Food grain demand in India is expected to reach 355 million tonne (MT) in 2030 vis-a-vis 250 million tonnes in 2016 and the enhancement of farm mechanisation market will play a key role in meeting this demand. There were the findings of Grant Thornton India LLP and the Federation of Indian Chambers of Commerce and Industry’s (FICCI) knowledge paper, titled Mechanisation: Key to higher productivity to double farmers’ income.
Launched recently at EIMA Agrimach India 2017, it added that the farm equipment market in India was currently estimated at $8.8 billion in 2017 and was expected to reach $12.5 billion by 2022 with a compound annual growth rate (CAGR) of 7.5 per cent.
With growing employment opportunities in other sectors, labour is shifting from agriculture to the non-agricultural sector. This trend will reduce the supply of labour for agriculture, pushing the labour wages and overall cultivation cost of a farm product upwards. The report suggested that farm mechanisation would be seen as a key measure to improve productivity and improve profitability in the sector.
I strongly believe that mechanisation has a lot to contribute in the development and sustainability of the agriculture sector in India, said Rahul Kapur, partner, Grant Thornton India LLP.
In order to increase productivity with a balanced degree of mechanisation, the government needs to ensure that implementation of policies takes place in a transparent and methodical manner, especially to support small and marginal farmers, he added.
While approximately 86 per cent of all farm land holdings belong to small and marginal farmers, machine penetration seems to be limited, Kapur said.
Going forward, this must be an area of focus to promote overall growth within the industry at a time when agricultural labourers are moving to other sectors for better opportunities, he added.
While there are significant opportunities in farm mechanisation, it is currently fraught with several challenges. A large proportion of small and marginal farmers, declining land holding sizes, unaffordability, the lack of farmer awareness and complex legislation structure were some of the key challenges highlighted in the report.
The average farm size is expected to decrease, making individual ownership of agricultural machinery even more uneconomical.
The report recommended that the sector required closer attention to further enhance the growth and tap the immense potential it offers.
Initiatives like enabling easier access and greater adoption of custom hiring centres (CHCs), uniform implementation of Goods and Service Tax (GST) rates across agricultural products and the promotion of the use of technology in daily farming practices were some of the key recommendations of the report.
Farm mechanisation is essential for sustaining agricultural growth, especially in the context of diminishing agricultural labour, said Vinay Mathur, deputy secretary general, FICCI.
However, large communities of small and marginal farmers are still not in a position to take the full benefit of farm mechanisation because of adverse economies of scale, particularly in operations like land preparation and harvesting, he added.
The question that emerges is not only how to leverage farm mechanisation for enhancing agricultural productivity, but also how to bring the large community of small and marginal farmers into the fold of mechanised farming, Mathur said.
One viable option can be in form of greater degree of adoption of CHCs for farm machinery and other modern farming services, he added.
Source: FNB News