The Business Line 12.08.2009

Drought pushes up demand for farm pump sets

R. Yegya Narayanan

Coimbatore, Aug. 11 While the spectre of drought is looming large over the country sending the capital market into a tizzy, the pump set industry in Coimbatore has gone into an overdrive to meet the rising demand.

An industry veteran estimates that leading agricultural pump set producers here are working at 10-15 per cent more than their capacity for the last two months to meet the surge in demand which has come at a time when the industry generally witnesses a slump in demand and offers off-season discounts to its distributors to sustain the business momentum.

Monsoon failure

But this is not a cause for rejoicing since failure of monsoon may lead to contraction in demand during next year since the purchasing power of the rural population would decline and farmers may not opt for replacing old motors and pumps.

Speaking to Business Line, Mr G. Rajendran, Managing Director, CRI Pumps Private Ltd, said the depleting water table in most parts of the country has forced farmers to go for higher head pumps so as to extract water from greater depths. While the big farmers normally use pumps of 7 HP or 10 HP capacity, the smaller land owners use 5 HP pumps.

He said while the replacement cost for 10 HP pumps would come to about Rs 20,000, for 5 HP pumps it would be about Rs 10,000.

He said the size of the pump set market in the country is estimated at Rs 3,500 crore, of which the share of the submersible pumps used in agricultural operations is around 60 per cent (Rs 2,100 crore in value). The Coimbatore pump industry has about 45 per cent of the market share of the farm pump sets (about Rs 1,000 crore).

He said normally, the pump industry witnesses around 25 per cent fall in demand during July to September compared with other months due to the onset of the South-West monsoon. To sustain the demand momentum, manufacturers offer 2-3 per cent discount to their distributors to encourage them to stock pump sets ahead of the North-East monsoon season.

Mr Rajendran said due to deficit rainfall this year, the surge in demand was seen in Andhra Pradesh and States in the central and northern regions. The manufacturers of branded pumps here have not been able to meet the spike in demand.

The higher demand during lean season has lead to manufacturers withdrawing the price discount and to work in excess of normal capacity. The industry has generally been doing well even when others faced recession because of the incentives offered by the Government to the farm sector.

Lower water table

Mr Jayakumar Ramdass, President, Southern India Engineering Manufacturers’ Association (Siema), Coimbatore, said there is a surge in demand for a few farm pump set varieties. But the industry has to view this with caution since any prolonged dry spell would cause contraction in demand later.