58th Annual Conference of the Australian Agricultural & Resource Economics Society, Port Macquarie, New South Wales, 4-7 February 2014

Rural Transformation through Farm Mechanization: Custom Hiring of Combined Harvesters in Madhya Pradesh State of IndiaMadhusudan Bhattarai1, B L Varalakshmi2 and Cynthia Bantilan3 1Principal Scientist, 2Scientific Officer, and 3Program Director, Research Program - Markets, Institutions and Policies International Crops Research Institute for the Semi-Arid Tropics, Patancheru, Andhra Pradesh – 502 324, India

AbstractThe practice of custom hiring of farm machinery has led to the widespread use of equipment such as combined harvesters by smallholder farmers in India, paving the way for increased farm intensification, profitability, and efficiency.

IntroductionFarm mechanization is a very crucial factor for crop intensification and development of agriculture, and is one of the major thrust areas of the Government of India. Since the year 2000, the practice of custom hiring of expensive farm machinery in India has led to the quick adoption of combined harvesters and other farm equipment, thereby facilitating agricultural intensification. Small- holding farmers are no longer impeded by the huge investment costs of buying machinery.

Table 1. A partial budget analysis of the use of combined harvesters for wheat in Papda village, Raisen district, Madhya Pradesh, India, 2013. BENEFITS US$/ha COSTS US$/ha

ADDED RETURNS ADDED COSTS

Rental charge of combined harvesters

41

REDUCED COSTS REDUCED RETURNS

Reduced cost of labor for harvesting, threshing, etc.

140 Loss of straw using harvester (opportunity cost)

62

Grain losses (5%) 23

TOTAL ADDED BENEFIT 140 TOTAL ADDED COST 126

Net benefits per ha = US$ 140 – US$ 126 = US$ 14.

Objectives• To analyze the extent of use of combined harvesters in Papda

and Rampura Kalan villages of Madhya Pradesh (MP) state in India.

• To estimate costs and benefits of using combined harvesters and farmers’ perceptions.

• To recommend options for their use among smallholder farmers.

MethodologyData on the use of combined havesters was collected from secondary sources, farmers using these machines, entrepreneurs renting them out and other key stakeholders in selected villages of Madhya Pradesh, as a part of the Village Dynamics Studies in South Asia (VDSA). The results were derived by integrating quantitative and qualitative survey data.

The study site in India. The sale of combined harvesters in India (source: India Market Research Bureau, 2013).

Results and Discussions• Expansion in monocrop area: The use of combined harvesters has led to the

expansion of profitable monocrops. Soybean is now grown on 75% of the crop area in the rainy season. Wheat occupies 80% of the crop area in winter. Farmers were unable to attain this level of expansion earlier due to the shortage of labor during the peak season.

• Time and labor saving: Farmers who used the combined harvester took 45 minutes to harvest, thresh and pack wheat in an acre, which otherwise takes a week and 15 labor days (Table 1).

• Changes in labor market: The shift of rural labor from farm to non-farm activities, their migration to cities and rising rural wages have served as incentives to increased adoption of combined harvesters in India. Custom hiring and government subsidy have also supported its dissemination, allowing smallholder farmers to adopt and benefit from the combined harvesters (Singh 2010).

• Better adaptation to climate vagaries: The use of the harvester has helped farmers cope better with and adapt to climate vagaries during the crop cultivation period.

Conclusions• Custom hiring has helped smallholder farmers to use costly machinery and led to

the intensification of their farm practices.• The technical efficiency of the combined harvester needs to be increased to

minimize straw and grain losses.• The extent of adoption and dissemination of improved technologies such as the

combined harvester are determined by a combination of factors such as the rural labor market, agrarian structure, farm intensification, and rural transformation.

India

China

This work is undertaken

as part of

Reference: Singh S. 2010. Agricultural Machinery Industry in India. Allied Publisher Pvt. Ltd. IndiaFor details, contact b.madhu@cgiar.org