Food grain demand is expected to reach 355 million tonnes in 2030 and farm mechanisation will be instrumental in meeting this demand, says Grant Thornton and FICCI report

Food grain demand in India is expected to reach 355 million tonnes in 2030 as compared to 250 million tonnes in 2016 and the enhancement of farm mechanisation market will play a key role in meeting this demand, says a Knowledge Paper by Grant Thornton and FICCI – “Mechanisation: Key to higher productivity to double farmers’ income” launched today at EIMA Agrimach India 2017. The knowledge paper further states that the farm equipment market in India is currently estimated at USD 8.8 billion in 2017 and it is expected to reach USD 12.5 billion by 2022 with a CAGR of 7.5 per cent.

With growing employment opportunities in other sectors, labour is shifting from agriculture to non-agriculture sector areas. 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 suggests that farm mechanisation will 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. In order to increase productivity with a balanced degree of mechanisation, government needs to ensure that implementation of policies takes place in a transparent and methodical manner, especially to support small and marginal farmers. While approximately 86 per cent of all farm land holdings belong to small and marginal farmers, machine penetration seems to be limited. 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,” said Rahul Kapur, Partner, Grant Thornton India LLP.

While there is significant opportunity in farm mechanisation, it is currently fraught with several challenges. Large proportion of small and marginal farmers, declining land holding sizes, unaffordability, lack of farmer awareness and complex legislation structure are some of the key challenges highlighted in the report. Average farm size is expected to decrease, making individual ownership of agricultural machinery even more uneconomical.

The report recommends that the sector requires 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 GST rates across agricultural products and promotion of use of technology in daily farming practices are some of the key recommendations of the report.

“Farm mechanisation is essential for sustaining agricultural growth, especially in the context of diminishing agricultural labour. However, large communities of small and marginal farmers are still not in a position to take full benefit of farm mechanisation because of adverse economies of scale, particularly in operations like land preparation and harvesting. 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. One viable option can be in form of greater degree of adoption of Custom Hiring Centres (CHC) for farm machineries and other modern farming services,” said Vinay Mathur, Deputy Secretary General, FICCI.