Karnataka government will soon offer tractor and other farm equipment on rental basis to farmers across the state through a collaboration with automobile makers including VST Tillers, John Deere, and Mahindra, reports Business Standard. Under the “Uber for agricultural services” scheme, the state is planning to invest around Rs 175 crore as subsidy for renting out farming equipments, bringing down the cost of use of these equipment to farmers by nearly a third, added the report.
According to the government, a majority of farmers own very small patches of land that are too small to justify the investment on mechanized equipment. Therefore, under the new model, the state would pay 75% of capital costs, while equipment makers earn money by renting it to farmers over a three-year period. Farmers will be able to procure tractors, tillers, harvesters, etc. on hourly and daily basis, once the scheme is launched.
Custom Hire Centres: The Karnataka state also claims to have tied up with two non-profit entities by investing Rs 87.5 crore to set up about 175 Custom Hire Service Centres (CHSCs). It plans to setup a total of 350 centres in total once the scheme is rolled out fully. The manufacturers will also stock farming equipment from other manufacturers, apart from its own equipment.
Mahindra Trringo: Earlier this month, automobile manufacturer Mahindra & Mahindra introduced a tractor rental service named Trringo, which will be available as a mobile app. The company plans to run the business through a franchise as well an aggregator based business model.
Under the franchise model, Mahindra claims to provide new tractors and relevant equipment to customers, which would be rented out by their franchising partners. Under the aggregator model, large farmers who own high-end equipment will be able to rent out their assets to other farmers using Trringo.
MediaNama’s Take: The Karnataka government’s plan to rent out tractors through a subsidy is a welcome initiative and will mostly benefit smaller farmers. However, other marginal farmers could reap an additional benefit from the initiative if they are allowed to rent out their tractors under the initiative–something similar to Mahindra Trringo’s aggregator model.
The Power Asia Pacific 2015 India Tractor Product Performance Index notes that more than one-third of the farmers surveyed rent out their tractors. A considerable 45% of small and marginal farmers are renting out their tractors to generate alternative income, compared with farmers of large land holdings (29%). Across the fourteen states covered in the study, the highest incidence of tractor rental is seen in some of the poorest states of India like Bihar (81%), West Bengal (71%) and Chattisgarh (58%).