Why is Mahindra & Mahindra planning to reduce its focus on the tractors segment?

Let me put it this way. Mahindra & Mahindra is shifting to lay a broader focus on farm equipment to tap the entire opportunity spectrum than focus overly on tractors. As a strategy, M&M will also give a boost to farm mechanization and adopt the Farming-as-a-Service (FAAS) model to enhance the demand for its farm equipment business. Its latest Krish-e centres provide services to farm across the cropping value chain.

The focus of Mahindra will be on bringing down the overall cost of farming, improving crop output and as a result, giving a boost to farm incomes. M&M is also offering expensive farm equipment on lease to farmers to reduce their farm outlays. These include sophisticated equipment like rice transplanters, laser levellers, tractor-mounted combine harvesters and potato planters. The idea is that farmers don’t lose out on technology enrichment.

If you look at the global numbers, the overall agri-equipment market is about $160 billion, of which farm machinery is $100 billion and tractors $60 billion. In India, the tractor market has a skewed proportion of 7:1 versus farm equipment. The strategy of M&M is focussed on changing this mix in favour of farm equipment. M&M is looking aggressively at 10 times growth of its farm machinery business.