It is widely known that mechanization or utilization of agricultural machinery and tools can dramatically improve productivity in the agriculture sector and set the stage for competitive production and creation of more jobs for new university graduates.
Experts believe that in order to attract investment in this sector, targeted supportive measures should be taken. Forsat-e Emrooz daily has published a report on different aspects of investment in this sector and the opportunities ahead of the startups.
Despite the remarkable diversity of agricultural tools and machines, only a couple of farming tool manufacturers and a handful of assembly plants are active in Iran. The market is awash with either imported or assembled equipment.
Also, the missing link between those who possess the know-how of making farming tools and potential investors is to blame for the unfavorable condition of agricultural machinery production in Iran.
Setting up farming machinery complexes would be a solution to this problem. It is also a new untapped market for investment.
Investment Options
People who intend to invest in this sector have two options: either to explore the possibility of establishing assembly plants or set up factories that manufacture farming tools from scratch. They can also take an in-between approach by launching a factory specialized in both production and assembly.
As a startup business in assembling farming tools, investors need to have some $303,000, 60% of which should be spent on equipment, 20% for the raw material depot and the rest should go to marketing. A 2,000-meter silo is also needed to launch the production line.
As a manufacturer of farming tools, one needs to triple or quadruple their initial investment. To win the needed permits, they should refer to offices affiliated to the Ministry of Industries, Mining and Trade and the Agriculture Ministry. The returns could yield between 40% to 50% in profits on the initial investment.
Opportunities and Threats
The loans offered for the procurement of agricultural machinery boost farmers’ purchase power and open up opportunity for production, said Karim Mansourirad who is an expert in the field.
He viewed the low costs of workforce and production in Iran, rapid pace of technology change and the need for new agricultural machines and export markets as advantages of investment in this sector.
“We cannot afford to lose farming tool market in a world where the future wars would be fought on water and food and the use of modern technology has become the key goal of the world economies,” he added.
Mansourirad regarded the diversity of foreign products in the local market as the main threat and said not having a detailed insight about the field and the widening gap between the investors and those with technical know-how are among weak points of this sector.
“Investors should seek to indigenize the technical knowledge and create collaboration between industries and universities. The use of technology should top our priorities,” he noted.
