Published as ZEF Discussion Paper 297.
Read the full report here.
Indian agriculture is dominated by smallholders. With an average holding size of just 1.08 hectares (ha) (in 2015-16), and 86 percent of holdings being of less than 2 ha in size, Indian agriculture transformed the country from functioning ‘ship-to-mouth’ during the mid-1960s to being a net exporter of agri-produce today. This would not have been possible without the onset of the Green Revolution post-1965, which resulted in increased food grain production and productivity. Among various inputs such as seeds, irrigation and fertilizers, the productivity of farms also depends greatly on the availability and judicious use of farm power by the farmers. Between the mid-20th century and 2013-14, India witnessed a tremendous shift away from traditional agriculture processes to mechanized processes. Today, 88 percent of the total farm power comes from tractors, diesel engine pump-sets, electric pump-sets and power tillers (2013-14). Additionally, Indiahas emerged as the largest manufacturer of tractors in the world, followed by the USA and China. But how has farm mechanization, especially the use of tractors, evolved in India over time? What were the key drivers of the demand for tractors? And how efficiently are the tractors being used in terms of usage by number of hours/year? Given the high cost of tractors, it is also interesting to see how far they have penetrated the small and marginal holdings, i.e., the issues of inclusiveness, financial viability, and sustainability. These are some of the key questions that are addressed in this study.
Our analysis shows that farm mechanization in India, especially the use of tractors, has made commendable progress. With major policy changes, entry of private farm machinery manufacturing companies and foreign collaborations, farm power availability increased from 0.25 kilowatt per hectare (kW/ha) in 1951 to 2.02 kW/ha in 2017. Furthermore, the contribution of mechanized sources to farm power increased from about 3 percent in 1951 to 88 percent in 2013-14, replacing human and draught power. In addition, the production of tractors increased significantly from a meagre 880 units in 1951 to about 900,000 units in 2019. This has transformed India from being a net importer of tractors through the 1960s and 1970s to being an exporter of tractors, exporting some 92,000 units in 2019. In terms of inclusiveness, although larger farms are more mechanized, the Input Census data (2011-12) reveals that even in the category of small and marginal holdings (less than 2 ha), an average of roughly 44 percent of farmers use farm machinery (e.g., tractors, diesel engine pump sets, electric pump sets and power tillers). This is a good achievement, but further improvements are always possible and major attempts in this direction are already underway with heavy policy support through Custom Hiring Centres (CHCs). However, the fact that farm machinery is expensive also raises concerns over whether it is financially viable and sustainable to own and use on smallholder farms. It is therefore important to look at unfolding innovations providing farm machinery services through ‘CHCs’ and ‘Uberization’ models. These innovations make farm machinery and equipment perfectly divisible as a service to all classes of farmers at the doorstep at affordable cost on a ‘pay per use’ basis. This seems to be the future of farm machinery usage in India if it is developed as a sustainable business model with due support of policy and finance.