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Farm Machinery Uses and Agricultural Machinery Industries in India: Status, Evolutions, Implications


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Farm Machinery Uses and Agricultural Machinery Industries in India: Status, Evolutions, Implications

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Farm Machinery Uses and Agricultural Machinery Industries in India: Status, Evolutions, Implications

  1. 1. Farm Machinery Uses and Agricultural Machinery Industries in India: Status, Evolutions, Implications Acknowledgements: Hiro Takeshima, Ravindra S Shekhawat, and others. Presented at South-South Knowledge Sharing on Agricultural Mechanization Gajendra Singh & Madhusudan Bhattarai
  2. 2. 1. Evaluation of current status of farm machinery uses in India, and its spatial and temporal variation and their significances 2. Illustration of development phases of farm machinery uses (and evolution of four wheel tractor) in India. 3. Assessment of demand side and supply side factors of farm machinery uses in India, and historical and spatial patterns. 4. Assessment of policy implications & lessons learning out of the India case to other countries in Asia and Sub-Saharan Africa Outline of Presentation
  3. 3. India: Salient Feature • Per Capita Income: US$ 1800 (PPP: US$ 4200) • 3rd Largest Economy on PPP basis ($ 5.5 trillion) . • Nominal GDP: $ 2.3 trillion; • Savings rate: 30%. • Agriculture contributes: 14% of GDP (50% employment). • World important farm machinery market, fastest growth • World largest tractor market with over 600 K sale/year, with market size of > 5 billion USD (tractor alone) => India case provides several lessons for developing countries in Asia and Africa.
  4. 4. Challenge • Main challenge is to increase production and productivity of smallholding agriculture to feed the growing population. • With sufficient food stocks, the big challenge is also to curve wastage, provide adequate Food and Nutrition Security to all population, and ensure judicious distribution of food. • Urgent need is to improve the income of >100 million farm families (>250 million workers) cultivating 140 million ha land; >50% work force contributing only 14% to GDP.
  5. 5. 1961 880 Domestic Production of Tractors started 1970 20,000 Net importer up to 1976 1980 71,000 Exports started: Africa 1990 140,000 Exports grew up to 7,000/year 2000 256,000 Exports grew upto 50,000/year 2010 548,000 Exports to USA, Malaysia,Turkey, South 2011 640,000 Asian and African countries 2012 579,000 Exports about 63,300 tractors 2013 699,000 Exports about 62,700 tractors 2014 613,000 Exports about 77,500 tractors 2015 572,000 Exports about 75,400 tractors 2016 >600,000 Exports about 80,000 tractors => India produces > 1/3rd of global 4-wheel tractors. India is now the biggest producer of tractors in the world; with M&M as the no 1 company globally Source: Tractor Manufacturers Association (TMA, India) Spectacular achievement in annual tractors sales (4-wheel)
  6. 6. 0 20 40 60 80 100 120 140 160 No of Tractor/1000 ha of Net Cropped Area 0264 NumberofTractor(inMillion) 1960 1970 1980 1990 2000 2010 Year Tractors use over the years is growing at an exponential pace at all India level Tractor intensity widely varies across the states (regions) A huge spatial variation exists on tractors use is in India! Also, suggests for a huge opportunity for tractor growth in future
  7. 7. Animal power has been replaced by tractor power in India Share of agricultural worker & draught animals came down from 60.8% in 1971-72 to 10.1% in 2012-13; Source: CIAE, Bhopal
  8. 8. Development pathways of farm machinery sector in India N Development pathways Major characteristics/ Changes 1 Pre- Independences • In 1914, first tractors imported to reclaim land In 1934, manufacturing of pumps started 2 Initial period (1947- 1966) • 1961 => Manufacturing of tractor & Import of Power T begun • 1962 => Manufacturing of Power Tiller started 3 Green Revolution Era (1967 to 1991) • In 1967 => Govt. imposed statutory control on selling price on domestically manufactured tractors • In 1967, The Agro-Industry Corporations were set up in states • Number of tubewells and threshers grew rapidly • 1968, Harvesters were introduced in Punjab (India) to address peak season labor scarcity; custom hiring becoming popular • 1974- Statutory price control withdrawn (tractor) • 1973- Import of fully build tractor was banned 4 First wave of reform in national economy (1991/92- 2004/05) • 1992 , no license needed to set up tractor industry, and import and export of Farm Machines were liberalized • Several MNC (New Holland, John Deere, ..) came in India to set up production of tractor and other farm machinery 5 Second wave of reform in national economy (2005/06- 2015/16) • Govt. started support to CHSC-AM at several places • SMAM came in 2014, with bigger push in AM • Tractor company & others started to set up CHSC-AM in several places in PPP mode. IT used in CHSC-AM.
  9. 9. Power tiller use has not picked up in India There are many reasons for limited expansion of power tiller in India
  10. 10. Custom Hiring Services of Agricultural Machinery
  11. 11. Different Models of Custom Hiring Services of AM 1. Individual farmer led …(a)……(b)…. 2. Farmers group purchased machineries 3. Cooperative managed CHSC-AM & services 4. Implement Traders’ led CHSC-AM 5. Individual entrepreneur (LSP) operated 6. NGO (non-profit group) supported AMS 7. Govt. supported center (PPP mode) 8. CHSC- AM set up under PPP mode 9. Big Business operated center (TRRINGO, EM3, Zamindara). 10. Start-up firm, with app based coordinated–CHSC-AM
  12. 12. An Interesting Innovation is taking place on Harvesters use in India 1. Large farmers, privately owned harvester with limited renting out to fellow farmers nearby. 2. Traders, entrepreneurs, drivers, doing rental business of harvesters (dominant one); 1 machine cover= ~ 600 ha/year, and it covers a distance of over 1,000 km/year) 3 Farmers Groups, Farmers Cooperatives, Multipurpose Societies. 4 Custom Hiring Center (govt., cooperatives, etc.) 5. Corporate firm - (Tata chemicals, EM3 Agri services, etc.) First Harvester brought in India (1968) Over 50,000 harvesters are operating in India at present
  13. 13. Annual market of major farm machinery used in India Item Numbers Item Numbers Tractors 450000 - 500000 Power tillers 50000 - 60000 Plow: MB/Disc 45000 - 50000 Rotavator (Rotary tiller) 100000 - 120000 Cultivators 150000 - 200000 Harrows 120000 - 150000 Seed-ferti drills 60000 - 75000 Planters 15000 - 25000 Rice transplanters 2000 - 3000 Power weeders 35000 - 40000 Reapers 10000 - 15000 Threshers 60000 - 75000 Combine harvesters 3500 - 4000 Trailers 150000 - 175000 Sprayers (TD) 10000 - 15000 Laser land levellers 2500 - 3500 Potato diggers 25000 - 30000 Rotary hoes 20000 - 25000
  14. 14. • BIS standards; Testing facilities (4 GOI+29 at Ag. Eng. institutions); Training and Extension • Rate of subsidy: about 25% with limit on amount; • Sub-Mission on Agricultural Mechanization (SMAM): Subsidy to Small, Marginal, SC/ST and Tribal farmers on farm equipment up to 40%; • Financial Support / Subsidy to Entrepreneurs to establish custom-hire centers and Hi-Tech. machine centers. • Unlike the case in many other countries, Govt. Subsidy for FM in India is not tied to any particular brand, or HP size of tractor or machinery, which has helped to healthy growth of tractor and other farm machinery industries Policies that are Supporting Mechanization
  15. 15. Priorities for Future Mechanization • Expand uses of agricultural residues; Biogas, solar and wind energy, as sources of power of farms. • Farm production techniques with low energy requirement: Minimum tillage, Zero till planting, Conservation agriculture. • Farm machinery for higher water use efficiency: Laser land leveling, Micro irrigation. • Farm machinery for higher fertilizer use efficiency: Seed- cum-fertilizer drills, Fertigation.
  16. 16. Priorities for Future Mechanization • Public support and incentives to alternate models of Custom-hire services targeting machinery needs of smallholding farmers and marginal farmers • Advance FM : Nursery for rice seedlings, vegetables seedlings and transplanting; Protected cultivation. • Specialized machinery promotion: Sugarcane harvesting, Cotton picking, harvesting of small grain crops, harvesting and post harvest of horticultural crops. • Mechanization of animal husbandry and fisheries operations. • Mechanization for hill agriculture and small plots.
  17. 17. Policy Reforms needed • Business and enterprise friendly policies, laws, and regulations. • Reduction of direct subsidies for Farm machinery but to invest more on infrastructure, mainly, roads, electricity supply, irrigation systems and markets with storage and processing facilities in catchment areas. • Lower interest rates on loans and lower taxes for purchase of equipment and machinery for agricultural operations and food processing. (i.e., more of back end subsidy). • Promote entrepreneurship at local level to provide custom hire services of FM (in Taxi model). • Provide financial and technical support to individual rural enterprises (entrepreneurs) to start rental market services of CHSC-AM, this could be in PPP or other small scale operation of CHSC-AM.
  18. 18. 1. Through custom hiring services, even smallholding farmers are able to use costly machine (tractor, Laser land leveler and harvester) and getting benefits of FM. 2. Application of smartphone and mobile apps in rental services have reduced cost of transaction of services provisions (cost of doing business) with smallholdings. 3. Due to heterogeneity of farmers (and farming practices), there is no-one-size-fits-for-all type of a model of farm machinery uses (or to CHSC-AM models) for whole India. Various models operate at a place. 4. The Farm Machinery use related policies need to be adapted and tested for wider scale uses. Take Home Messages
  19. 19. Sustainable Agricultural Mechanization Sustainable production intensification Optimum use of farm inputs Environmental friendly agricultural management
  20. 20. Thank You