Pakistan’s tractor market hit hard by monsoon floods

Heavy monsoon flooding across Pakistan is now striking at the heart of the country’s agricultural economy, with far‑reaching consequences for both farmers and major industrial firms. Millat Tractors Ltd., the exporter of Massey Ferguson tractors, is bracing for a heavy blow in earnings as the flood crisis erodes farmers’ incomes and slashes demand for farm machinery.

Since July, Pakistani farmers have purchased only about 2,981 tractors, a stark 43 per cent drop compared to the same period last year, according to Pakistan Automotive Manufacturers Association data. The drop is especially damaging to firms such as Millat, whose domestic sales fell by 15 per cent to 2,177 units. Its rival, Al‑Ghazi Tractors, saw an even worse decline, only 804 units sold, a staggering 70 per cent fall from last year’s tally.

These declines come as monsoon floods inundate vast areas of cropland, destroy livelihoods, and deepen financial stress in rural communities. The initial government estimate places damage at over $1.31 billion. More than 1,000 people have died, and thousands of livestock have perished. Hundreds of thousands of acres of crops have been submerged, threatening the very basis of farm incomes.

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Analysts warn that the tractor firms are just one link in a chain of industries facing impending losses. Cement, fertiliser, dairy, agrichemical and seed companies stand vulnerable to shrinking demand as farmers retrench. Banks with large agricultural loan portfolios may face rising defaults. In past flood years, fertiliser sales have dropped as much as 20 per cent in the following quarter, a pattern that could replay itself now.

Agriculture contributes nearly a quarter of Pakistan’s GDP. Its distress therefore ripples across the national economy. While the Pakistan Stock Exchange has boomed this year, rising some 24 per cent, many listed companies linked to farming likely will bear the cost of this climate shock.

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Millat Tractors itself has acknowledged the impact of increasingly erratic weather, manifesting in cloud bursts, flash floods, droughts and heat waves, and warned that any worsening agricultural conditions would hurt its performance. Al‑Ghazi is attempting to cushion the downturn with expanded export efforts and sales via banking channels.

Meanwhile, macroeconomic forecasts for the year have already been revised downward. The World Bank now estimates growth at 2.6 per cent, lower than its earlier outlook, while the IMF projects 3.6 per cent, cautious of the floods’ cascading effects on corporate performance.

In sum, what began as a natural calamity is rapidly morphing into an economic crisis. Tractor firms such as Millat and Al‑Ghazi are among the first to feel the squeeze, but the implications spread far beyond machinery: from fertiliser to banking, from rural livelihoods to the stability of Pakistan’s markets. The challenge now is whether recovery strategies and policy responses can contain the fallout and protect the nation’s agrarian backbone.