Bringing Sharing Economy to Agriculture using Digitization
Indian agriculture is a confusing paradox in many ways.
With the largest contribution in terms of work force and employment, agriculture is not a sector to be ignored. And yet, when it comes to contribution to the GDP, it lags way behind its competition. With nearly 141 million hectares of land under crops, India competes with large agricultural economies such as China. And yet, with a languishing productivity rate, we are yet to come close to the production levels of even small countries such as Japan. The world’s largest tractor manufacturing company by volumes hails from India, and yet, our mechanization penetration alarmingly low.
Truth be told, mechanization alone has the potential to change all these paradoxes in favor of Indian agriculture. Higher mechanization leads to higher productivity and hence, higher economic contribution.
For the longest time, mechanization has been inaccessible to Indian farmers due to economic infeasibility. Owing to small land ownership and frequent land fragmentation, the small and marginal farmers, constituting a large majority of our farmer population, find it hard and almost impossible to own a tractor. Unfortunately, in India, tractor ownership is high amongst the larger farm owners. This means that nearly 85% of farmers, who are small farmers are dependent on the 15% of large farmers for mechanization needs. This automatically leads to a large rental market. Many small farmers are dependent on other tractor owners for their mechanization needs. A large informal hiring practice exists, but comes with its own set of problems. Lack of quality standards, no adherence to time, poor quality of implements, discrimination on the basis of caste and land size are just some of the problems plaguing this practice. All these, in turn, are pushing the 2nd generation farmers to move into cities for search of jobs leaving behind farming. Census 2011 data shows that land under cultivation has gone down 141 to 137 million hectares.
With the Government’s focus on doubling the farmer’s income, Farm mechanization is being seen as a key lever. . Focus on setting up of Custom hiring centers for farm equipment rental, along with incentives such as subsidies on capital investments has been a boon for the sector and with the increased participation of private players, this business is on the verge of witnessing a massive digital revolution. Several private entrepreneurs, larger farmers, as well as private companies are now eyeing farm equipment rental as a large business and an opportunity to change the lives of farmers.
Dedicated farm equipment rental centers, offering high end equipment on a per hour rental basis to farmer along with trained, professional drivers and mechanics is the panacea to the mechanization needs of India’s small farmers. Gone are the days of dependence on others. With such centers available at village levels, farmers can now just walk in and book their orders for high end equipment which were earlier out of reach for them. Not just the equipment, they can now take home a professional service, hence converting farm equipment from being just a product to a service. This has far reaching implications for India’s farmers. They are no longer dependent on someone for mechanization. They can ask for the best of services and pay for it. With a pay per use model, they can no longer be fleeced. And most importantly, they get access to the best of implements at the lowest of rates.
There is still a long way to go in terms of actual changes on the ground. While private enterprises are treading the ground carefully, the Government too is working on bringing a change in their approach towards mechanization, both at center as well as state level. A lot still needs to be done. For instance, discarding of archaic rules such as rate contracts which force custom hiring centers to stock only those equipment which have been approved by Government. This restricts service providers from making high end, high quality equipment available to farmers, and bringing about an actual increase in the level of mechanization
In fact, with the entry of private companies and startups in this space, the revolution has just begun. From offering rental of farm equipment through call centre and mobile apps, to using analytics for predictive demand generation, this sector is about to witness a digital spin that will change the mechanization scenario in Indian agriculture forever. And the Indian farmer will be at the centre of this digital spin.
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