Thanks to schemes like Mahatma Gandhi National Rural Employment Guarantee Act, farm labour is not only costly, but also scarce.
Compared to a few years earlier, Jarnail Singh, 47, from Sangrur district in southern Punjab, uses more equipment to farm his 10-acre land. He says he is left with no choice but to mechanise operations, as labour wages have more than doubled in two years.
He isn’t alone. Farmers across the country are increasingly calling in machines to replace labourers. Says Ashok Gulati, chairman of the Commission for Agricultural Costs and Prices: “Thanks to schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), farm labour is not only costly, but their availability is also scarce, compelling growers to look for mechanisation.”(Click here for table & graph)
This trend is not just driven by tractors, but encompasses a growing use of supplementary farm equipment such as combine harvesters, small tillers, de-weeders and small power-driven sprayers. A surge in sales of these equipment in the past 50-odd months underlines the preference for machines over men among farmers.
Heavy tractor sales, the most common indicator of farm mechanisation, grew 57 per cent to 545,128 units in 2010-11, from 346,501 units in 2007-08. Small tractors (12-25 Hp), combine harvesters, power sprayers and brush cutters logged sales growth of 157, 60, 300 and 800 per cent, respectively, over the period (see chart).
According to Gagan Pal, head of domestic sales and marketing, Honda Siel Power Products, sales of small tractors are surging because of rising farm wages. “Not only in grain: the use of machines has also grown exponentially in orchards, as manual labour has become scarce and costly,” he says. A senior official from Hind Agro says combine harvester sales have almost doubled since 2007, as availability of labour in Punjab has become scarce and unaffordable.
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“Not only are farmers opting for more machines to do farm operations, but the utilisation has also improved,” says Ramesh Chand, director, National Centre for Agricultural Economics and Policy Research. Earlier, farm equipment like combine harvesters remained idle after some use. Now, these are used through the crop cycle, he says. The daily rentals for these have also improved.
Wage push
Experts say an almost 70 per cent rise in farm labour cost in three-four years, a direct fallout of successful welfare schemes such as the MNREGA, which assures a minimum wage of Rs 100 per day, is the prime driver of this trend.
Data with the Labour Bureau shows the average daily wage of agricultural labour in Punjab, one of India’s biggest producers of wheat and rice, jumped 78 per cent in four years, from Rs 95.75 in January 2007 to Rs 170.24 in April 2011. In Haryana, it was a 102 per cent rise, from Rs 100.18 to Rs 203.06 (see chart). Launched in 2005, MNREGA has been in operation in all districts since 2007.
Such high wages not only squeeze farmers’ margins, but also crimp availability of labour. “Factors like MNREGA and the prevalent socio-economic conditions lead to a 30-40 per cent shortage in manpower, which, in turn, leads to escalating costs year after year,” says Ravindra Singhvi, managing director of EID Parry, a group company of the Chennai-headquartered Murugappa Group. The Rs 17,000-crore business conglomerate is a leader in farm products and solutions.
He says the overall harvesting cost of sugarcane in Tamil Nadu has risen from Rs 300 a tonne to Rs 500-600 over recent years. And, that it touches Rs 700 a tonne during peak harvest.
Costs & benefits
Leading tractor maker Sonalika Group’s chairman, L D Mittal, adds another dimension. He says farmers are not only worried about wages, but also want to reap more benefit from the same piece of land, as returns have improved over the years.
“The earlier a farmer clears his field of the previous crop, the more possibility he will have to plant an extra one, and this can happen only if manual labour is minimum,” says Mittal.
Ravindra Kumar, managing director of SAS Motors, one of the pioneers of small and affordable farm equipment, says a pair of bullocks cost Rs 50,000 and feeding these requires another Rs 5,000 per month. Though used only for a month, they need to be fed for the entire year. “So, bullocks are a hugely expensive proposition in Indian farming.”
“You need to give fishnets to villagers and not just fish,” Kumar says, underlying the need for mechanisation and not just subsidies. Mechanisation not only reduces the per-unit cost by improving productivity, but also eases the volatility in input supply. Companies are noting this rise in preference for machines. The Murugappa Group recently inked an agreement with CNH Global’s New Holland Fiat (India) to make available mechanised harvesters and other equipment to sugarcane growers.
“EID Parry and its associates will arrange the necessary farm equipment and then hire those out to farmers. Through this, the actual usage costs by farmers will be much less,” Singhvi says. The initiative, started with an investment of Rs 100 crore, will target 15,000 farmers in the initial phase. The group plans to scale it up to bring almost half of all the cane harvested area in Tamil Nadu under mechanisation.