HUL714 Final Report

8/11/2019 HUL714 Final Report

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Title of the Project: Product Service System based Custom Machine Hiring

Model for Small and Marginal Farmers

Team Members

S No Name Entry No email

1. Ankit Narayan 2011ME20766 [email protected]

2 Digvijay Singh

Bhadouria

2010CH10075 [email protected]

3. Kamal 2011ME20776 [email protected]

4. Ramdan Charan 2011TT10950 [email protected]

Faculty Mentor(s) if any:

S. K. Saha

Chairman RuTAG IITD Chapter

Mechanical Engineering Department

The Need Statement:

In India, small and marginal farmers face multiple difficulties in terms ofpoor productivity and lack of access to credit and market. One reason of

poor productivity is lack of mechanization. We plan to address this need

for pulse producing farmers of Madhya Pradesh and our focus is onharvesting and post-harvesting implements only.


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Content

1. Introduction

2. Need Addressed

3. Need Validation3.1. Field Survey

3.2. Stakeholders Contacted

3.3. Responses validating Need Statement

4. How the need is being addressed currently4.1. Subsistence farming

4.2. Employing Manual Labor

4.3. Unorganized Custom Hiring

5. Potential Solution Set5.1. Individual Ownership

5.2. Cooperative Ownership

5.3. Product Service System based Custom Hiring

5.4. Evaluation of potential solutions by weighted matrix delivery decision approach

5.5. Stakeholder Analysis

5.6. Technology Component of our solutionUse of ICT

6. Validation of Solution6.1. Economic Analysis of PSS based Custom Hiring

6.2. Haryana Custom Hiring Case Study

6.3. Weaknesses and Risks associated

6.4. Business Model

7. Conclusion

References

Appendix: Questionnaire for Farmers and Other Stakeholders


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1. INTRODUCTION

Agriculture in India accounts for around half of the employment of the country with 84 % of

the total famer with small farm size (


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pulses. There is also need of evolving varieties of major pulses having ever higher production

vigor and resistance to drought, frost, flood & weeds. Area specific refinement in package of

practices of major popular old varieties of cultivation of pulses are required, especially in

technologies like, seeding, IPM, INM, fertilizer and bio-fertilizer application including

insecticides and bio-pesticides and Irrigation technology to harvest the maximum yield in

present climatic and soil conditions. Currently, only 15 per cent of the total area under pulses

is irrigated as compared to an average of 46 per cent for all food grains.

Providing scheduled and controlled irrigation can lead to increase in yields. Also, irrigation

requirements for pulses are much lower than for other crops and could be provided through

sprinklers, etc.

There is a need for effective use of farm implements and machinery required for completing

primary and secondary tillage operations in recommended time for better productivity and

higher recovery and also for reduction in cost of cultivation including processing cost. For this

purpose, manufacturing of machines suitable for major pulse producing states at affordableprice for attending the operations like sowing, application of pesticides for management of

insect pests and diseases, INM for balanced use of fertilizers and Biofertilizers, Micro irrigation

devices, harvester, threshing and post-harvest etc. are required. Also there is no machine

available for harvesting of pulses for small scale farmers. Mechanization of crop production

practices, processing and value addition is very important. Development of post-harvest

machines and practices are required for increasing recovery of pulses & minimizing the losses

in processing. Training for refreshing knowledge of personnel on modern production,

protection and processing technologies is requirediii3.

Out of the many needs, we identified lack of post-cultivation mechanization issue which can

be addressed under our domain and has significant impact on the earnings of small and

marginal farmer based on a survey conducted by MART (a Noida based agro-consulting firm)

on black gram production in two districts of Maharashtra and Madhya Pradesh. The survey

revealed that out of the 485 Kg of standing crop of a farmer in Maharashtra, 85 Kg is lost and

wasted solely due to lack of mechanization while in M.P. out of 265 Kg of standing crop, the

amount is 75 Kg. Maximum losses were identified during harvest and drying. These relative

wastage is usually very less in case of farmer having larger land holdings (>4 hectare) because

of the presence of proper farm mechanization and adoption of advanced techniques. The

issues related to mechanization included monetary issues for buying equipment, issues

related to hiring and availability of thresher and issues related to agricultural extension.

Mechanization is the need of the hour due to increasing labor wage, because of scarcity of

labor as well as reducing human drudgery. The scale of impact of mechanization can be

assessed by the rise in productivity with increase in number of tractors among farmers as

illustrated in the table below.


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Figure 1: Imapct of Mechanization on crop productivity

Thus there is a technology gap which exists between farmers depending upon their size of

land and economic conditions. Also it has been observed that According to the 2003 survey

(NSSO 2005), access to information from any source increased with larger farm size. It is still

not understood in the literature why marginal and smallholder farmers do not access

information more frequently. Thus our focus is mainly on small farmers with land size holding

less than 2 hectares growing pulses (arhar, urad and chana) who do not have access to access

to mechanization and lack access to formal credit in the areas of Andhra Pradesh, Madhya

Pradesh, Maharashtra, Uttar Pradesh, Punjab, West Bengal, Orissa, Tamil Nadu, andKarnataka.

3. NEED VALIDATION

3.1 FIELD SURVEY

The status report on Black Gram (urad daal) published by MART (a Noida based agro-

consulting firm) conducted survey to understand causes of crop losses and map technologiescurrently available in India to prevent these losses done for 5 villages in Buldhana district in

Maharashtra. The report points out that maximum losses were identified during harvest,

drying and storage, costs of which are borne by the farmers themselves. It was found that for

an acre of Black Gram cultivated, 350 Kg of produce (485 Kg/acre) is sold and 25 Kg is

consumed by the household. Maximum losses were identified during harvest, drying and

storage. While transportation caused negligible loss, significant loss was reported during

grading and repacking in the mandis. The similar survey for 6 villages of Alirajpur district in

Madhya Pradesh was done and it was found that for an acre of Black Gram cultivated, 98 Kg

of produce (265 Kg) is sold and 100 Kg is consumed by household. Maximum losses were

identified during harvest and drying. Farmers reported negligible loss during transportation.


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Traders deduct 2 Kg per quintal of produce during sale to account for loss during grading and

repacking.

After studying the results from survey of MART, a field survey was done at Ratibad Village,

Bhopal (M.P.) to identify the reason for the losses at various stages in pulses production,

mainly at sowing, pesticides, fertilizer application, irrigation, harvesting, threshing, drying,

storage and transportation by conducting in-depth interview with farmers of Ratibad Village

near Bhopal, Madhya Pradesh.

The aim of the survey was to get data about the range of information as shown below:

Key Information Areas Purpose

Farmers Demography and details

of all crops

Profile the farmers involved in pulses

production

Profile the different varieties of pulses

grown in India

Assess the kind of social networks

available amongst these farmers for

support services

Crop management process gaps and

challenges

Understand the production system and

the supply chain of the product

Analyze the harvesting and post

harvesting processes of the product

Analyze the gaps and challenges faced

Technology traditional and modern Assessment the technologies applied

Comparative analysis of traditionaland modern technologies applied

Affordability and adoptability Understand and assess the

affordability and adaptability of

techniques used for enhancing

production of the crop

Gender, technology, dissemination Develop understanding about the

existing gender issues related to the

value chain of black gram

Existing division of labor in theproduction and harvesting of the crop

Role of stakeholders (farmer, Private, NGO,

Govt. etc.)

Map the roles and responsibilities of

various stakeholders in the value chain

Innovation opportunities Capture innovative practices adopted

in the value chain to generate learning

Figure 2: Table showing field survey aims

The identified problem were then discussed with:

Key Opinion Leaders Farmer network, lead farmers, Agriculture co-operatives Govt. PlayersAgriculture department (SMS, Extension workers), Agri. universities ,


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Agriculture Technology Management Agency (ATMA)

Private Players Traders, warehouses, transporters

The main aim was to look for possible and feasible solution to the problem which the farmers

are unaware. The survey also aimed to knowing barrier for the solutions suggested at

different levels.

Figure 3 : Field survey at Ratibad village, Bhopal (M.P.)

The sample set of initial field survey included:

Location Ratibad Village, Bhopal (M.P.)

Village Population Approx. 3000

Sample Set 2 farmers with land size < 0.5 acre (They are

also laborers)

4 farmer with land size is < 10; acre

3 farmers with land size approx.. 40 acre.

2 farmers with land size 120 acre.

No. of Small and marginal farmers Approx. 65 %

The survey sample questions asked to the farmers are attached in appendix and following

observation were made:

At sowing stage, seeds which are of smaller size for e.g. Moong Pulse were directly

sprinkled on the farm along with DAP fertilizer, while for other pulses like Urad and Chana,

seed drill machine are used by big farmers along with their tractors but not by small

farmers. Accordingly to farmers on average loss of 8-10 kg/acre is used extra in the latter

case. In some cases a tractor is hired by small farmers at Rs. 600/hr and tractor for rent

are easily available.


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break them by using chakki or stone mill. A significant price difference was seen

between the small and large farmers pulses being sold to factory varying between

Rs.3000-4000/quintal. This is mainly due to the quality of pulse seed sold to the factories.

The big farmers used the grading machine (which is costly i.e. 15k to 25k) to separate the

different sized pulses and sell the larger ones to factories keeping smaller and broken

pulses personal household consumption. The small farmer dont have this facility bear

approximately 25%-35% losses and hence sell the mixed pulses and paid less.

Figure 4 : Grading Machine for Pulses

One major reason because of which very poor or small farmers are unable to utilize

the high subsidy offered by government on various seeds, fertilizers-pesticides, agri.

machinery is because of lack of proofs required for getting subsidy. In local language

these requirements are Khasra, Khatoni, Naksha, Gram sewa praman patra, board card

proof and Rs.10 Stamp affidavit. A few farmers in the region who donot have any of

the requirement face a huge number of problems in getting subsidy. Lack of education,

awareness and corruption are the main reasons for the problems related to this

aspect.

3.2 STAKEHOLDERS CONTACTED

For need validation, we referred to numerous reports and research papers and also undertook

detailed discussion with different stakeholders including final users, i.e., farmers, NGOs,

Government Agencies and Scientist working in the area. Telephonic interviews of around a

dozen farmers hailing from Bihar, Rajasthan, Madhya Pradesh and Uttar Pradesh having farm

sizes from 6 acres to 20 acres (approx. as farmers responded in bigha, definition of which

varies in each state). We also contacted, ATICs (Agricultural Technology Information Center),

which act as information agency for farmers and researchers of Delhi (at Indian Agricultural

Research Institute, New Delhi), Rajasthan (Central Arid Zone Research


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Institute, Jodhpur) and Uttar Pradesh (Narendra Dev Institute of Agriculture and Technology,

Kumarganj, Kanpur). Among scholars of the area, we talked to Dr. Dharmedra Singh of IARI,

Pusa.

3.3 RESPONSES VALIDATING NEED STATEMENTResponses from farmers and other stakeholders converged at many points with what

researchers have pointed out. The status paper on Pulses published by Ministry of

Agriculture and Cooperation calls for a need to develop and disseminate harvesting

implements for small and marginal farmers. Harvesters are available for pulses, but are not

economically viable and currently only large farmers own these machines.

One of the recommendations is need to implement low cost harvesting solutions which not

only include the device, but increased farmer awareness, training and dissemination channels.

When we contacted RuTAG (Rural Technology Action Group), IITD chapter, they listed major

problems involved in crop cultivation, harvesting and post harvesting. Lack of access to credit

to purchase high quality seeds, power for irrigation pumps and lack of technology at

harvesting and post- harvesting stages was their major concerns. Irrigation in itself is not a

critical one, as pulses dont require intensive irrigation. They also gave example of how they

redesigned garlic grading machine and the accompanying system which suggests that many a

time farmers are not even aware that a solution exists for their problem and thus they keep

incurring productivity losses. The spokespersons at ATICs narrated region specific problems

but they too agreed that technology amenable to small and marginal farmers for harvesting

was unavailable and thus needed to be provided but they also stressed that a whole package

of services needed to be integrated which is also missing from current scenario. Dr. Mahendra

Singh, also pointed out that black gram in itself was a low priority crop for India as only 9 % of

total pulse production goes to it, but the issue of lack of technology was iterated in this

conversation as well. He also gave insight on rampant corruption that is prevalent in

government machinery which doesnt allow the benefits to reach to the farmers and

highlighted the decreasing planned expenditure in farm mechanization, a cause of worry.

The responses from farmers gave us further insights. Not all farmers grow black gram as the

main crop and many do it as mixed cropping with sugarcane and maize. Earning from this crop

act as additional income. Black gram is grown in Kharif as well as Rabi season but productivity

in Rabi is better than that in Kharif, as only those farmers farm in Rabi which have better

irrigation facilities compare to farmers which used to do farming in kharif as they relies onmonsoon. Some farmers also sow this crop in the summer as third crop. As pulses are water

sensitive, irrigation system like drip irrigation are highly recommendable for them Dhirendra

Prasad sows masoor, arhar and urad (black gram) in 2 acres each and irrigation is not an issue

for him as hes installed subsidized drip irrigation system but he moans lack of solutions for

harvesting like other farmers. Somdatt Singh does mixed cropping with paddy on his 16 bigha

land and uses irrigation pump. Apart from lack of implements he also cites lack of

maintenance services at local level. From these conversations we validated the need.

4. HOW THE NEED IS BEING ADDRESSED CURRENTLY


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4.1 SUBSISTENCE FARMING

The most prevalent method used by small scale farmers is manual, though big farmers have

special equipment which are not affordable for small farmers. So lot of efforts requirement

and its time consuming for small/ marginal land holder. In case of small land holder, all manual

processes are done by family member and in this way they gather grain/food for theirlivelihood. These family members have generally had no other source of employment. During

harvesting period all family members are busy in harvesting process, so it is very difficult for

family members to perform other daily household task.

4.2 PEOPLE EMPLOYING MANUAL LABOUR

Other people doing this type manual work are daily labors or casual labors. Their work is not

secure or we can say they have to find work every day. In some case there is shortage of

manual labors. As data of literature say that manual labors accounts 40% of non-variable cost.

The cost of these manual labors is not fixed in and this should be standardized.

4.3 UNORGANIZED CUSTOM HIRING

In some cases hiring of machine from a large farmer is also practiced among small/marginal

land holder but they face lot of problem due to unstructured market. These problems are

such as not getting machines on time, they have to pay high cost (no standard of cost are

available). In these condition farmer have to pay the money decided by machine owners

themselves. It is not economical for small land area or says for shorter time, threshing for 20

minute is less economical that threshing for 2 hour.

Large land holder have harvesting machines , the problem in case of small land holder is that

these machines required enough space to turn back/ rotate these machines, after it completeone row/ column. These machines are very useful for large land holder because manual

process required lot of time, manpower, efforts also. Harvesting machines are not beneficial

for machine owners for small land.

5. SOLUTIONS

5.1 INDIVIDUAL OWNERSHIP

Individual farmers owns the required large or small equipment by themselves for different

uses. Nowadays government is providing lot of subsidies to enhance mechanization and

therefore productivity. From good quality seeds to each and every machine subsides there

for marginal farmers. These machines are, Tractors, Power Tillers, manually operated tools,

Power thresher, and diesel electric pumps.

Small and marginal farmers is not a monolith group. As defined by government of India, a

farmer with land holding size


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As we know that this segmentation of target population has been in practice in the past as

well, one of them by SELCO, where they provide innovative financing model for BoP, by

segmentation of BoP and uses different method for revenue collection depending on cash

flows of the customer.iv

Government provides financial assistance to target groups for purchase of different kind of

farm equipment demonstration of new equipment among famers for spread of new

technology.

Government also provides maintenance/ repairs and management of agricultural machinery

and improvement in quality through testing and evaluation besides institutional credit & fiscal

measures.v

The benefits of agricultural mechanization should be extended to all category of farmer (basis

on income and land size), keep consideration to small and marginal ones and all regions of

the country. This may be achieved by proper distribution channel or accessibility of machine

in all part of country according to requirement. In some cases government have their ownretail outlet providing these service with subsidies.

Mechanization should contribute to conservation of land and water resources and to more

efficient use of inputs like seed, chemicals, fertilizer and energy.vi

In training what is primary need of farmers is that, demonstration of new equipment among

farmers for spread of new technology. In many cases there are service already exist in market

and not reached to small or marginal farmers so there is need of diffusion of service as well

as introduce them to new product and how to use them.

In our country there are many institutions which provide training details of which are included

in the stakeholder analysis, ATMAs, KVKs etc.

In case of individual ownership diffusion model is developed on the basis of machines and

their users. Diffusion require proper training and knowledge of machinery. There is need of

minimum infrastructure without which diffusion of innovation is difficult. vii

5.2EQUIPMENT COOPERATIVE AS A POSSIBLE SOLUTION

The term cooperative means in business solutions as, ventures to address common

challenge and provide mutual benefit, which is in our case is providing access of agricultural

equipment to small and marginalized farmer, who are otherwise not able to access thembecause of non-availability of small equipment and higher price of large equipment.viii

Benefit of cooperation: - a) economy of scale; cooperation allows little farms to do what big

farms can do, like lower the per-use cost of equipment b) access to a greater pool of

knowledge and resourcesthe pooling of machinery in an organized manner can also

facilitate the pooling of other resources, such as experience, and ideas

At present such a model is in practice on large scale in Canada & Israel.ix

Different aspects of equipment cooperative as a possible solution:-


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Membership - the cooperation is its member, now the first question that arise is who

are going to become the member of group; what's the criteria need to be; the size of

farm, geographical location etc.

Role & Responsibility of members- what are the role of each member; like giving the

initial capital by each member, than how is paying how much, and if people are

giving different capitals, do they get different treatment for that.

Management, governance and agreement - how the group is going to run, who will

form take the decisions, monitor logistics ,etc. how all the member are going to

provide say in decision making , what kind of agreement is there between each

member

Capital involved :- initial investment in buying the equipment, maintenance cost ,

insurance cost ; who will pay how much & on which basis, charge per uses

Important decisions: -

Machines to buy means what kind of technology, size, number etc.

How much each member has to pay initially and then for uses and maintenance

Scheduling use - time when each member needed the machine and when machine is

available

Note - In cooperative groups, or equipment pooling we need or ensure distributive justice,

procedural justice, transactional justice, so that all member feel equality in group as in Indian

case it might be possible that some people form group within group on basis of caste or

geography and take all the major decision for rest of the group

5.3 CUSTOM HIRING SERVICE/CENTERS

Custom Hiring of machines is an option through which the technology gap of agricultural farm

mechanization for pulses can be tackled in the specified location by making the machines

available for small farm holders. Custom hiring can be hiring of machine itself or hiring along

with service being provided depending on the level of complexity and type of usage of

machine. Custom hiring services, in a limited way was started in 1990s under National

Schemes spread over India, under NATP and NAIP in a limited way. Accordingly, it had limited

success because they were tried in limited spaces with extremely less number of staff i.e.

concentrated to small pockets of India

The Custom Hiring depends involves various dimensions like

Manufacture and distribution of agricultural machinery and implements as well as of theequipment pertaining to processing connected with pulses agriculture and this mainly

involves the farm machinery industries in India. The number of farm machinery

industries in India are shown in the table:


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Figure 5: source: Entrepreneurship Scope in Custom Hiring of Agricultural Implements & Machinery, State Agri dept. of Assam,

2011.)

Enabling persons engaged in agricultural and allied pursuits to own the means ofmodernizing their operations or make available the necessary custom service for this

purpose. This may involve local entrepreneur or the machine manufacturer or both in

partnership who will take care of the installation, operation, maintenance and

obsolescence of the custom hiring center. The its the Custom hiring center which will

take care to undertake and assist in efficient distribution of inputs for agriculture.

For providing technical guidance to farmers and persons concerned with agro-industries

with a view to enabling them to conduct their enterprise efficiently, the custom hiring

centers can play an important role along with the Krishi Vigyan Kendra (farm science

center), NGOs, farmer-based organization / self-help group, Agri-clinic etc. Available

extension network and technical expertise of KVKs are utilized, that act as a backstop.

Also by forming Farm machinery Service Centers/Farmers Committee, requirement of

individual village/agro-climatic zone is assessed and use of equipment is tailor made as

per requirement/demand.


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Figure 6: Information flow is the line between the boxes, though strength and feedback in each line are not described here.

ATMA = Agricultural Technology Management Agency, DoA = Department of Agriculture, ICAR = Indian Council for

Agricultural Research, FFS = farmer field school, FBO/SHG = farmer-based organization / self-help group, SAU = state

agricultural university, KVK = Krishi Vigyan Kendra (farm science center), NGO = nongovernmental organization.

Since the rate of hiring in the present system is mostly monopolized by owner himself

without consideration of any cost parameters, the present model of Custom Hiring Service

will have fixed hiring rate and the government should develop the Primary Agricultural

Cooperative Societies as Agro-Service Centers for such services and take steps like fixing

the custom hiring rates in collaboration with NGOS and farmer organizations, reducing

fuel costs and creating more awareness about custom hiring of farm machinery. Once the

hiring rates are fixed the payment can be made by the user depending on the hiring of

machine or for the service being provided by the hiring center.

5.4 EVALUATION OF SOLUTIONS USING WEIGHTED MATRIX DELIVERY

DECISION APPROACH

In order to compare the three solutions for addressing the need of lack of mechanizationamong small and marginal farmers, weve used Weighted Matrix Delivery Decision Approach.

This approach involves prioritizing project objectives and selecting the delivery method that

best aligns with these objectivesx. This approach has been made popular by academics and

professionals over the past 20 years.xi

This approach has following 5 steps:

1. Define Selection Factors/Evaluation Criteria

2. Weight Selection Factors

3. Score Project Delivery Methods/Potential Solutions

4. Choose Most Appropriate Project Delivery Method5. Document Results


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Evaluation criteria used were classified into three categories based on users perspective,

firms perspective and governments perspective. In all 10 criteria were selected. Weights

have been assigned based on a combination of Delhi method and Rank Order Centroid

Method. Then, the three solutions were ranked against each factor from 1 to 3 where 1

signifies the best option and 3 the worst. Finally, rank of the solutions were compared based

on lowest sum. Custom Hiring has the lowest sum and thus was chosen.

In Delphi method we have repeated solicitations of questions from a panel of experts who are

anonymous. The information and ideas of each panel member are distributed among all the

panel members in the next round. They can comment on others viewpoints and can even use

new information to modify their own opinions. Panel members can change their opinions

based on new information more easily than in regular group meetings and open discussion. A

consensus of opinions should be ultimately achieved in this way.

Rank Order Centroid method uses the formula

Where Wi is weight of ith factor and M is total no. of factors, here 10.

S.

No.

Factors weight Individual

Ownership

Equipment

Cooperating

Custom

Hiring

1 Farmer Initial investment 0.192 3 2 1

2 Total cost 0.292 3 1 2

3 Accessibility 0.109 1 2 2

4 Ease of maintenance

and service

0.064 3 2 1

5 Training 0.047 3 1 2

6 Manufacturer total cost to be borne

during product life

cycle

0.142 1 2 2

7 potential revenue

from sales

0.084 2 2 1

8 government total cost

burden(subsidy

extension)

0.016 3 2 1

9 scalability 0.021 3 2 1

10 potential positive

impact

0.033 3 2 1

final

rank

3 2 1

Figure 7: Decision matrix


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5.5 STAKEHOLDER ANALYSISStep 1- Identify your stakeholders

Small and Marginal Farmers Large Farmers Manufacturer

Banks Agricultural TechnologyManagement Agency

Krishi Vigyan Kendra

State Departments of

Agriculture

Private extension firms Local Entrepreneurs

State Departments of Agriculture - State Department of Agriculture (DoA) is the principal

organization responsible for majority of extension activities at state level. However,

organization of extension activities differs from state to state with wide diversity in personnel

numbers and program focus.

Agricultural Technology Management Agency (ATMA) Started in 2005, ATMA integratesresearch and extension activities at district level across line departments, such as animal

husbandry, fisheries, and forestry while inviting farmer participation in decision making

(Swanson 2008)

Krishi Vigyan Kendras(KVKs) - The Krishi Vigyan Kendra (KVK), or farm science center, is a

multidisciplinary educational institution situated at the district level, with funding and

technical supervision from ICAR. There are currently centers in 569 districts, almost one for

each district in India. Each center is under the administrative control of a state agricultural

university, NGO, or central research institute.

Private extension firms The different initiatives taken up by private entities has been

summarized here. The most notable is ITCs e-Choupal, a kiosk located in a village andequipped with computers with Internet access which provides farmers with an alternative

marketing channel, information on local district weather, agricultural best practices, feedback

on quality of crops, and input sales with accompanying field-specific testing such as soil tests.

Similarly, Tata Kisan Sansar, an initiative of Tata Chemicals, provides inputs and technical

information as well as finance and credit to farmers (Tata Chemicals 2010). There are 32 hubs,

which cater to 681 Tata Kisan Sansars covering around 22,000 villages in Uttar Pradesh,

Haryana, and Punjab. Other companies investing in rural business hubs include Rallis,

Mahindra and Mahindra, Godrej, and Reliance.

Step 2Prioritize your Stakeholders

Some of the stakeholders identified above have the power to advance the solution where as

some have the power to block it. Some may be interested in our proposal while others may

not. So depending on their power and level of interest, they have been classified into 4 groups

each requiring different actions as outlined below

High power, interested people: these are the people you must fully engage and

make the greatest efforts to satisfy.

High power, less interested people: put enough work in with these people to keep

them satisfied, but not so much that they become bored with your message.

Low power, interested people: keep these people adequately informed, and talk to

them to ensure that no major issues are arising. These people can often be veryhelpful with the detail of your project.


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Manufactures are the 2ndmost important stakeholders here, because they have to make

the highest investment. In the recent past, private firms have taken interest in this sector

but no firm has been involved in operation concerning custom hiring of machinery. A Win-

Win business model needs to be proposed, as is done in next section to lure them for

investment. Also, to secure return on investment, market monopoly and relaxation on

pricing needs to be given for a particular area for a specified period of time.

ATMAs and KVKs are clear advocates of PSS based custom hiring as has been pitched by

Ministry of Agriculture as well in their recent presentation before parliamentary committee.

Understaffed and lagging on funds, their efforts will be more streamlined if farmers are

organized in this form.

5.6 USE OF ICT (INFORMATION COMMUNICATION TECHNOLOGY) IN CUSTOM

HIRING:

To provide better and fast service to farmers ICT can play important role. As it is controlled by

government so installation of ICT is not big task. The requirement of sowing machine andthreshing machine on almost same time interval (within 5-10 days) so arrangement of these

machine by phone call is best way. During this crucial period if one of family member to

arrange machine can create problem, because lot of manual process are done by all family

members and absence of one member is not tolerable. The requirement of services are

instant and cannot preplanned in advance, so there must be a quick channel to provide

service. Our users (farmers) are small/marginal farmers live in remote areas, so to provide

this service instantly is big task and use of ICT can strengthen our service.

Now a day every household own a mobile phone or benefitted by it. So as we discussed

example of Medic Mobile Serve and how use of ICT can provide service to remote villagers.

So we have almost same type of scenario. So according to us ICT can transform our entire

channel to provide service. It is in betterment of government as well as farmers. It is in

betterment of both farmers and government because it save lot of money as well as time.

Initially in first year farmer may face problem that they may not get service on time because

unavailability of service but Once government have data of machines requirement at different

places in different season than afterwards it is easy to optimize and fulfill farmers

requirements.

Via phone call users can file complains, if they are not satisfied with service provided to them.

For complains and feedback government should provide a platform like customer care

services.

6. VALIDATION OF SOLUTION

6.1 ECONOMIC ANALYSIS OF CUSTOM HIRING


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The economic analysis of a straw combine is done in order to understand the economic

feasibility of using the machine in custom hiring and individual ownership for the chosen

region because of ease of availability of data collected.

A straw combine essentially consists of four main units viz., stubble cutting and collecting

unit, feeding unit, straw bruising unit and "BHUSA" blowing unit. Straw combine is pulled

by tractor (45hp) with an attached trolley. As soon as this trolley is completely filled with

straw, it is unloaded near the dumping site normally located centrally or in the corner

of the field.

The economic analysis from the data collected from various sources showed that the cost of

operation was Rs.800/ha. An entrepreneur can save on an average Rs.61600 on custom hiring

when area covered by one entrepreneur was 88 ha. The average rate of custom hiring was

Rs.1500/ha and there was net saving of Rs.700/ha. The payback period of machine is three

year. The cost of machine was Rs.1,70,000.

Cost of operation (Rs./ha) 800

Average grain recovery ( kg/ha) 80

Average Bhusa recovery (q/ha) 25

Average expenditure Rs. per trolley 300

Out put 10 trolleys per day (1000 kg / trolley

or 4 ha/day)

Average rate of custom hiring (Rs./ha) 1500 or Rs. 600 per trolley

Av. work done on hiring by one farmer (ha) 88

Saving in cost of operation, Rs/ha 700

Saving by Bhusa recovery, Rs/ha 5000Saving by Grain recovery, Rs/ha 800

Net saving ( Rs./year) 61600

Cost of machine (Rs.) 1,70,000

Pay-back period Three years

Benefit Cost ratio

Own use

Custom hiring

6.25

1.88Figure 8: Economic Analysis of Straw combine machine

A similar analysis can be done for thresher and grader used for pulses and a comparison

between the benefit cost ratio of for custom hiring and individual ownership can be made

6.2 HARYANA CUSTOM HIRING CASE STUDY

The dissemination of improved technology in Haryana through custom hiring was started

in the year 2002-04. Results revealed that there was encouraging adoption of improved

machinery which resulted in timely operation, increase in production and additional

source of income generated. This ultimately benefited to farmers of Haryana State. The

status, adoption, economics and benefits of farmers of Haryana state with the use of

improved machinery on custom hiring till 2010 is tabulated in Table belowxiii:


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of zero-till seed-cum-fertilizer drill and marketing in Haryana. There was saving of Rs.2500/ha

in lieu of not doing any tillage operation. Therefore, the Benefit Cost ratio of this machine

when used for his own farm was 3.33 whereas on custom hiring it was 1.33. The post usage

of custom hiring feedback from farmers obtained showed that:

Timeliness in sowing (7-8 days earlier than traditional)

Saves 60-75 liters of diesel per hectare which resulted in saving of natural

30-40% less infestation of weeds

Saves irrigation water up to 10-15% during first irrigation

Improvement in crop yield

Improvement in soil structure and fertility

Machine is simple and easy to operate

6.3 WEAKNESS AND RISKS INVOLVED

The weakness and risks involved with custom hiring services are tabulated as under:

S.No. WEAKNESS/ RISKS INVOLVED REMARKS

1 Dependence on the existing extension

network agencies and rural

entrepreneur

Target area of the hiring center will

depend on the availability of these

networks.

2 Lack of well-defined pricing models and

awareness program

The government should develop the

Primary Agricultural Cooperative

Societies as Agro-Service Centers for

such services and take steps like fixingthe custom hiring rates in collaboration

with NGOS and farmer organizations,

reducing fuel costs and creating more

awareness about custom hiring of farm

machinery

3 The solution was selected without

conducting a sophisticated quantitative

analysis.

Lack of well-defined cost factors for

individual ownership and cooperative

ownership

4 Lack of monitoring channels Customer feedback

5 A sudden change in cropping pattern inthe region may lead to failure of the

hiring center in terms of usability of

particular machines

High level of centralization of the hiringcenter can tackle this issue with

coordination among themselves.

6 Social acceptability of machines

available at the custom hiring center

Need to solved by awareness program

though agricultural extension agenciesFigure 10: Weakness and Risks

6.4 Business Model


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Business Model Canvas

Figure 11: Business Canvas Model

Channels-

1. A farm implement manufacturer will get contract for a particular region forparticular period of time

2. It will open local hiring centres addressing a couple of villages

3. Rural entrepreneurs will perform actual maintenance and service.

Value Proposition

1. Less investment by farmer during product life cycle as maintenance and service

will be taken care of by Custom Hiring Center

2. Information regarding better farming practices will be accessible

3. Higher service levels promised compared to existing solutions

Key Activities 1. Optimizing capacity of custom hiring centre based on market survey

2. Partnership with government extension agencies to leverage their network and good-

will.

Key Partners

1. Financing Organizations

2. Extension Organizations ATMA, KVK

3. Private extension organizations - e Chopal, TATA Krishi Sansar

4. Farmer Interest Groups

Cost Structure Fixed Cost


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1. Equipment

2. Housing

3. Taxes

4. Interest on Investment

5. Training of employees

6. Developing fee collection infrastructureVariable Cost

1. Repair and maintenance cost

2. Fuel cost

3. Lubrication cost

4. Labour cost

Revenue Stream

Revenue contract from farmers which will depend on following factors:

1. Crop

2. Land holding size

3. Stage of production

4. Amount of labour deployed


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7. CONCLUSION

Small and marginal farmers dont have the same set of problems and thus a universal

solution wont work. Solutions need to be context-specific and the end user, i.e., farmers

has to be involved in the problem solving approach. Also, solution to the need of lack ofmechanization is not developing another machine as the root of the cause lies in

implementation. Innovative financing and business model is proposed based on concept

of Product Service System to address the need of lack of mechanization for small and

marginal farmers. The survey and analysis was limited to pulses only but the approach can

be extended to other crops as well. Increasing farmers income is essential to sustain more

than half of our countrys population dependent on agriculture.


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REFERENCES

1. iTwelfth Five Year Plan (20122017) report, Planning Commission, Government of India.

2. iiR.P. Singh, Status paper on pulses 2013, Ministry of Agriculture, Government of India

3. iiiDr I. Satya Sundaram, IndIa needs a Pulses Revolution, December 2010

4. iv Access to sustainable energy via innovative financing.

5. vTNAU Agritec Portal.

6. vi Department of agriculture & cooperation: agricultural implements and machinery

division.

7. viiInfrastructure for Agriculture & Rural Development In India Need for a Comprehensive

Program & Adequate Investment by Dr Amrit Patel.

8. viiiCooperative farming by Faith Gilbert, 2012

9.ix

Farm machinery cooperative by Andrea Harris & Murray Fulton, 200110.x. (Transit Cooperative Research Program Report 131, 2009, edited by Ali Touran et al)

11.xi(Loulakis 2000, CII 2003, kitmore and Marsden 1988).

12.xii.(Anne Evison, Stakeholder Analysis, mindtools.com, taken on 10thMay, 2014)

13.xiiiimpact of custom hiring on farm mechanization in haryana, n. k. bansal, s. mukesh; all

india coordinated research project on farm implements and machinery department of

farm machinery and power engg. ccs hau, hisar, 2009.


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Appendix:Agriculture colleges:

1. INFORMATION:

Personal information (income), local information (land size, soil type, type of crops

grow, water resources):

2. METHODS AT DIFFERENT STAGES:

Methodsused during different processes/ stagesin agriculture:

Stages methods difficulty

Sowing

Pesticides & fertilizer

application

Irrigation

Harvesting

Threshing

Drying

Storing

transportation

1. Difficult (work) stage among above mention?

2 Costly Stage?

3. EQUIPMENT

Which equipment is used at different stages?

Stages Equipment used Owned/Hired or

rent/known but

rate problem

difficulty


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Sowing

Pesticides removal

Irrigation

HarvestingThreshing

Drying

Storing

transportation

4. RESOURCES CONSUMED

According to soil and climatic condition what & how much resources consumed:

Stages Resources

consumed

Amount cost Accessibility

Sowing


application

Irrigation

Harvesting

Threshing

Drying

Storing

transportation

5. AMOUNT OF LOSSES:

Stages Losses if any If yes, Why (Reason)

Sowing

Pesticides removal

Irrigation

Harvesting

Threshing

Drying

Storingtransportation


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6. YEILD & COMPARISON WITH LARGE FARM HOLDER:

Per hectare/acre or what measurement they have.

Reason?

7. OTHER PROBLEM FACED:

At any stages, equipment.

AGRICULTURE COLLEGES: SURVEY QUESTIONAIRE

1.

According to you which is best method available for product of pulses?

Stages method1 M2 M3 difficulty

Sowing


application

Irrigation

Harvesting

Threshing

DryingStoring

transportation

2. RESOURCES REQUIREMENT

According to soil and climatic condition what & how much resources

requirements:

Stages Resources

requirement

Amount cost Accessibility

Sowing


application

Irrigation

Harvesting

Threshing

Drying

Storing

transportation

3. REASON FOR LOW YEILD


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What are reason for Low yield?

Stages Yield Status(Low, Medium, High) if Low, Medium than

why?

How to increa

Sowing

Pesticides &

fertilizer

application

Irrigation

Harvesting

Threshing

Drying

Storing

transportation

If any other reason and how to increase that?

4. LOSSES AND HOW TO REDUCE THEM?

Stages Losses (amount) Method to reduce & why

farmer not using that

method?

Sowing


application

Irrigation

Harvesting

Threshing

Drying

Storing

transportation

Documents

HUL714 Final Report