Study: Custom hiring can push farm automation

The finding is part of a joint report by YES Bank with the German Asia-Pacific Business Association

India’s small farms can have the advantage of high-quality capital-intensive mechanisation through custom hiring, seemingly the only practical way for cotton, maize, soya bean, and paddy, says a joint report of YES Bank with the German Asia-Pacific Business Association.

In custom hiring, high-cost agricultural machinery such as combine harvesters or threshers are purchased by a group of farmers or a body, for use by all in return for a fixed payment. This saves cost and optimises usage, to make it financially viable.

There are 1,200 custom hiring centres in the country, considered far less than the need.

The report says combine harvesters could be the largest in potential for custom hiring, due to their high cost and with 90 per cent of these owned by non-farmers.

To popularise the practice, says the report, the government needs to encourage various models.

Farm cooperatives and farmer-producer companies should be tapped.

“The majority of Indian farmers do not benefit from mechanisation because of shortage of capital, which is consequential to the purchase of needed equipment,” the report said.

Major farm machinery used in India are tractors, threshers and power tillers. The biggest market in terms of annual sales is of tractors (around 600,000 annually), followed by threshers (around 100,000) and power tillers (56,000). The tractor market is Rs 34,000 crore. Penetration is tilted towards Punjab and Haryana; that of power tillers is higher in southern and eastern India.

Farm mechanisation is considered at a nascent stage in India, with annual growth about five per cent. Agriculture employs 55 per cent of all labour but contributes only 14 per cent to gross domestic product.

The report was officially issued on Thursday by Union agriculture minister Radha Mohan Singh. He said farm mechanisation would bring down the cost of cultivation by up to 25 per cent and raise production by 20 per cent.

The Centre is implementing a sub-mission on agricultural mechanisation, under which custom hiring facilities for agri machinery are set up. The aim is supposed to be to increase the reach for small farmers.