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Karnataka adopts on-demand model to rent tractors, equipment to farmers

VST Tillers, John Deere and Mahindra Tractors take part in the 'Uber' for farm equipment


Alnoor Peermohamed  |  Bengaluru 

Karnataka adopts on-demand model to rent tractors, equipment to farmers

has roped in firms such as VST Tillers, John Deere and Mahindra and Mahindra to offer tractor and farm equipment on demand for farmers across the state, adopting the Uber model to increase mechanisation and overcome labour shortage for farmers. This also brings down the cost of use of these equipment to farmers by nearly a third.

The state is investing Rs 175 crore in the “Uber for agricultural services” model that entails paying for 75 per cent of capital costs, while the equipment makers earn money by renting it to farmers over a three year period. The cost for adopting mechanisation for farmers, largely with minor holdings, would come down significantly with this model, say officials.

“Farmers all over complain of the non-availability of labour. We understand that a lot of agricultural costs can be brought down by mechanisation,” said Krishna Byregowda, Karnataka’s minister of Agriculture in an interview. “For this we thought we should set up rental services, where all agricultural equipment will be available to farmers.”

With majority of farmers owning patches of land that are too small to justify the investment on equipment, the plan being expanded cover the state by next year, where villagers rent farm equipment such as tractors, tillers and harvesters on hourly and daily basis. The state had so far tied up with two non profit entities and spent Rs 87.5 crore to set up 175 farm machinery custom hire service centres (CHSCs).

VST, a maker of compact tractors and one among the manufacturers that has partnered with the government says that it has been given 90 days to set up all the centres across the state that it will manage. Apart from its own equipment it will also stock equipment such as harvesters, weeders, etc which will be bought from other manufacturers.

“The government is providing 75% subsidy on the purchase of equipment for the scheme. See, these farmers cannot afford to buy their own tractors, but through this they can rent it on a hourly basis. It's like if you don't own your own car and you have to go to the airport, you will hire a taxi. Here it is for farmers so that they can hire equipment for farming,” said B C S Iyengar, Director of Corporate Strategy at VST.

Karnataka has adopted two slabs to make these investments. In the first slab the government will invest 75 per cent of the Rs 50 lakh capital that goes into buying farm equipment for each centre. The second slab will see a 50-50 investment of Rs 25 lakh for the buying of agricultural equipment and will happen at a completion of one year of the setting up of the centre.

“Each farmer cannot buy machinery, or need not buy machinery, because if a farmer has five to ten acres, he or she need not own equipments for that size of land. Even if they do purchase farm equipment, for which we do give subsidy, the machinery will be used less than its optimum level and it’s actually a waste of investment,” added Byregowda.

The on-demand nature of the scheme will ensure maximum utilisation of farm equipment and thereby maximum effectiveness of subsidies from the government. Through the initial 175 CHSCs, the state says that it has reached out to 128,650 farmers and that number will more than triple once the 350 new centres become operational.

Hiring agricultural equipment through any of the CHSCs will be 20-30 per cent cheaper than on the private market through government subsidy. While the total impact on agriculture production through the scheme in the state has not been estimated, Byregowda said that the positives of increased mechanisation in agriculture are well known.

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First Published: Sun, March 27 2016. 10:24 IST