Mechanizing Small and Marginal Farmers

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1 Mechanizing Small and Marginal Farmers by Balamurugaraja Karuppiah, CLAAS India for Rice Market and Technology Convention 2016, Houston

2 Indian Agriculture Arable Land Source: Wikipedia, FAOSTAT, Mapsofworld 2

3 Indian Agriculture Net Sown Area Source: Indian Ministry for Agriculture 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% * * Forests Barren and unculturable land Land under miscellaneous tree, crops and groves Fallow land Non-agricultural uses Permanent pastures and other grazing land Culturable wasteland Net sown area 3

4 India Agriculture Major Crops Source: USDA, NOAA, FAO, Indian Ministry for Agriculture Winter Rice: Sept - Dec One of the largest agricultural areas in the world: 180 Mio. Ha. Rice, Wheat and Sugarcane are the main crops of India. Wheat: Total Area: 29.4 Mi. Ha Production: 82 Mi. tonnes Yield per Ha: 2.7 tonnes ( ) Rice: Total Area: 40 Mi. Ha Production: 94 Mi. tonnes Yield per Ha: 2.3 tonnes ( ) Sugarcane: Total Area: 5 Mi. Ha Production: 340 Mi. tonne Yield per Ha: 68 tonne ( ) Summer Wheat: Feb-May Summer Rice: Feb - May Crop Production Rank Productivity Rank Maize 6 35 Pulses 1 44 Soyabean 5 44 Groundnut 2 40 Potato 2 26 Sugarcane 2 9 4

5 India Agriculture Land Holdings Source: Indian Ministry for Agriculture Period Operated Area (in million hectares) No of operational holdings (in million) Avg size of land holding (in hectares) Category Size of Operated Area (in million hectares) Marginal Holdings Small Holdings Semi-Medium Holdings Medium Holdings Large Holdings % 5

6 India Agriculture Demand Projection Source: Agricultural Economics Research Review, Vol. 22 All figures in mill. tonnnes A growing population, with an increasing middle class, to ensure substantial demand for Foodgrains, Milk & Meat. 6

7 Indian Agriculture Mechanization Challenge Large bottom Market - HUGE market for Low value Low technology (affordable) products - Conversely, a smaller market for high technology / large capacity / premium positioned products - World s largest market for small low technology tractors - World s largest market for small backhoes (modest market for large machines) - World s largest market for small motor-cycles (very small for large bikes) - Huge market for low technology low capacity trucks (TATA beat worlds largest truck makers in LCV space) - Value, Performance, Running Cost, Reliability are priority over Comfort, Features or Frills Willingness to develop low technology is absolutely mandatory! Market potential will explode Huge market for Low technology (affordable) products. 7

8 Current Mechanization 31% of farmers are small or semi-medium (1 to 4 ha) Equal to app. 36.9Mn farmers Low cost! Low technology! But very high volume!! 6% of framers are medium or large (4 to 10 and more) Equal to app. 7.8 Mn farmers Mid technology Moderate cost More than 80% of the land holdings are smaller than 2 hectares High mechanization Moderate mechanization Low mechanization Level of mechanization constantly increasing Punjab, Haryana and Uttar Pradesh have achieved a faster growth in mechanization Reasons for slow mechanization in low mechanized states Hilly regions Politic/ economic conditions Lack of institutional financing High mechanization only in North and part of South Huge future potential central and eastern India 8

9 Regional Mechanization North/Rest of India Regional Overview Net sown Area Ave. farm size Crops 112 m ha 1.5 ha Yield, kg/ha Harvest period - Wheat - Rice harvest seasons (Rabi, Kharif) - Pulses Best Selling Models Mahindra 265 TAFE 1035 Farmtrac 60 Quality and performance High implement compatibility b CLAAS CT30W (TAF) 71% 71% PREET 987 (Straw Walker) Kartar 4000 (Straw Walker) Technology and Performance TOT (Straw Walker) 4 63% 44% 4 Mechanization in forage harvesters is almost negligible but demand is expected to grow in near future 9

10 Regional Mechanization South India Regional Overview Net sown Area Ave. farm size Crops 28 m ha 0.75 ha Yield, kg/ha Harvest period - Wheat - Rice harvest seasons (Rabi, Kharif) - Pulses 600 Best Selling Models Mahindra 575 TAFE 241 John Deere 5310 Quality and performance High implement compatibility bv CLAAS CTT (TAF) 71% 71% PREET 949 (Straw Walker) Kartar 3500 (Straw Walker) Technology and Performance Kubota 68 G (Axial Flow) 4 TOT (Straw Walker) 63% 44% Mechanization in forage harvesters is almost negligible but demand is expected to grow in near future 10

11 Mechanization Areas % Share of power sources High mechanization Moderate mechanization Low mechanization Usage of power for agriculture (kw/ha) Ag-equipment market in India (Bill. USD) Steady increase in mechanization. Tractor power replacing human & animal power 11

12 Harvesting Mechanization Harvesters Segmentation 90% contractors, 10% Institutions Rainfall 1 2 CRITICAL SUCCESS FACTORS (To Win CONTRACTORS) INITIAL INVESTMENT, & EASE OF FINANCE HIRING ATTRACTIVENESS Irrigation Projects Labour Shortage 3 PRICE Minimum Support Price Market Demand Drivers Labour Cost OPERATING COST DEALER BACKUP PERFORMANCE Govt. Subsidy Finance Availability 7 8 RESALE VALUE BRAND 12

13 Mechanization Future Now 10 years in Future Industry* : 6,000 Growth** : 10% Contractors still main segment & growth of corporates. 500,000 10% Some growth in contractor segment with hiring of higher hp tractors and more sophisticated implements. 15,00,000 10% Few hundred 15% Farmer Contractor Institution Some growth in contractor segment with hiring of more sophisticated implements. Growth seen in farmer & contractors due to local manufacturing and price reduction % * Estimated sales/year ** Average Growth for next 10 years. Local manufacturing & price reduction to see growth of farmer segment. 90% of Harvesters are bought by Contactors. Trend is likely to continue. Majority of tractors are bought by Farmers. Tractors & implements is a large market followed by Harvesters. 13

14 CLAAS India Story Initiated and commercialized paddy harvesting in South India since 1991 Key role in over 90% mechanization status in 4 South India states Well known for Tangential Axial Flow, harvest performance & quality, reliability & resale value Most preferred harvester brand in South and East India 25 years of leadership in Indian Combine harvester market, more than 70% market share in track machines since 1991 and fast growing market share in wheel machines 14

15 Other low cost mechanization products Land Preparation Sowing Crop Maintenance Harvesting Post Harvest Cultivator Seed Drill Sprayer Reaper Wheel combine Straw Harvester - Reaper Harrow Transplanter Walk Weeder Stationary Thresher Sugarcane Harvester Baler Laser Leveler TOT combine Transplanter Ride Tractor drawn forager Rotavator Track combine Wide spread of different low cost products, apart from combines and tractors 15

16 THANK YOU 16

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