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How To Run A Successful Tractor Service Business

With the advent of mechanised agriculture in a bid to increase yields and save on time, most farmers currently use tractors for various farm activities. These undertakings include ploughing, harrowing, ridging, planting, spraying and hauling of farm produce.

Cost of a brand new tractor & Implements 

There are a number of brands in the Kenyan market including New Holland, Case, John Deere, Massey Ferguson, Landini, Kubota, Zetor, Sonalika, Solis, Ford, Mahindra and Zoomlion.

With that said, this article will focus on one specific brand – The New Holland TT75 tractor because it is the most popular tractor in the Kenyan market.

New Holland TT75 is identical to Case JX75T with the only differences being the color and the latter has two side mirrors while the former has only one. These tractors cost ksh 2.6 million for 2WD and 2.8 million for 4WD. Currently, CMC group which sells New Holland tractors is giving a free motorcycle and a front guard to its customers for every purchase.

New Holland TT75 ploughing a piece of land in Kanyarkwat, West Pokot County. [Photo|Beauttah|Whownskenya]

Implements

After purchasing the tractor, you will need various implements including a disc plough, ridger and a trailer for a start.

The most popular disc ploughs are Baldan from Brazil and Nardi from Italy. Both of these ploughs have their advantages and disadvantages and currently cost approximately ksh 400k.

Baldan plough isn’t costly to maintain and doesn’t need reinforcements. A 3 disc Baldan plough is relatively heavy (weighs 398kg) and for this reason can even plough on a hard surface. However, it has its limitations in that it is considered heavy and could occasion hydraulic hitches.

Secrets of Success In Tractor Service Business, Expenses Involved & Profitable
Baldan disc plough [Photo|courtesy]

The Nardi plough is best for commercial use given its allocation for multiple settings and is lighter than the Baldan plough. However, you will have to reinforce it with heavy steel plates immediately you buy it. Moreover, it requires regular greasing to allow for frictionless rotation of the discs.

Secrets of Success In Tractor Service Business, Expenses Involved & Profitable
Nardi disc plough. [Photo|Courtesy]

Another tractor implement is the ridger that is used to make planting rows. This is the cheapest of all the implements and can be locally fabricated for a price of less than ksh 50k.

The New Holland TT75 tractor can comfortably haul a loaded 7 tonnes trailer. This trailer can be locally made at a cost of between ksh 250k – 300k.

Secrets of success in tractor investment

For over one year, I have managed a tractor, and I’m pretty sure of the challenges, and how to turn this venture into a success. Because many Kenyans purchase tractors to hire to other farmers basically during ploughing seasons across the country, the following are my tips on how to manage this investment:-

  • You should accompany your driver and always be around your tractor during ploughing seasons. In doing so, you will be the one receiving the cash and paying for various expenses. If you can’t manage to be around then you will need a trustworthy person to manage your machine. A big mistake many investors make is giving the driver absolute freedom and with this comes a myriad of challenges. To begin with, your driver may resort to buying fuel that has been purchased through shady deals and more often than not it is always adulterated. Moreover, not monitoring your driver may lead to loses as he may pocket some of your profits.
  • As an owner, learn how to operate your tractor because it is a well known fact that most tractor drivers are drunkards. During peak season, drivers suffer fatigue and you may cushion him if you have the knowhow of farm operations.
  • Have yourself a number of brokers across the country who get in touch with farmers and market your business. However, don’t appear desperate for them because during peak season you can do without them.
  • Use the profit you get to lease a few acres of land through which you will at least be able to diversify your revenue inflows.
  • You can always begin with second hand implements, make a few repairs and save money that would have been otherwise used to buy brand new ones.

Expenses Involved 

The main expenses in this venture are relatively affordable unless your machine suffers a mechanical breakdown. Tractor owners pay an insurance premium of only ksh 8000 yearly. Your tractor will need to be serviced after every 250 hours and for this you will need 9 litres of engine oil (ksh 4600), an oil filter (ksh 1400) and 2 fuel filters for ksh 2000.

Expected Profits 

A good tractor should consume 7 litres of diesel in ploughing an acre of land but this depends on the type of soil, the terrain and the driver. The operator is paid ksh 250 for every acre of land ploughed. Using a standard charge of ksh 2500 per acre, one can make a profit of 1400 shillings per acre. In a good day, a TT75 tractor can plough up to 10 acres of land in places where large tracts of lands exist.

Ambitious investors are forced to pack their belongings as they move across the country chasing the rainy seasons. In January and February, tractor owners move to Bungoma, Kakamega and Busia counties where they charge ksh 3000 per acre of land ploughed.

In March, a caravan of tractors land in Trans-Nzoia and Uasin Gishu where they charge ksh 2300-2500 in ploughing an acre of land.

In April and May it is another rush to West Pokot county where tractors land in Chepareria, Kacheliba and Kitale Kapel. They charge ksh 2500 per acre.

A fleet of tractors on the move. [Photo|Courtesy]

Around July and August, it is another journey to Homa Bay, Siaya and Western Kenya (ksh 3000 per acre). In October and November tractor owners pitch tent in Ukambani and charge ksh 2000 per acre.

According to a 2016 report by nation, investors used to rake in between ksh 700,000- kes1,000,000 yearly as they migrated throughout the country during ploughing seasons.

Challenges

Currently, tractor owners are lamenting at how the business is unpredictable and is suffering contracted returns.

The abrupt change of fortunes can be pinpointed to increased fuel prices and increased number of tractor owners which has led to a decline in ploughing prices. Some 4 years ago, it was a sure deal for instance that ploughing an acre of land in West Pokot county would be charged a minimum of ksh 3000. However, currently tractor owners have been forced to reduce the cost to ksh 2500 even as the price of fuel escalates.

Secondly, due to population increase, there is a reduction of land that is available for farming. Many Kenyans have subdivided their lands and this has hit the investment hard.

It is highly advisable that one consults widely before venturing into this field.