Date: 30/03/2023

Relevance: GS-3: Transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers.

Key Phrases: Sub-Mission on Agricultural Mechanisation, NCAER, Farm Machinery Industry, Small Farmers, Entrepreneurs, All-India Debt and Investment Survey, Harmonised Commodity Description, Imports.

Context:

• Despite the fact that the government has been implementing a Sub-Mission on Agricultural Mechanisation since 2014, there is no comprehensive record of how much farm machinery is being used by farmers.

Key Highlights:

• The NCAER White Paper titled 'Making India a Global Power House in the Farm Machinery Industry' reveals that the ownership of power farm equipment in India is not high.
• The paper suggests that the farm machinery industry in India is facing challenges related to both demand and supply.
• However, the quality of data stands out as a key challenge. The lack of a comprehensive database of farmers' usage of farm machinery poses a significant hurdle to the development of the sector.

Demand-side Challenges:

• One key demand-side challenge faced in the farm machinery industry is the need for comprehensive data.
  • In order to carry out robust analyses, there must be a clear understanding of how many farmers are using machinery, the types of equipment used, the ownership status of the equipment, and the impact farm machinery has on agricultural productivity.
• Additionally, it is necessary to know if farmers have become entrepreneurs by leasing equipment, what kind of equipment they are leasing, and whether they are experiencing any profitability.
• The All-India Debt and Investment Survey (AIDIS) provides ownership data and reveals that the ownership of tractors among farmers is only 4.4%, as of June 2018.
  • On the other hand, only 5.3% of cultivator households own any one of the non-tractor farm equipment, which includes power tillers/power-driven ploughs, etc.
• Regarding rental data, the ‘Land and Livestock Holding of Households and Situation Assessment of Agricultural Households’ published by the MoSPI show that as of June 2018, 63.5% of agricultural households spent on hiring machinery and equipment for crop production.
• Despite the Sub-Mission on Agricultural Mechanisation (SMAM) launched by the government since 2014, a comprehensive database of farmers’ usage of farm machinery is still lacking.
  • Additionally, the surveys do not include the new crop-specific, operation-specific, and region-specific farm machinery that is now available.

Supply-side Challenges:

• The supply side of the farm machinery industry also faces several challenges, and the lack of a dedicated National Industrial Classification code for the industry is one of them.
  • The industry has been mapped using the 7-digit product classification codes from the Annual Survey of Industries. However, relevant codes were clubbed together to form the industry since there is no dedicated code.
• Estimating the size of the sector, considering both the organised and unorganised sector, requires approximations.
  • Data show that the farm machinery sector is 0.6% of the overall manufacturing sector, with tractors alone accounting for 70% of that share.
  • However, mapping the National Industrial Classification codes to Harmonised Commodity Description and Coding System codes is still a challenge, and sometimes the same HS code can be used for two products, which complicates the classification process.
• Estimating demand, domestic supply (from ASI product codes), and external supply (imports) is also problematic, since the codes used cannot be matched comprehensively. Therefore, matching the demand-supply remains an issue.

Consequences of Inadequate Data Quality:

• The lack of quality data hinders decision making and the implementation of appropriate policies in the farm machinery industry.
• Without a comprehensive understanding of the ownership of power farm equipment, it is challenging to plan for the sector's growth and development.
  • The inadequate data quality also makes it difficult to match demand-supply and estimate domestic supply and external supply correctly.
• Furthermore, the data limitations make it challenging to include the new types of farm equipment in the surveys, hindering the sector's development.
  • It is essential to capture crop-specific, operation-specific, and region-specific farm machinery data to meet the needs of farmers adequately.

Conclusion:

• The ownership of power farm equipment in India is still low, and the farm machinery industry faces significant demand and supply challenges.
• Improving the quality of data by expanding the scope of surveys and including new types of equipment is crucial to address these challenges effectively.
• The government must take further steps to encourage farmers to own or lease farm equipment to improve agricultural productivity and advance the development of the sector.

Source: The Hindu BL

Mains Question:

Q. Discuss the impact of the lack of a comprehensive database of farmers' usage of farm machinery on the development of the farm machinery industry in India. What measures can be taken to address this challenge? Discuss (250 words).