Q.1. At what stage do you believe is the agriculture equipment in Myanmar? What has been your observation in the past few years? What has been growth in general in these years?

Tractors are the most demanded agricultural equipment in Myanmar and other equipments follow the trend similar to the trend of tractor sales. The market has shown immense growth and profitability in the past few years. However, the demand in new tractors have gradually declined over the past few years, therefore I believe the market has reached its peak. Initially, Myanmar was a closed country in terms of foreign investment and business. Since the opening of economy, there was pent-up demand which led to heavy demand and healthy sales.

In terms of the industry life cycle, market is saturated since there are many players and is probably in later stages, arguably past its growth stage. In coming years, I believe it will remain stable.

Q.2. What has been the effect of pandemic in terms of the general growth of Zetor? And what will be your strategy to face the challenges ahead in the South Asian Market? How has the general reaction of the industry been?

Initially, there was uncertainty in the market and 2020 was in itself a slow year and of course when pandemic hit, it was worse. If we see our sales, then I’ll say we made almost 80% of our total sales in last five months.

You see, there was lockdown across the globe and we are a multinational company, which implies the disconnection directly affected us. When the lockdowns were eased, orders came rushing in. But due to disruption in trade, complete supply chain was disturbed from component supply to container availability for shipments across the globe.  Somehow we made production within our standard lead time, but there were no containers on ICDs (Inland Container Depots).

These were the problems faced by all players across the industry; this became a major issue if you see it in light of the agricultural season. Due to unavailability of the containers, our shipments got delayed by twenty to thirty days; which is a big time period to lose selling season in the destination country, which directly affects our order rotation/repetition.

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For the future, we are back in game and are optimistic about it. With the pandemic, there has been fluctuation in government tenders and general demand from retail market, which would eventually lead to healthy growth due to postponement of demand. People, who wanted to or were planning to buy new equipment but were not able to, will be back in the markets to order new machinery.

 

Zetor is famous for its quality and it has maintained that image in the South Asian market as well. As a brand, we have complete faith in our abilities. About thirty or forty years ago Zetor had a tie-up with a local governing body in Myanmar for a project, thus the brand is well known in Myanmar. Our most popular products are in the range of 75 horse power and 90 horse power; the respective models are global 2175 and global 2190.

Government issues tenders every year for acquisition of machinery and this plays a major role in mechanization within Myanmar. We have not participated in government tenders in the past few years, so I don’t have any recent experience in this regard.

Government supports the farmers in many ways; one of them being subsidizing of loans. For example, if general period of payment is three to five years, government provides it for five to six years with down payment of 10%. They also rent out tractors to farmers.

 

Q.5. Rental business in agriculture equipment market is expanding. What are your views about this? Are you planning on entering this segment?

Farmers who buy heavy equipment see it as an investment and usually rent these equipments in their community or to their neighbors when the season is off, or when they have a different harvesting schedule. I believe 90% of market is unorganized for rental business in agriculture equipment market; unorganized in the sense that purchasers act as contractors and rent out to local community. It could be that in commercial farming, the usage of product is high so the replacement cycle for equipment is quite fast.

 

Season and climate are very important, so obviously sales vary accordingly. The quality of soil is also essential. In region such as Ayerwaddy, the soil is soft and moist since it is part of a delta region. Therefore, light weight equipments are popular in that region. For region such as Shan state and other northern regions, the soil is hard; therefore there is market for higher HP equipments which are heavy in weight. Also, the financing facility by the distributor should be easily accessible and have comfortable cash flow to facilitate the easy financing of equipment. They should be well connected with NBFCs and banks in the region so that customers do not face issues.

 
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