 2017-18, which were also good agriculture years with growth rates of 6.8% and 6.6% respectively. Farm output growth was also buoyant in 2020-21 (4%) and 2022-23 (6.3%), and weak in 2023-24 (2.7%), which was an El Niño year. This was reflected in tractor sales in these years.

The only years in which the association between agricultural growth and sales of tractors break down are 2018-19, 2019-20, and 2021-22. Farm sector growth was low (2.1%) in 2018-19, but the tractor industry did well. That year saw a “weak” El Niño, and the effects of deficient monsoon and post-monsoon rain in 2018 were felt only in 2019-20, when tractor sales fell despite agriculture per se growing by 6.3%.

Officially, the farm sector grew at a healthy 4% in 2021-22. But many question the official figure, given the spurt in food inflation from early 2022 and the bans/ restrictions on exports of wheat, rice and sugar imposed thereafter. It was also captured by tractor sales, which posted a 6.4% dip in 2021-22.

Domestic tractor sales

…And of fertilisers

The table shows sales of urea and complexes – containing nitrogen (N), phosphorous (P), potassium (K), and sulphur (S) nutrients in various proportions – at record levels of 387.7 lakh tonnes (lt) and 142.1 lt respectively in 2024-25.

This is consistent with the 4.6% growth in farm sector gross value added, as per the National Statistics Office’s second advance estimates for 2024-25.

Sales of muriate of potash (MOP) and single super phosphate (SSP) also went up significantly over 2023-24. That year had seen flat or low growth in sales of most fertilisers, thanks to the “strong” El Niño whose impact was felt in the form of subnormal rains and a short winter, followed by heat wave conditions.

The only fertiliser that recorded a decline in sales is di-ammonium phosphate (DAP) – 92.8 lt in 2024-25, from 108.1 lt and 104.2 lt in the preceding two years. DAP, which contains 46% P (a nutrient that crops require at the early stage of root establishment and development), has been in short supply in the last few years.

The non-availability of DAP relative to demand has led farmers to apply alternative fertilisers, especially complexes such as 20:20:0:13, 10:26:26 and 12:32:16, and also SSP. These have less P compared to DAP, but also contain other nutrients like K and S.

The fertiliser that has seen the highest growth in the last two years is 20:20:0:13, also known as ammonium phosphate sulphate. It has now emerged as India’s third largest consumed fertiliser after urea and DAP, with sales rising from 33.4 lt in 2013-14 to 53.9 lt in 2023-24 to 69.7 lt in 2024-25.

With P and K being increasingly consumed in the form of complexes – the sales of which have almost doubled from 72.6 lt to 142.1 lt between 2013-14 and 2024-25 – there would be that much less dependence on high-analysis fertilisers such as DAP and MOP containing 46% and 60% of the respective two nutrients.

The only high-analysis fertiliser whose consumption in India continues to rise unabated – largely due to over-subsidisation and no increase in retail price since November 2012 – is urea (containing 46% N).

Sales have touched a new high of almost 390 lt, after showing a stagnant, if not declining, trend between 2013-14 and 2017-18. Clearly, the effects of neem-coating, to improve nitrogen-use efficiency and check diversion of this fertiliser for non-agricultural use, have worn off.