Dialogue: Constraints to Mechanization for Small Holders in Bihar
Source: Jaspreet Aulakh, IFPRI

Bihar is India’s third most populous state, and its high population density, compounded with inequality in land distribution and differential access to resources such as credit and information, has provided challenges for several agricultural and development programs. Fostering large-scale agricultural mechanization requires not only the research commitment but also significant political will power.

A recent dialogue, organized by the International Food Policy Research Institute (IFPRI) and Rajendara Agricultural University (RAU) on May 12, aimed to understand and clarify the complexity of these challenges in Bihar. The workshop was conducted as part of the Indian FSP and was well-attended by 15 FPO representatives, as well as farmers from different parts of Bihar. State officials from the Agricultural Office and the National Bank for Agriculture and Rural Development (NABARD) also presented at the event.

Avinash Kishore, IFPRI Research Fellow, pointed out that more than 30 percent of Bihar’s land holdings are around 0.16 ha; making mechanization challenging. Bihar also has the highest labor availability and one of the lowest wage rates in the country. The presentation suggested that rather than try to purchase big machines, which can be prohibitively expensive, small farmers should rather focus on rental markets. The benefits of farm equipment rentals range from lower input costs, options in the variety of equipment available, increased access to technology, access to eco-friendly technology, regular updating of technology and equipment and minimizing losses. 

The challenge here, however, is that current prevailing rental markets show an oligopolistic kind of behavior which allows larger farmers to dominate. Bihar could learn from the experience of Bangladesh, which has similar agricultural conditions and has managed to establish viable machine rental markets with more variety, affordability, and feasibility for small farmers. 

The discussion of rental markets also raised the issue of Custom Hiring Centers, which can enable farmers to more easily and affordably rent farm equipment. These new Custom Hiring Centers are emerging in Bihar, but their structures and function vary across the regions. Farmers and FPOs at the workshop showed willingness to open Custom Hiring Centers, agreeing that this is a straightforward way to make technology more accessible and bring down input costs. Queries from farmers focused largely on financing, irrigation, type of machines and variants available, repair and back-up support services, and the non-availability of ready cash for most farmers.

Representatives of the Indian Council on Agricultural Research (ICAR) pointed out that the government recognizes the benefits of mechanization (including reduced input consumption, increased cropping intensity, increased production, and reduced operating time and labor costs), and that several government policies exist to promote mechanization efforts. The Government of India (GOI)’s Sub-Mission on Agricultural Mechanization (SMAM) for the 12th Plan focuses on skill development, custom hiring centers, and a credit guarantee scheme, along with testing and demonstrating of agricultural machinery and subsidies for machinery purchase. According to Sanjay Kumar Singh, Deputy Director with government of Bihar, under Bihar’s current government programs, most machinery is subsidized at 50 percent, except for tractors. According to Singh, the SMAM still needs to address the lack of gender-appropriate equipment and the need for increased subsidies for solar pumps, combine harvesters, and pump sets. In addition, the government needs to focus on providing electricity to rural areas, increasing the number and quality of testing centers at State Agricultural Universities (SAUs), creating online applications for subsidies, and ensuring that subsidy claims are easily understandable and transparent. 

Bihar still struggles for agricultural self-sufficiency despite having a favorable climate for agriculture, very good rainfall, fertile soil, strong agriculture research, and an ample labor force. The reasons for this can be broadly grouped into social and economic conditions, issues with land tenancy (90 percent of land holdings are less than 1 ha (Joshi et al, 2012), lack of precision farm machinery, lack of awareness, low productivity, no production surplus to balance risk, and droughts and flood risk (70 percent of the state is prone to flooding).

An additional problem stems from water management. The state has poor on-farm and off-farm irrigation and rainwater harvesting infrastructure, and poor farmers are often not able to bore wells or buy pumps due to a lack of credit. As a result of this inadequate infrastructure and financial access, only 44 percent of the state’s groundwater resources are utilized. Moreover, only 52 percent of villages in the state had electricity as of 2008 (Joshi et al, 2012); this further constrains the use of modern technologies for water management and irrigation.

There exist a variety of recommendations for improved water management that are not currently used in Bihar, including use surface drainage in flood-prone areas, promotion of solar power for efficient use of irrigation, land levelling for undulating regions, use of drip/sprinkler systems, better government support for credit, more direct interaction between researchers and farmers to find practical solutions, and a separation of domestic and irrigation power supplies.

Finally, the presentation from NABARD stated that the organization is not ready to provide extension services and financial services to small farmers until those farmers form FPOs, as the risk involved in lending to smallholders are high. Low agricultural output in Bihar means low savings, and high tenancy rates and other issues related to land ownership causes additional concerns for banks to dispense loans. This presentation highlighted the difficulties that many small farmers face in accessing financial services to enable the purchase or rental of farm machinery.

Overall, the workshop produced several key recommendations and plans moving forward:

  1. Subsidies should be directly deposited to farmers’ bank accounts to ensure fair and transparent transfers.
  2. Small-scale machine use demonstrations should be promoted via agricultural universities.
  3. Custom Hiring Centers should be promoted in a well-planned manner and should include roles for individuals, self-help groups (SHGs), and the corporate sector.
  4. Joint efforts from research and development (R&D) institutions, manufacturers, corporate sector and farmer group are required to achieve success in agriculture. 
  5. Innovations in the other parts of India should be explored for possible use in Bihar.  
  6. The Vice Chancellor of RAU, RAU’s Director of Extension, and IFPRI jointly agreed to train local service providers in Bihar on how to manage rental farms, in a similar fashion to Zamindara Farm Solutions. Vikram Ahuja, Director of Zamindara Farm Solutions, will begin training 10-15 youths from farming households in Bihar, while IFPRI-RAU will support the training of farmers to use Ahuja’s custom hiring model.
  7. A group of smallholder farmers (10-15) showed willingness to go to Bangladesh to observe and learn from Bangladeshi management of tube wells for irrigation and small-scale mechanized operations.
  8. IFPRI and RAU will jointly promote an “ideation jam” on the impact of Bihar’s lack of mechanization.


By: Jaspreet Aulakh, IFPRI 

Photo credit:Jaspreet Aulakh, IFPRI