Mechanized agriculture has not been given its due in our country. While government efforts are in place, they are not significant in terms of crop productivity, farm incomes and the well-being of farmers in general.

1. Sustainable Agriculture: The Status of Farm
Mechanization in India
AGRO-BUZZ December 2015

2. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
 Mechanizing agriculture, in its simplest form implies upgradation of farms and
agriculture with the latest technology, in order to improve overall efficiency and output
in agriculture.
 India is one of the world’s largest producers of tractors, yet one of the most backward in
mechanized agriculture.
 We account for 20% of total world tractor production & export about 11% of total
tractor production.
FARM MECHANIZATION ACROSS THE GLOBE
FARM MECHANIZATION: AN INTRODUCTION
0%
20%
40%
60%
80%
100%
0% 10% 20% 30% 40% 50% 60% 70%
Farmmechanizationlevel(%)
Population engaged in agriculture (%)
Farm mechanization level(%) & population engaged in agriculture
(%)
India
Africa
China
Argentina
USA
W. Europe
Brazil
Russia
OBSERVATIONS
 While USA employs only 2% of its total population in agriculture, 95% of its farms are
mechanized.
 Similarly, the entire Western Europe employs 3.9% of its total population in agriculture,
and 95% of their farms are mechanized.
 Although this makes agriculture, a small contributor to their GDP, it makes the
profession profitable and viable.
 However, in India 55% of the total population is employed in agriculture but only 40%
of its farms are mechanized. Majority of our population is employed in this sector, but
the sector’s GDP contribution amounts only to 14% of total GDP – This makes
agriculture in India less remunerative and increases the incidence of poverty among
farmers.

3. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
Agricultural mechanization helps in increasing food production, crop productivity &
therefore profitability in agriculture – by achieving timeliness in operations, bringing
precision in placement of inputs & reducing input losses.
Despite its various advantages, farm mechanization has not been given the attention it
deserves in our country.
WHY FARM MECHANIZATION
200-300% more
powerful than
indigenous plough
Improves crop
productivity by
30%
Helps farmers
grow multiple
crops, helping
commercialize
agriculture
A MECHANIZED PLOUGH
MYTH: MECHANIZATION CREATES UNEMPLOYMENT
Human power availability
grew at a CAGR of 3.37%
between 1960 & 2000
During 1970-2010, no. of
agricultural workers
increased from 126 million
to 243 million
DIRE NEED FOR IMPROVED CROP PRODUCTIVITY
Need to increase
food grain
production to 320
Mn MT, by 2020
Area under
Agriculture is
declining. From
141.3 Mn Ha in 2000
to 140.8 in 2011-12
Food grain
productivity has
grown at an
average rate of
2% since 1990s

4. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
FARM POWER IS STRONGLY LINKED TO HIGHER FOOD PRODUCTIVITY
 Farm power is necessary during the entire course of farming activity.
 During turn around time, it is not possible to harvest and thresh the standing crop on
one hand, and on the other, prepare the seedbed for sowing operations, if adequate
farm power is not available.
 It therefore influences crop productivity greatly. India’s crop yields being lower than
the world average are a result of relatively lower farm power available on Indian
agricultural land.
 The below graph indicates that farm power availability & food grain productivity go
hand-in-hand:
0.25 0.31 0.35
0.63
0.92
1.35
1.66
0.52
0.71
0.87
1.02
1.36
1.72
1.92
0
0.5
1
1.5
2
2.5
1951 1961 1971 1981 1991 2001 2010
Farm power & food productivity in India
Farm Power (KW/Ha) Foodgrain Yield (MT/Ha)
OBSERVATIONS
 Keeping everything else constant, 84% of
change in food grain productivity is
explained by change in farm power.
 A positive slope indicates, higher the
farm power higher will be the food grain
yield.
 Punjab, where farm power is more than
3 KW/Ha, is the highest food grain
yielding state in our country.
 States like Jharkhand, Orissa &
Chhattisgarh have the lowest levels of
both, food grain yield & farm power.
y = 1.02x + 0.98
R² = 0.84
0
1
2
3
4
5
0 1 2 3 4
Foodgrainyield(MT/Ha)
Farm Power (KW/Ha)
State-wise Farm power(KW/Ha) regressed
on food grain yield (MT/Ha)[2013-14]
WHY FARM MECHANIZATION
Punjab
Haryana
U.P.
A.P.
Uttarakhand
W.B.
Jharkhand
Orissa
Chhattisgarh

5. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
A common finding that emerged from various studies on farm mechanization is that it
greatly helped the farming community in overall economic upliftment.
Below we assess exactly by how much does farm mechanization improve agriculture in
general:
IMPACT OF FARM MECHANIZATION
FACTOR
% INCREASE POST FARM
MECHANIZATION
Cropping Intensity 10%
Commercial Livestock
[Milch cattle]
25%
Gross income per hectare 31%
Area under irrigation 4%
23%
28%
10% 11%
4%
14%
0%
10%
20%
30%
% increase in yield post mechanization
Effect of farm mechanization on crop yield
Paddy Wheat Sugarcane
Oilseeds Cotton Potato
OBSERVATIONS
 After mechanization, all crops
reported an increase in yield per
acre.
 While mechanization had the least
impact on Cotton, it significantly
increased the yield of rice &
paddy.]
 Output growth in tractorised &
well irrigated areas has direct
bearing on cropping intensity.
 Similarly, farmers who use tractors
generated more gross income per
hectare.
 For them, the natural progression
to animal husbandry has been
relatively easy. [25% more milk
cattle than non-mechanized farms]
 Farm mechanization also has a
positive impact on employment.
 According to a study by Desai & Gopinath, for an increase of one hectare in area,
employment went up by 29.43 man days when a tractor was introduced onto the farm.
 The study also showed that for every Rs.100 increase in output, employment increased
by 3 days on tractor farms and 2 days on bullock farms, thereby indicating a close
relationship between output & employment.
 USE OF TRACTORHIGHER OUTPUTHIGHER EMPLOYMENT
 The rationale behind this is that with the introduction of tractors, both cropping
intensity & crop yield increased, although farm size remained the same, which resulted
in increased labour use per farm for carrying out crop farming activities that still
required the use of manual labour.

6. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
GOVERNMENT EFFORTS TO ENCOURAGE FARM MECHANIZATION
 With the objective to increase farm power availability to 2 KW/Ha, the govt. has
introduced a Sub-Mission on Agricultural Mechanization (SMAM) in 2014 and has
assigned Rs. 150 crores under the same for 2015-16.
 Under this scheme, larger states like Maharashtra, Uttar Pradesh & Rajasthan have
received 30% of the total allocation.
 Apart from this, the govt. provides up to 50% subsidy on all agricultural equipment.
388.6
1832.7
1216.4
1426.9
216.3
0
1000
2000
2011-12 2012-13 2013-14 2014-15 2015-16
Funds Allocated/Released to State Government
for Farm Mechanization in India
(In Rs crores)
145.6
22.1
0
100
200
2014-15
SMAM(Allocation vs. Utilization)
[Upto 30th Sep '15]
Allocation Utiization
OBSERVATIONS
 It is not possible to establish a positive trend in the allocation of funds by the central
government to the states.
 Utilization of the funds under new scheme SMAM, was very low in 2014.
 This could be the possible reason for sharp decline in allocation of funds in 2015-16
from 2014-15.
 GOVT’S ROLE IN BOOSTING THE TRACTOR
INDUSTRY
 To leverage a global advantage, the govt. has
intervened correctly in areas of policy &
technology development.
 Today, we are the largest manufacturers of
tractors in the world – this would not have
been possible if the govt. didn’t allow free
inflow of foreign technology through
collaboration.
 Today, India exports tractors to rice-growing
countries like Canada, Philippines &
Bangladesh.
3.52
3 3.42
3.93
5.44
6.085.91
6.97
6.26
0
2
4
6
8
India’s Tractor sales (Lakh nos.)

7. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
WHY THESE INITIATIVES ARE NOT ENOUGH
For three reasons, the government’s efforts are insufficient to make a dent in
technologically upgrading our agriculture sector.
1) MOST STATES ARE UNDER MECHANIZED
The below map explains the state of mechanization in our country.
• More than 50% of agricultural land in India is
not irrigated. Area under irrigation has been
stagnant since the last decade.
• Despite increasing farm stress due to drought,
the situation remains the same.
• In Maharashtra, the state govt. has spent
Rs.4500 crores on 70,000 minor irrigation
projects. However, the utilization rate of these
projects, is an a mere 12%!
• Therefore, govt. spending alone cannot make a
dent in the system. There is need for swift,
regular action on part of the concerned
authorities, so that the benefits of this
spending are passed on to the ground level.
2) IRRIGATION – A QUINTESSENTIAL FARM MECHANISM – ABSENT FROM
MAJORITY OF FARMS
FARM POWER
(KW/Ha)
KEY
0.5-1.0
1.0-2.0
>3
• Except for Punjab, no state
has farm power greater than 3
KW/Ha
• World average farm power is
near 4 KW/Ha.
• Majority of states are
between 0.5 – 1 KW /Ha
which is an extremely low
mechanization rate
• Other states like U.P., Haryana,
West Bengal, A.P. etc. are
marginally better than the
rest.
• The most ignored are the
northeastern states
44% 45% 45% 45% 45% 45%
47% 48%
31%
36%
41%
46%
51%
Agricultural irrigated land (% of total
agricultural land) in India

8. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
WHY THESE INITIATIVES ARE NOT ENOUGH
3) GROWING FARM DISTRESS & LOW CREDIT DISBURSEMENT LEVELS
• There is increasing rural distress in our country today .
• With consecutive droughts in the last two years, there never was a greater need for
having more farms covered under irrigation than now.
• The government’s efforts in providing credit to mechanize farms is disheartening.
• The below statistics indicate that rural distress could have been minimized had the
government acted swiftly & surely on upgrading agricultural farms with equipment:
0
2000
4000
6000
8000
10000
12000
14000
Rs.crores
Ground level credit disbursement for
Farm Mechanization
0
2,000
4,000
6,000
8,000
10,000
Rs.crores
Ground level credit disbursement for
Minor Irrigation
OBSERVATIONS
• Post 2010-11, credit disbursed for farm mechanization has dropped significantly.
• It is understood that government’s priorities have changed, where something as
fundamental as farm mechanization has been put on the back burner.
• In case of micro-irrigation we observe a poor non-positive trend in disbursement of
credit. Despite more than half the country not having access to irrigational facilities,
this never makes it to government’s priority agenda.
• From Rs 8000 crores disbursed in 2006-07, to a mere Rs 1,147 crores in 2014-15, the
budget for micro irrigation has been blatantly cut down without any progress to show.

9. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
SOLUTION: WHAT THE GOVT CAN DO FURTHER
1) ALLOCATE FUNDS AS PER LAND HOLDING SIZE OF FARMERS
 The average size of land holdings has reduced by half from 2.28 Ha in 1970-71 to 1.16
Ha in 2010-11.
 Consequently, the number of land holdings in the marginal and small categories have
swelled by 56 million and 11 million respectively. Naturally, this change in size of land
holdings has an implication on farm mechanization among other things.
 Most farm mechanization tools are expensive and unaffordable for majority of
farmers. Therefore, the government allocates funds for improving mechanizations
across farms in the country.
 However, these funds are allocated for everyone alike irrespective of the land size
holding. Therefore, a large farmer & a marginal farmer, both receive the same amount
of subsidy/ funds from the govt. While this makes things easier for the large farmer, it
may not be enough subsidy for the marginal farmer.
 Now, given the rise in fragmentation of land holdings in the last 30 years, as seen in the
graph above, we have more marginal farmers and lesser large farmers than ever
before. This therefore means that for most farmers (marginal) the aid received from
the govt.is not enough to mechanize his/her farm.
 Therefore, government's purpose of mechanization of every farm, stands defeated.
Majority of farms therefore remain under-mechanized.
 Instead, if the govt. allocated funds targeted on the basis of land holding size, the
outcome would be much different. We can have more farmers who are financially
better off and more farms that are mechanized.
36
45 50
56
62
71
75
84
92
0
20
40
60
80
100
Category-wise land holdings in India (In Mn
nos.)
Marginal Small Semi-Medium Medium + Large
2.28
2
1.84
1.69
1.55
1.41 1.33 1.23 1.16
0
0.5
1
1.5
2
2.5
Average size of operational holding (In
Ha)

10. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
3) AGRESSIVELY PROMOTE FARM MACHINERY BANKS
 In order to improve its reach and make farm mechanization more inclusive, the govt
introduced farm machinery banks in its 12th plan.
 Under this, the farmer can hire various agricultural implements from the government,
through these banks.
 This program seeks to provide affordable farm equipment to small & marginal farmers &
in areas where farm labour is scarce.
 State governments tie up with private sector companies for buying equipment which is
available for hiring to farmers.
 The most distressed farmers are the small & marginal ones. With no sources of income
except farming, they have to rely on credit for meeting significant amount of investment
required in farm equipment.
 As a result these farmers are burdened with debt if their farm output is lost for any
reason since they cannot truly own the equipment unless their crop output pays off.
 To tackle this issue farm machinery banks provide a good solution as opposed to
burdening the farmers with heavy loans.
SOLUTION: WHAT THE GOVT CAN DO FURTHER
5.33
1.43
0
2
4
6
(In Mn Ha)
Cumulative Achievement of Irrigation Potential
Created and Utilized under Minor Irrigation
Project XI Plan in India
Irrigation potential Created (XI plan)
Irrigation potential utilized (XI plan)
2) REVOLUTIONIZE THE MINOR IRRGATION
SYSTEM
 Two consecutive years of deficient rainfall
have left farmers in an appalling situation.
 India’s ultimate irrigation potential stands at
81.4 million hectares. However, only 26% of
the minor irrigation potential created in the
11th plan was utilized.
 While a plethora of irrigation projects have
already been established across states, they
are not being utilized.
 Hence modernization & rehabilitation of
these existing projects is of utmost
importance.
 Of equal importance is employing trained
personnel to operate the equipment.

11. SUSTAINABLE AGRICULTURE: THE STATUS OF FARM MECHANIZATION IN
INDIA
LIST OF SOURCES
1) Times of India article on minor irrigation
2) Farmer Suicide statistics as released by National Crime Bureau
3) Mechanization & Technology Division, Ministry of Agriculture, GO
4) Ministry of Water Resources, GOI
5) NABARD Annual reports 2013-14 & 2014-15
6) Economic times article on farm machinery banks
7) Press release on allocation of funds to farm mechanization
8) Farmech.gov.in – Guidelines of SMAM
9) Research paper by S.R. Verma on “Impact of Agricultural Mechanization on Production, Productivity, Cropping Intensity, Income
Generation & Employment of Labour”.
10) Indiaagristat.com
11) NABARD – Rural Pulse
12) Agriculture statistics at a Glance 2014
13) Presentation by Mechanization and Technology Division Dept. of Agriculture and Cooperation Ministry of Agriculture
14) IBEF presentation on Indian agriculture
15) Google images
Created & compiled by
Business Development & Strategy Team, Godrej Agrovet
For any further queries or comments, please feel free to contact at:
aparna.tiwari@godrejagrovet.com
Aparna Tiwari
Economist – Business development & strategy