HUL 714

Academic session 2
nd
semester 2013-2014






Inclusive Innovation















Indian Institute of Technology Delhi New
Delhi
Summary Sheet




Title of the Project: Product Service System based Custom Machine Hiring
Model for Small and Marginal Farmers



Team Members

S No Name Entry No email
1. Ankit Narayan 2011ME20766 narayan.ankit18@gmail.com
2 Digvijay Singh
Bhadouria
2010CH10075 digvijay200791@gmail.com
3. Kamal 2011ME20776 kamal.kashyap13@gmail.com
4. Ramdan Charan 2011TT10950 ramdaniitd@gmail.com

Faculty Mentor(s) if any:
S. K. Saha
Chairman RuTAG IITD Chapter
Mechanical Engineering Department



The Need Statement:

In India, small and marginal farmers face multiple difficulties in terms of
poor productivity and lack of access to credit and market. One reason of
poor productivity is lack of mechanization. We plan to address this need
for pulse producing farmers of Madhya Pradesh and our focus is on
harvesting and post-harvesting implements only.












Content
1. Introduction
2. Need Addressed
3. Need Validation
3.1. Field Survey
3.2. Stakeholders Contacted
3.3. Responses validating Need Statement
4. How the need is being addressed currently
4.1. Subsistence farming
4.2. Employing Manual Labor
4.3. Unorganized Custom Hiring
5. Potential Solution Set
5.1. Individual Ownership
5.2. Cooperative Ownership
5.3. Product Service System based Custom Hiring
5.4. Evaluation of potential solutions by weighted matrix delivery decision approach
5.5. Stakeholder Analysis
5.6. Technology Component of our solution Use of ICT
6. Validation of Solution
6.1. Economic Analysis of PSS based Custom Hiring
6.2. Haryana Custom Hiring Case Study
6.3. Weaknesses and Risks associated
6.4. Business Model
7. Conclusion
References
Appendix: Questionnaire for Farmers and Other Stakeholders












1. INTRODUCTION

Agriculture in India accounts for around half of the employment of the country with 84 % of
the total famer with small farm size (<1.5 hectare)
i1
. India is worlds largest producer of pulses
with its total pulse production contributing a quarter of worlds total production. . Pulses are
grown on 22-23 million hectares of area with an annual product ion of 13-15 million tonnes
(mt)
ii2
. India accounts for 33% of the world area and 22% of the world production of pulses.
The major pulse crops grown in India are chickpea, pigeonpea, lentil, moong bean, urd bean
and fieldpea. While one-third of worlds total acreage under pulses is in India, Indian
population consumes 30% of worlds total pulses. Indias population would reach a figure of
1350 million by 2020
3
. The country would then require a minimum of 30.3 million tonnes of
pulses but now the production is stagnant at around 13.6 million tonnes. The average
productivity of pulses is around 600 kg per hectare while the experimental station yields are
2 to 5 tonnes per hectare. India occupies first position in the world both in area and
production of pulses. But, in productivity, it ranks 118th in the world. France has the maximum
productivity of 4769 kg per hectare
3
.

Black gram (urad), one of the pulses, is mostly produced in Asian countries as their tropical
climate and soil type suits its cultivation. India is largest producer of this pulse followed by
Myanmar and Thailand. India produces 70% of worlds black gram production and Black gram
accounts for 10% of total pulse production in India. In absolute terms, 1.5 million tons of Black
Gram is produced from 2.5 million hectare area with an average productivity of about 600 kg
per hectare. Despite being largest producer of black gram, India is not in a comfortable
situation as it is also the largest consumer of black gram. Total Indian production is not
sufficient to fulfill its domestic demand. Because of this, India is also the largest importer of
this pulse. Andhra Pradesh, Madhya Pradesh, Maharashtra, Uttar Pradesh, Punjab, West
Bengal, Orissa, Tamil Nadu, and Karnataka are the major states producing black gram in India.
While Andhra Pradesh contributes 24% of total production, Maharashtra and Madhya
Pradesh contributes 20% and 13% respectively.

2. NEED ADDRESSED

One of the main reasons for the current pulses scenario in India is due to different problems
faced by farmers in the production of pulses which need to be addressed. A number of
varieties of pulses have been evolved and notified suitable to different agro climatic zones.
The breeding programmers are being carried out by research institutes for improvement in



pulses. There is also need of evolving varieties of major pulses having ever higher production
vigor and resistance to drought, frost, flood & weeds. Area specific refinement in package of
practices of major popular old varieties of cultivation of pulses are required, especially in
technologies like, seeding, IPM, INM, fertilizer and bio-fertilizer application including
insecticides and bio-pesticides and Irrigation technology to harvest the maximum yield in
present climatic and soil conditions. Currently, only 15 per cent of the total area under pulses
is irrigated as compared to an average of 46 per cent for all food grains.
Providing scheduled and controlled irrigation can lead to increase in yields. Also, irrigation
requirements for pulses are much lower than for other crops and could be provided through
sprinklers, etc.

There is a need for effective use of farm implements and machinery required for completing
primary and secondary tillage operations in recommended time for better productivity and
higher recovery and also for reduction in cost of cultivation including processing cost. For this
purpose, manufacturing of machines suitable for major pulse producing states at affordable
price for attending the operations like sowing, application of pesticides for management of
insect pests and diseases, INM for balanced use of fertilizers and Biofertilizers, Micro irrigation
devices, harvester, threshing and post-harvest etc. are required. Also there is no machine
available for harvesting of pulses for small scale farmers. Mechanization of crop production
practices, processing and value addition is very important. Development of post-harvest
machines and practices are required for increasing recovery of pulses & minimizing the losses
in processing. Training for refreshing knowledge of personnel on modern production,
protection and processing technologies is required
iii3
.

Out of the many needs, we identified lack of post-cultivation mechanization issue which can
be addressed under our domain and has significant impact on the earnings of small and
marginal farmer based on a survey conducted by MART (a Noida based agro-consulting firm)
on black gram production in two districts of Maharashtra and Madhya Pradesh. The survey
revealed that out of the 485 Kg of standing crop of a farmer in Maharashtra, 85 Kg is lost and
wasted solely due to lack of mechanization while in M.P. out of 265 Kg of standing crop, the
amount is 75 Kg. Maximum losses were identified during harvest and drying. These relative
wastage is usually very less in case of farmer having larger land holdings (>4 hectare) because
of the presence of proper farm mechanization and adoption of advanced techniques. The
issues related to mechanization included monetary issues for buying equipment, issues
related to hiring and availability of thresher and issues related to agricultural extension.

Mechanization is the need of the hour due to increasing labor wage, because of scarcity of
labor as well as reducing human drudgery. The scale of impact of mechanization can be
assessed by the rise in productivity with increase in number of tractors among farmers as
illustrated in the table below.




Figure 1: Imapct of Mechanization on crop productivity


Thus there is a technology gap which exists between farmers depending upon their size of
land and economic conditions. Also it has been observed that According to the 2003 survey
(NSSO 2005), access to information from any source increased with larger farm size. It is still
not understood in the literature why marginal and smallholder farmers do not access
information more frequently. Thus our focus is mainly on small farmers with land size holding
less than 2 hectares growing pulses (arhar, urad and chana) who do not have access to access
to mechanization and lack access to formal credit in the areas of Andhra Pradesh, Madhya
Pradesh, Maharashtra, Uttar Pradesh, Punjab, West Bengal, Orissa, Tamil Nadu, and
Karnataka.

3. NEED VALIDATION

3.1 FIELD SURVEY

The status report on Black Gram (urad daal) published by MART (a Noida based agro-
consulting firm) conducted survey to understand causes of crop losses and map technologies
currently available in India to prevent these losses done for 5 villages in Buldhana district in
Maharashtra. The report points out that maximum losses were identified during harvest,
drying and storage, costs of which are borne by the farmers themselves. It was found that for
an acre of Black Gram cultivated, 350 Kg of produce (485 Kg/acre) is sold and 25 Kg is
consumed by the household. Maximum losses were identified during harvest, drying and
storage. While transportation caused negligible loss, significant loss was reported during
grading and repacking in the mandis. The similar survey for 6 villages of Alirajpur district in
Madhya Pradesh was done and it was found that for an acre of Black Gram cultivated, 98 Kg
of produce (265 Kg) is sold and 100 Kg is consumed by household. Maximum losses were
identified during harvest and drying. Farmers reported negligible loss during transportation.
Traders deduct 2 Kg per quintal of produce during sale to account for loss during grading and
repacking.

After studying the results from survey of MART, a field survey was done at Ratibad Village,
Bhopal (M.P.) to identify the reason for the losses at various stages in pulses production,
mainly at sowing, pesticides, fertilizer application, irrigation, harvesting, threshing, drying,
storage and transportation by conducting in-depth interview with farmers of Ratibad Village
near Bhopal, Madhya Pradesh.
The aim of the survey was to get data about the range of information as shown below:
Key Information Areas Purpose
Farmers Demography and details
of all crops
Profile the farmers involved in pulses
production
Profile the different varieties of pulses
grown in India
Assess the kind of social networks
available amongst these farmers for
support services
Crop management process gaps and
challenges
Understand the production system and
the supply chain of the product
Analyze the harvesting and post
harvesting processes of the product
Analyze the gaps and challenges faced
Technology traditional and modern Assessment the technologies applied
Comparative analysis of traditional
and modern technologies applied
Affordability and adoptability Understand and assess the
affordability and adaptability of
techniques used for enhancing
production of the crop
Gender, technology, dissemination Develop understanding about the
existing gender issues related to the
value chain of black gram
Existing division of labor in the
production and harvesting of the crop
Role of stakeholders (farmer, Private, NGO,
Govt. etc.)
Map the roles and responsibilities of
various stakeholders in the value chain
Innovation opportunities Capture innovative practices adopted
in the value chain to generate learning
Figure 2: Table showing field survey aims

The identified problem were then discussed with:
Key Opinion Leaders Farmer network, lead farmers, Agriculture co-operatives
Govt. Players Agriculture department (SMS, Extension workers), Agri. universities ,
Agriculture Technology Management Agency (ATMA)
Private Players Traders, warehouses, transporters
The main aim was to look for possible and feasible solution to the problem which the farmers
are unaware. The survey also aimed to knowing barrier for the solutions suggested at
different levels.

Figure 3 : Field survey at Ratibad village, Bhopal (M.P.)
The sample set of initial field survey included:

Location Ratibad Village, Bhopal (M.P.)
Village Population Approx. 3000
Sample Set 2 farmers with land size < 0.5 acre (They are
also laborers)
4 farmer with land size is < 10; acre
3 farmers with land size approx.. 40 acre.
2 farmers with land size 120 acre.
No. of Small and marginal farmers Approx. 65 %


The survey sample questions asked to the farmers are attached in appendix and following
observation were made:
At sowing stage, seeds which are of smaller size for e.g. Moong Pulse were directly
sprinkled on the farm along with DAP fertilizer, while for other pulses like Urad and Chana,
seed drill machine are used by big farmers along with their tractors but not by small
farmers. Accordingly to farmers on average loss of 8-10 kg/acre is used extra in the latter
case. In some cases a tractor is hired by small farmers at Rs. 600/hr and tractor for rent
are easily available.

In most of the cases the fertilizer or related application was same in the whole region
where most of small farmers using pump spray and big farmer using tractor fertilizer
machine for the purpose. Fertilizers and pesticides and seeds of pulses are easily available
to farmers in the State Krishi Vibhag Kendra in the district (Bhopal) at highly subsidized
and subsidized rate to small & big farmers respectively. The fertilizer & pesticides are also
easily available in market with lost nearly equal to the subsidized rate of the fertilizer &
pesticides for large farmers. Environmental concern was an issue, because almost all the
farmers use pesticides without any knowledge of their side effect and usage quantity. For
e.g. monocrotophos was used by many farmers for controlling pesticides is being banned
in India since 2009 but easily available in market at a very low cost.

Irrigation was a major issue few years back but now with 75% - 100% by government on
drip irrigation system, the problem is solved for majority of farmers. Also in case of pulses,
water is not an issue as most of the pulses required very less water for e.g. Moong Daal
require water in 2 months. But still the production of other crops which require high
amount of is highly dependent on Monsoon rainfall.

For harvesting, there is no harvester, for pulses that exist in market. So harvesting usually
done by cutting by manual labor. An issue of labor unavailability is seen during a period of
2 months of year between October to December. Thus the price of labor increases from
200 to 300 rupees per day for male and 100-200 for female at the time of shortage. This
also tells us that there is a gender divide in manual labor at rural level. Most of the labors
either have very small land holding (less than 0.5 acre) or no land at all.

On the other hand harvester machine is easily available for harvesting of wheat by a
business people, they started by farmers of Punjab in villages near Bhopal. A number of
harvester are owned by group of farmers in Punjab are kept in Bhopal. At the time of
harvesting, the farmers came to central India (as harvesting of wheat in north India is done
before central India) and provide harvesting service with prior booking through phone or
in person at Rs 1000 1200/acre. This has increased the efficiency of wheat product in
the region and solved many problem like wheat wastage, time consume etc. The only issue
with this business is the gap between demand and supply of service.

Threshing machine for pulses is used by big farmers and a common machine is used for all
type of pulses. Belt breakage is a mechanical issue associated with the machine but it is
easily solved by the farmers themselves. On the other hand, threshing is done manually
by small farmers mainly by women. A threshing machine is available for rent Rs 600/hr by
big farmers to small farmer but a few pulses thresher is available in the whole region.

Since there is no machine available which can break the pulse seed at a large scale for the
farmers. So almost all the farmers sell the pulses in the form the seeds to vendors factories
or pulses mills where the seed breaking, polishing and packaging of pulses were done and
then finally sent to market. Farmers keep some amount of pulses for themselves and
break them by using chakki or stone mill. A significant price difference was seen
between the small and large farmers pulses being sold to factory varying between
Rs.3000-4000/quintal. This is mainly due to the quality of pulse seed sold to the factories.
The big farmers used the grading machine (which is costly i.e. 15k to 25k) to separate the
different sized pulses and sell the larger ones to factories keeping smaller and broken
pulses personal household consumption. The small farmer dont have this facility bear
approximately 25%-35% losses and hence sell the mixed pulses and paid less.

Figure 4 : Grading Machine for Pulses
One major reason because of which very poor or small farmers are unable to utilize
the high subsidy offered by government on various seeds, fertilizers-pesticides, agri.
machinery is because of lack of proofs required for getting subsidy. In local language
these requirements are Khasra, Khatoni, Naksha, Gram sewa praman patra, board card
proof and Rs.10 Stamp affidavit. A few farmers in the region who donot have any of
the requirement face a huge number of problems in getting subsidy. Lack of education,
awareness and corruption are the main reasons for the problems related to this
aspect.


3.2 STAKEHOLDERS CONTACTED
For need validation, we referred to numerous reports and research papers and also undertook
detailed discussion with different stakeholders including final users, i.e., farmers, NGOs,
Government Agencies and Scientist working in the area. Telephonic interviews of around a
dozen farmers hailing from Bihar, Rajasthan, Madhya Pradesh and Uttar Pradesh having farm
sizes from 6 acres to 20 acres (approx. as farmers responded in bigha, definition of which
varies in each state). We also contacted, ATICs (Agricultural Technology Information Center),
which act as information agency for farmers and researchers of Delhi (at Indian Agricultural
Research Institute, New Delhi), Rajasthan (Central Arid Zone Research
Institute, Jodhpur) and Uttar Pradesh (Narendra Dev Institute of Agriculture and Technology,
Kumarganj, Kanpur). Among scholars of the area, we talked to Dr. Dharmedra Singh of IARI,
Pusa.

3.3 RESPONSES VALIDATING NEED STATEMENT
Responses from farmers and other stakeholders converged at many points with what
researchers have pointed out. The status paper on Pulses published by Ministry of
Agriculture and Cooperation calls for a need to develop and disseminate harvesting
implements for small and marginal farmers. Harvesters are available for pulses, but are not
economically viable and currently only large farmers own these machines.
One of the recommendations is need to implement low cost harvesting solutions which not
only include the device, but increased farmer awareness, training and dissemination channels.
When we contacted RuTAG (Rural Technology Action Group), IITD chapter, they listed major
problems involved in crop cultivation, harvesting and post harvesting. Lack of access to credit
to purchase high quality seeds, power for irrigation pumps and lack of technology at
harvesting and post- harvesting stages was their major concerns. Irrigation in itself is not a
critical one, as pulses dont require intensive irrigation. They also gave example of how they
redesigned garlic grading machine and the accompanying system which suggests that many a
time farmers are not even aware that a solution exists for their problem and thus they keep
incurring productivity losses. The spokespersons at ATICs narrated region specific problems
but they too agreed that technology amenable to small and marginal farmers for harvesting
was unavailable and thus needed to be provided but they also stressed that a whole package
of services needed to be integrated which is also missing from current scenario. Dr. Mahendra
Singh, also pointed out that black gram in itself was a low priority crop for India as only 9 % of
total pulse production goes to it, but the issue of lack of technology was iterated in this
conversation as well. He also gave insight on rampant corruption that is prevalent in
government machinery which doesnt allow the benefits to reach to the farmers and
highlighted the decreasing planned expenditure in farm mechanization, a cause of worry.

The responses from farmers gave us further insights. Not all farmers grow black gram as the
main crop and many do it as mixed cropping with sugarcane and maize. Earning from this crop
act as additional income. Black gram is grown in Kharif as well as Rabi season but productivity
in Rabi is better than that in Kharif, as only those farmers farm in Rabi which have better
irrigation facilities compare to farmers which used to do farming in kharif as they relies on
monsoon. Some farmers also sow this crop in the summer as third crop. As pulses are water
sensitive, irrigation system like drip irrigation are highly recommendable for them Dhirendra
Prasad sows masoor, arhar and urad (black gram) in 2 acres each and irrigation is not an issue
for him as hes installed subsidized drip irrigation system but he moans lack of solutions for
harvesting like other farmers. Somdatt Singh does mixed cropping with paddy on his 16 bigha
land and uses irrigation pump. Apart from lack of implements he also cites lack of
maintenance services at local level. From these conversations we validated the need.

4. HOW THE NEED IS BEING ADDRESSED CURRENTLY

4.1 SUBSISTENCE FARMING
The most prevalent method used by small scale farmers is manual, though big farmers have
special equipment which are not affordable for small farmers. So lot of efforts requirement
and its time consuming for small/ marginal land holder. In case of small land holder, all manual
processes are done by family member and in this way they gather grain/food for their
livelihood. These family members have generally had no other source of employment. During
harvesting period all family members are busy in harvesting process, so it is very difficult for
family members to perform other daily household task.

4.2 PEOPLE EMPLOYING MANUAL LABOUR
Other people doing this type manual work are daily labors or casual labors. Their work is not
secure or we can say they have to find work every day. In some case there is shortage of
manual labors. As data of literature say that manual labors accounts 40% of non-variable cost.
The cost of these manual labors is not fixed in and this should be standardized.

4.3 UNORGANIZED CUSTOM HIRING
In some cases hiring of machine from a large farmer is also practiced among small/marginal
land holder but they face lot of problem due to unstructured market. These problems are
such as not getting machines on time, they have to pay high cost (no standard of cost are
available). In these condition farmer have to pay the money decided by machine owners
themselves. It is not economical for small land area or says for shorter time, threshing for 20
minute is less economical that threshing for 2 hour.
Large land holder have harvesting machines , the problem in case of small land holder is that
these machines required enough space to turn back/ rotate these machines, after it complete
one row/ column. These machines are very useful for large land holder because manual
process required lot of time, manpower, efforts also. Harvesting machines are not beneficial
for machine owners for small land.

5. SOLUTIONS

5.1 INDIVIDUAL OWNERSHIP
Individual farmers owns the required large or small equipment by themselves for different
uses. Nowadays government is providing lot of subsidies to enhance mechanization and
therefore productivity. From good quality seeds to each and every machine subsides there
for marginal farmers. These machines are, Tractors, Power Tillers, manually operated tools,
Power thresher, and diesel electric pumps.

Small and marginal farmers is not a monolith group. As defined by government of India, a
farmer with land holding size <2 hectare is small farmer but there exists huge variation in
income of small/ marginal farmers as well. Government is providing common subsidies, but
there is need to divide to make it more targeted. Land holding size and annual average income
can be two parameters to further distinguish this plank.

As we know that this segmentation of target population has been in practice in the past as
well, one of them by SELCO, where they provide innovative financing model for BoP, by
segmentation of BoP and uses different method for revenue collection depending on cash
flows of the customer.
iv


Government provides financial assistance to target groups for purchase of different kind of
farm equipment demonstration of new equipment among famers for spread of new
technology.
Government also provides maintenance/ repairs and management of agricultural machinery
and improvement in quality through testing and evaluation besides institutional credit & fiscal
measures.
v

The benefits of agricultural mechanization should be extended to all category of farmer (basis
on income and land size), keep consideration to small and marginal ones and all regions of
the country. This may be achieved by proper distribution channel or accessibility of machine
in all part of country according to requirement. In some cases government have their own
retail outlet providing these service with subsidies.
Mechanization should contribute to conservation of land and water resources and to more
efficient use of inputs like seed, chemicals, fertilizer and energy.
vi


In training what is primary need of farmers is that, demonstration of new equipment among
farmers for spread of new technology. In many cases there are service already exist in market
and not reached to small or marginal farmers so there is need of diffusion of service as well
as introduce them to new product and how to use them.
In our country there are many institutions which provide training details of which are included
in the stakeholder analysis, ATMAs, KVKs etc.

In case of individual ownership diffusion model is developed on the basis of machines and
their users. Diffusion require proper training and knowledge of machinery. There is need of
minimum infrastructure without which diffusion of innovation is difficult.
vii


5.2 EQUIPMENT COOPERATIVE AS A POSSIBLE SOLUTION

The term cooperative means in business solutions as, ventures to address common
challenge and provide mutual benefit, which is in our case is providing access of agricultural
equipment to small and marginalized farmer, who are otherwise not able to access them
because of non-availability of small equipment and higher price of large equipment.
viii

Benefit of cooperation: - a) economy of scale; cooperation allows little farms to do what big
farms can do, like lower the per-use cost of equipment b) access to a greater pool of
knowledge and resourcesthe pooling of machinery in an organized manner can also
facilitate the pooling of other resources, such as experience, and ideas
At present such a model is in practice on large scale in Canada & Israel.
ix

Different aspects of equipment cooperative as a possible solution:-
Membership - the cooperation is its member, now the first question that arise is who
are going to become the member of group; what's the criteria need to be; the size of
farm, geographical location etc.
Role & Responsibility of members- what are the role of each member; like giving the
initial capital by each member, than how is paying how much, and if people are
giving different capitals, do they get different treatment for that.
Management, governance and agreement - how the group is going to run, who will
form take the decisions, monitor logistics ,etc. how all the member are going to
provide say in decision making , what kind of agreement is there between each
member
Capital involved :- initial investment in buying the equipment, maintenance cost ,
insurance cost ; who will pay how much & on which basis, charge per uses

Important decisions: -
Machines to buy means what kind of technology, size, number etc.
How much each member has to pay initially and then for uses and maintenance
Scheduling use - time when each member needed the machine and when machine is
available

Note - In cooperative groups, or equipment pooling we need or ensure distributive justice,
procedural justice, transactional justice, so that all member feel equality in group as in Indian
case it might be possible that some people form group within group on basis of caste or
geography and take all the major decision for rest of the group

5.3 CUSTOM HIRING SERVICE/CENTERS
Custom Hiring of machines is an option through which the technology gap of agricultural farm
mechanization for pulses can be tackled in the specified location by making the machines
available for small farm holders. Custom hiring can be hiring of machine itself or hiring along
with service being provided depending on the level of complexity and type of usage of
machine. Custom hiring services, in a limited way was started in 1990s under National
Schemes spread over India, under NATP and NAIP in a limited way. Accordingly, it had limited
success because they were tried in limited spaces with extremely less number of staff i.e.
concentrated to small pockets of India
The Custom Hiring depends involves various dimensions like
Manufacture and distribution of agricultural machinery and implements as well as of the
equipment pertaining to processing connected with pulses agriculture and this mainly
involves the farm machinery industries in India. The number of farm machinery
industries in India are shown in the table:

Figure 5: source: Entrepreneurship Scope in Custom Hiring of Agricultural Implements & Machinery, State Agri dept. of Assam,
2011.)
Enabling persons engaged in agricultural and allied pursuits to own the means of
modernizing their operations or make available the necessary custom service for this
purpose. This may involve local entrepreneur or the machine manufacturer or both in
partnership who will take care of the installation, operation, maintenance and
obsolescence of the custom hiring center. The its the Custom hiring center which will
take care to undertake and assist in efficient distribution of inputs for agriculture.
For providing technical guidance to farmers and persons concerned with agro-industries
with a view to enabling them to conduct their enterprise efficiently, the custom hiring
centers can play an important role along with the Krishi Vigyan Kendra (farm science
center), NGOs, farmer-based organization / self-help group, Agri-clinic etc. Available
extension network and technical expertise of KVKs are utilized, that act as a backstop.
Also by forming Farm machinery Service Centers/Farmers Committee, requirement of
individual village/agro-climatic zone is assessed and use of equipment is tailor made as
per requirement/demand.


Figure 6: Information flow is the line between the boxes, though strength and feedback in each line are not described here.
ATMA = Agricultural Technology Management Agency, DoA = Department of Agriculture, ICAR = Indian Council for
Agricultural Research, FFS = farmer field school, FBO/SHG = farmer-based organization / self-help group, SAU = state
agricultural university, KVK = Krishi Vigyan Kendra (farm science center), NGO = nongovernmental organization.

Since the rate of hiring in the present system is mostly monopolized by owner himself
without consideration of any cost parameters, the present model of Custom Hiring Service
will have fixed hiring rate and the government should develop the Primary Agricultural
Cooperative Societies as Agro-Service Centers for such services and take steps like fixing
the custom hiring rates in collaboration with NGOS and farmer organizations, reducing
fuel costs and creating more awareness about custom hiring of farm machinery. Once the
hiring rates are fixed the payment can be made by the user depending on the hiring of
machine or for the service being provided by the hiring center.

5.4 EVALUATION OF SOLUTIONS USING WEIGHTED MATRIX DELIVERY
DECISION APPROACH
In order to compare the three solutions for addressing the need of lack of mechanization
among small and marginal farmers, weve used Weighted Matrix Delivery Decision Approach.
This approach involves prioritizing project objectives and selecting the delivery method that
best aligns with these objectives
x
. This approach has been made popular by academics and
professionals over the past 20 years.
xi


This approach has following 5 steps:
1. Define Selection Factors/Evaluation Criteria
2. Weight Selection Factors
3. Score Project Delivery Methods/Potential Solutions
4. Choose Most Appropriate Project Delivery Method
5. Document Results

Evaluation criteria used were classified into three categories based on users perspective,
firms perspective and governments perspective. In all 10 criteria were selected. Weights
have been assigned based on a combination of Delhi method and Rank Order Centroid
Method. Then, the three solutions were ranked against each factor from 1 to 3 where 1
signifies the best option and 3 the worst. Finally, rank of the solutions were compared based
on lowest sum. Custom Hiring has the lowest sum and thus was chosen.
In Delphi method we have repeated solicitations of questions from a panel of experts who are
anonymous. The information and ideas of each panel member are distributed among all the
panel members in the next round. They can comment on others viewpoints and can even use
new information to modify their own opinions. Panel members can change their opinions
based on new information more easily than in regular group meetings and open discussion. A
consensus of opinions should be ultimately achieved in this way.
Rank Order Centroid method uses the formula

Where Wi is weight of ith factor and M is total no. of factors, here 10.

S.
No.

Factors weight Individual
Ownership
Equipment
Cooperating
Custom
Hiring
1 Farmer Initial investment 0.192 3 2 1
2 Total cost 0.292 3 1 2
3 Accessibility 0.109 1 2 2
4 Ease of maintenance
and service
0.064 3 2 1
5 Training 0.047 3 1 2
6 Manufacturer total cost to be borne
during product life
cycle
0.142 1 2 2
7 potential revenue
from sales
0.084 2 2 1
8 government total cost
burden(subsidy
extension)
0.016 3 2 1
9 scalability 0.021 3 2 1
10 potential positive
impact
0.033 3 2 1


final
rank
3 2 1
Figure 7: Decision matrix



5.5 STAKEHOLDER ANALYSIS
Step 1- Identify your stakeholders
Small and Marginal Farmers Large Farmers Manufacturer
Banks Agricultural Technology
Management Agency
Krishi Vigyan Kendra
State Departments of
Agriculture
Private extension firms Local Entrepreneurs

State Departments of Agriculture - State Department of Agriculture (DoA) is the principal
organization responsible for majority of extension activities at state level. However,
organization of extension activities differs from state to state with wide diversity in personnel
numbers and program focus.
Agricultural Technology Management Agency (ATMA) Started in 2005, ATMA integrates
research and extension activities at district level across line departments, such as animal
husbandry, fisheries, and forestry while inviting farmer participation in decision making
(Swanson 2008)
Krishi Vigyan Kendras(KVKs) - The Krishi Vigyan Kendra (KVK), or farm science center, is a
multidisciplinary educational institution situated at the district level, with funding and
technical supervision from ICAR. There are currently centers in 569 districts, almost one for
each district in India. Each center is under the administrative control of a state agricultural
university, NGO, or central research institute.
Private extension firms The different initiatives taken up by private entities has been
summarized here. The most notable is ITCs e-Choupal, a kiosk located in a village and
equipped with computers with Internet access which provides farmers with an alternative
marketing channel, information on local district weather, agricultural best practices, feedback
on quality of crops, and input sales with accompanying field-specific testing such as soil tests.
Similarly, Tata Kisan Sansar, an initiative of Tata Chemicals, provides inputs and technical
information as well as finance and credit to farmers (Tata Chemicals 2010). There are 32 hubs,
which cater to 681 Tata Kisan Sansars covering around 22,000 villages in Uttar Pradesh,
Haryana, and Punjab. Other companies investing in rural business hubs include Rallis,
Mahindra and Mahindra, Godrej, and Reliance.
Step 2 Prioritize your Stakeholders
Some of the stakeholders identified above have the power to advance the solution where as
some have the power to block it. Some may be interested in our proposal while others may
not. So depending on their power and level of interest, they have been classified into 4 groups
each requiring different actions as outlined below
High power, interested people: these are the people you must fully engage and
make the greatest efforts to satisfy.
High power, less interested people: put enough work in with these people to keep
them satisfied, but not so much that they become bored with your message.
Low power, interested people: keep these people adequately informed, and talk to
them to ensure that no major issues are arising. These people can often be very
helpful with the detail of your project.
Low power, less interested people: again, monitor these people, but do not bore them
with excessive communication
xii
.

Step 3 Understand your key Stakeholders
In order to have a better chance of succeeding, we need to have a better idea about how
our stakeholders would react to our proposal and thus we need to know how well
communicate with them and engage with them to win them over.
The stakeholders in above shown diagram are represented in three different colors
green, orange and red. Green represents supporters and advocates, orange represents
neutral players and red as blockers or critics.
Small and Marginal Farmers are interested in custom hiring model because they cant
afford to buy expensive machinery at present and have to pay hefty amounts for poorer
service at present. However, they dont wield much power as individual customers. Proper
awareness about the specific custom hiring model we are proposing needs to be created
using existing communication channels.
Private Extension Firms in the recent past have shown interest in such activities as outlined
above but in order to leverage their existing networks, close communication with them is
necessary to convince them of the worthiness of the solution and incentives need to be
defined to attract them.
Local entrepreneurs have direct financial motives but they lack proper information about
our solution but they are quite essential for our success as the firms investment will
multiply if they have to field their employees in the rural areas. The local people can better
train and motivate farmers due to lesser heterophily.
Manufactures are the 2
nd
most important stakeholders here, because they have to make
the highest investment. In the recent past, private firms have taken interest in this sector
but no firm has been involved in operation concerning custom hiring of machinery. A Win-
Win business model needs to be proposed, as is done in next section to lure them for
investment. Also, to secure return on investment, market monopoly and relaxation on
pricing needs to be given for a particular area for a specified period of time.
ATMAs and KVKs are clear advocates of PSS based custom hiring as has been pitched by
Ministry of Agriculture as well in their recent presentation before parliamentary committee.
Understaffed and lagging on funds, their efforts will be more streamlined if farmers are
organized in this form.

5.6 USE OF ICT (INFORMATION COMMUNICATION TECHNOLOGY) IN CUSTOM
HIRING:
To provide better and fast service to farmers ICT can play important role. As it is controlled by
government so installation of ICT is not big task. The requirement of sowing machine and
threshing machine on almost same time interval (within 5-10 days) so arrangement of these
machine by phone call is best way. During this crucial period if one of family member to
arrange machine can create problem, because lot of manual process are done by all family
members and absence of one member is not tolerable. The requirement of services are
instant and cannot preplanned in advance, so there must be a quick channel to provide
service. Our users (farmers) are small/marginal farmers live in remote areas, so to provide
this service instantly is big task and use of ICT can strengthen our service.
Now a day every household own a mobile phone or benefitted by it. So as we discussed
example of Medic Mobile Serve and how use of ICT can provide service to remote villagers.
So we have almost same type of scenario. So according to us ICT can transform our entire
channel to provide service. It is in betterment of government as well as farmers. It is in
betterment of both farmers and government because it save lot of money as well as time.
Initially in first year farmer may face problem that they may not get service on time because
unavailability of service but Once government have data of machines requirement at different
places in different season than afterwards it is easy to optimize and fulfill farmers
requirements.
Via phone call users can file complains, if they are not satisfied with service provided to them.
For complains and feedback government should provide a platform like customer care
services.





6. VALIDATION OF SOLUTION

6.1 ECONOMIC ANALYSIS OF CUSTOM HIRING
The economic analysis of a straw combine is done in order to understand the economic
feasibility of using the machine in custom hiring and individual ownership for the chosen
region because of ease of availability of data collected.
A straw combine essentially consists of four main units viz., stubble cutting and collecting
unit, feeding unit, straw bruising unit and "BHUSA" blowing unit. Straw combine is pulled
by tractor (45hp) with an attached trolley. As soon as this trolley is completely filled with
straw, it is unloaded near the dumping site normally located centrally or in the corner
of the field.
The economic analysis from the data collected from various sources showed that the cost of
operation was Rs.800/ha. An entrepreneur can save on an average Rs.61600 on custom hiring
when area covered by one entrepreneur was 88 ha. The average rate of custom hiring was
Rs.1500/ha and there was net saving of Rs.700/ha. The payback period of machine is three
year. The cost of machine was Rs.1,70,000.
Cost of operation (Rs./ha) 800
Average grain recovery ( kg/ha) 80
Average Bhusa recovery (q/ha) 25
Average expenditure Rs. per trolley 300
Out put 10 trolleys per day (1000 kg / trolley
or 4 ha/day)
Average rate of custom hiring (Rs./ha) 1500 or Rs. 600 per trolley
Av. work done on hiring by one farmer (ha) 88
Saving in cost of operation, Rs/ha 700
Saving by Bhusa recovery, Rs/ha 5000
Saving by Grain recovery, Rs/ha 800
Net saving ( Rs./year) 61600
Cost of machine (Rs.) 1,70,000
Pay-back period Three years
Benefit Cost ratio
Own use
Custom hiring

6.25
1.88
Figure 8: Economic Analysis of Straw combine machine
A similar analysis can be done for thresher and grader used for pulses and a comparison
between the benefit cost ratio of for custom hiring and individual ownership can be made
6.2 HARYANA CUSTOM HIRING CASE STUDY
The dissemination of improved technology in Haryana through custom hiring was started
in the year 2002-04. Results revealed that there was encouraging adoption of improved
machinery which resulted in timely operation, increase in production and additional
source of income generated. This ultimately benefited to farmers of Haryana State. The
status, adoption, economics and benefits of farmers of Haryana state with the use of
improved machinery on custom hiring till 2010 is tabulated in Table below
xiii
:

Figure 9: Economic Analysis of custom hiring service in Haryana
The enterprising farmers and unemployed rural youth are engaged in custom hiring business
of rotavators i.e. incorporating Dhaincha (green manuring) and puddling simultaneously
and to prepare seed bed as reduced tillage technology after harvesting of paddy crop for
sowing. On an average, the custom hiring rate is Rs.2000 per ha for 2 m width rotavator for
puddling and Rs. 2500 per ha for field preparation after paddy harvest for sowing of wheat
crop.. The average area covered by one entrepreneur is about 100 hectares per year (50
hectares in puddling and 50 hectares for wheat sowing). The net profit by an individual is
about Rs. 1,12,500 per year. The payback period of rotavator is one year. The total estimated
area covered in Haryana with the use of rotavator for puddling is about 4,00,000 hectares.
The total estimated area covered to prepare field as reduced tillage technology after
harvesting of paddy for sowing of wheat is more than 4,00,000 hectares.
Similarly, CCS Haryana Agricultural University has undertook intensive research and large
scale demonstrations of zero-till seed-cum-fertilizer drill at farmers fields which can
accomplish sowing of wheat crop without any tillage operation. Thus, the machine, not only
saves tillage costs and energy but eliminates time on seed bed preparation. The crop
yields obtained are at par with farmers practice. Weed management of fields planted
by zero-till drill was much more effective especially that of phalaris minor weed. Zero-till
seed-cum-fertilizer drill was operated by 35 hp tractor and covered 4-5 ha/day. The
entrepreneurs/ farmers are charging on custom hiring an average Rs. 1000 per hectare. Total
Earning is estimated to be Rs. 12,500per year and the payback period of machine is three
years. There is about 70% -80% saving in fuel. The capacity of machine is 0.4ha/h. The price
of machine is Rs.32000/-. The average area covered by an entrepreneur is 50 hectares per
year. The total area covered by zero till drill in Haryana was about 1.0 lac hectares in each
year started from 2004. There are about 40 manufacturers who are engaged in the production
of zero-till seed-cum-fertilizer drill and marketing in Haryana. There was saving of Rs.2500/ha
in lieu of not doing any tillage operation. Therefore, the Benefit Cost ratio of this machine
when used for his own farm was 3.33 whereas on custom hiring it was 1.33. The post usage
of custom hiring feedback from farmers obtained showed that:
Timeliness in sowing (7-8 days earlier than traditional)
Saves 60-75 liters of diesel per hectare which resulted in saving of natural
30-40% less infestation of weeds
Saves irrigation water up to 10-15% during first irrigation
Improvement in crop yield
Improvement in soil structure and fertility
Machine is simple and easy to operate

6.3 WEAKNESS AND RISKS INVOLVED

The weakness and risks involved with custom hiring services are tabulated as under:

S.No. WEAKNESS/ RISKS INVOLVED REMARKS
1 Dependence on the existing extension
network agencies and rural
entrepreneur
Target area of the hiring center will
depend on the availability of these
networks.
2 Lack of well-defined pricing models and
awareness program
The government should develop the
Primary Agricultural Cooperative
Societies as Agro-Service Centers for
such services and take steps like fixing
the custom hiring rates in collaboration
with NGOS and farmer organizations,
reducing fuel costs and creating more
awareness about custom hiring of farm
machinery
3 The solution was selected without
conducting a sophisticated quantitative
analysis.
Lack of well-defined cost factors for
individual ownership and cooperative
ownership
4 Lack of monitoring channels Customer feedback
5 A sudden change in cropping pattern in
the region may lead to failure of the
hiring center in terms of usability of
particular machines
High level of centralization of the hiring
center can tackle this issue with
coordination among themselves.
6 Social acceptability of machines
available at the custom hiring center
Need to solved by awareness program
though agricultural extension agencies
Figure 10: Weakness and Risks


6.4 Business Model

Business Model Canvas

Figure 11: Business Canvas Model

Channels-
1. A farm implement manufacturer will get contract for a particular region for
particular period of time
2. It will open local hiring centres addressing a couple of villages
3. Rural entrepreneurs will perform actual maintenance and service.
Value Proposition
1. Less investment by farmer during product life cycle as maintenance and service
will be taken care of by Custom Hiring Center
2. Information regarding better farming practices will be accessible
3. Higher service levels promised compared to existing solutions

Key Activities
1. Optimizing capacity of custom hiring centre based on market survey
2. Partnership with government extension agencies to leverage their network and good-
will.

Key Partners
1. Financing Organizations
2. Extension Organizations ATMA, KVK
3. Private extension organizations - e Chopal, TATA Krishi Sansar
4. Farmer Interest Groups
Cost Structure
Fixed Cost
1. Equipment
2. Housing
3. Taxes
4. Interest on Investment
5. Training of employees
6. Developing fee collection infrastructure
Variable Cost
1. Repair and maintenance cost
2. Fuel cost
3. Lubrication cost
4. Labour cost

Revenue Stream
Revenue contract from farmers which will depend on following factors:
1. Crop
2. Land holding size
3. Stage of production
4. Amount of labour deployed




7. CONCLUSION

Small and marginal farmers dont have the same set of problems and thus a universal
solution wont work. Solutions need to be context-specific and the end user, i.e., farmers
has to be involved in the problem solving approach. Also, solution to the need of lack of
mechanization is not developing another machine as the root of the cause lies in
implementation. Innovative financing and business model is proposed based on concept
of Product Service System to address the need of lack of mechanization for small and
marginal farmers. The survey and analysis was limited to pulses only but the approach can
be extended to other crops as well. Increasing farmers income is essential to sustain more
than half of our countrys population dependent on agriculture.


































REFERENCES
1.
i
Twelfth Five Year Plan (20122017) report, Planning Commission, Government of India.

2.
ii
R.P. Singh, Status paper on pulses 2013, Ministry of Agriculture, Government of India
3.
iii
Dr I. Satya Sundaram, IndIa needs a Pulses Revolution, December 2010
4.
iv
Access to sustainable energy via innovative financing.

5.
v
TNAU Agritec Portal.

6.
vi
Department of agriculture & cooperation: agricultural implements and machinery
division.
7.
vii
Infrastructure for Agriculture & Rural Development In India Need for a Comprehensive
Program & Adequate Investment by Dr Amrit Patel.

8.
viii
Cooperative farming by Faith Gilbert, 2012
9.
ix
Farm machinery cooperative by Andrea Harris & Murray Fulton, 2001
10.
x
. (Transit Cooperative Research Program Report 131, 2009, edited by Ali Touran et al)
11.
xi
(Loulakis 2000, CII 2003, kitmore and Marsden 1988).

12.
xii
.(Anne Evison, Stakeholder Analysis, mindtools.com, taken on 10
th
May, 2014)

13.
xiii
impact of custom hiring on farm mechanization in haryana, n. k. bansal, s. mukesh; all
india coordinated research project on farm implements and machinery department of
farm machinery and power engg. ccs hau, hisar, 2009.

















Appendix:
Agriculture colleges:
1. INFORMATION:
Personal information (income), local information (land size, soil type, type of crops
grow, water resources):

2. METHODS AT DIFFERENT STAGES:

Methods used during different processes/ stages in agriculture:
Stages methods difficulty
Sowing
Pesticides & fertilizer
application

Irrigation
Harvesting
Threshing
Drying
Storing
transportation

1. Difficult (work) stage among above mention?
2 Costly Stage?

3. EQUIPMENT
Which equipment is used at different stages?
Stages Equipment used Owned/Hired or
rent/known but
rate problem
difficulty

Sowing
Pesticides removal
Irrigation
Harvesting
Threshing
Drying
Storing
transportation

4. RESOURCES CONSUMED
According to soil and climatic condition what & how much resources consumed:




Stages Resources
consumed
Amount cost Accessibility
Sowing
Pesticides & fertilizer
application

Irrigation
Harvesting
Threshing
Drying
Storing
transportation





5. AMOUNT OF LOSSES:
Stages Losses if any If yes, Why (Reason)
Sowing
Pesticides removal
Irrigation
Harvesting
Threshing
Drying
Storing
transportation

6. YEILD & COMPARISON WITH LARGE FARM HOLDER:

Per hectare/acre or what measurement they have.
Reason?



7. OTHER PROBLEM FACED:
At any stages, equipment.



AGRICULTURE COLLEGES: SURVEY QUESTIONAIRE
1. According to you which is best method available for product of pulses?

Stages method1 M2 M3 difficulty
Sowing
Pesticides & fertilizer
application

Irrigation
Harvesting
Threshing
Drying
Storing
transportation

2. RESOURCES REQUIREMENT
According to soil and climatic condition what & how much resources
requirements:
Stages Resources
requirement
Amount cost Accessibility
Sowing
Pesticides & fertilizer
application

Irrigation
Harvesting
Threshing
Drying
Storing
transportation


3. REASON FOR LOW YEILD


What are reason for Low yield?


Stages Yield Status(Low, Medium, High) if Low, Medium than
why?
How to increase?
Sowing
Pesticides &
fertilizer
application

Irrigation
Harvesting
Threshing
Drying
Storing
transportation

If any other reason and how to increase that?

4. LOSSES AND HOW TO REDUCE THEM?
Stages Losses (amount) Method to reduce & why
farmer not using that
method?
Sowing
Pesticides & fertilizer
application

Irrigation
Harvesting
Threshing
Drying
Storing
transportation