LAHORE, May 31: Farmers from the Punjab have expressed concern over 'stagnation' in the local tractor manufacturing industry, consequent gap between demand and supply, and illegal premium that they have to pay on each purchase.

Quoting the annual report of a leading tractor manufacturer in the country on Monday, they said its production had been varying between 14,215 and 15,151 for the last few years despite the fact that the company's financial book showed neither debts nor rising profits.

They said its production went up from 7,010 in 1998 to the figures quoted above in 2002. However, expansion had stopped creating artificial crisis in the market. The company had, however, failed to expand its capacity to meet the increasing demand despite Rs1.2 billion reserves and zero long-term debts.

A cartelization of the manufacturing industry had left farmers with no choice but to pay Rs50,000 premium on every tractor, they added. The farmers demanded the government that it should look into the financial books of these manufacturers and force them to bring in new manufacturers to ease pressure on them.

Tracing the history of problem, an official of the Kissan Board Pakistan said production of tractors dipped from 35,038 in 1999-2000 to 32,553 in 2000-01 and 27,101 in 2001-02. "This shows that two leading manufacturers have joined hands to keep production low and prices high," he said.

He said increase in agriculture credit had enhanced demand of tractor but the leading manufacturer was refusing to use the required resources. Of the 350,000 tractors in private use, at least 84 per cent are in the Punjab, nine per cent in Sindh, five per cent in the NWFP and two per cent in Balochistan.

These figures showed that the Punjab would be worst hit by the latest cartelization. A Farmers Associates Pakistan official said modern industry could not grow without the use of tractors. Any tinkering with the industry would hurt the farming sector badly.

"The two big manufacturers hold over 80 per cent of the market and could manoeuvre price according to their will. If they start producing 27,000 tractors against a demand of 35,000 to 45,000, one can imagine the game plan that the government must stem, he demanded.

The demand for tractors increased in 1998 when the government and the industry jointly took initiative to reduce tractors' prices by Rs100,000 per unit. In the last few years, rising trend of agricultural credit for tractors also led to increase in demand.

Hamid Malhi of the FAP said various farmer organizations had already pointed out growing gap between demand and supply of tractors, saying the dealers were minting money at the cost of growers and the entire sector.

Dealers of all the major manufacturers were selling tractors on the black market and making around Rs40,000 to 50,000 per vehicle. He criticized the government for not taking appropriate steps to find a way out of the crisis. According to a market analyst, manufacturers have a capacity to produce more than 35,000 tractors a year against a demand of around 45,000.