Tractor Economics

Context: India has become the world leader in tractors. The sector should now be facilitated to use digital tools to benefit small farmers.

Evolution of Tractor Industry in India (1914 to 2020):

Factors which contributed to the success of the Tractor Industry:

• De-licensing of the 1991.
• The availability of bank credit for buying tractors helped the market to grow.

Challenges due to rise of the Tractor Industry in agriculture

• Overcapitalisation of Farms: 

• Inefficient use: their use in most states hovers around 500-600 hours per year compared to a benchmark figure of 800-1,000 hours for efficient utilization.

• This problem is occurring primarily in Punjab and Haryana.

Way Forward:

• Uberisation of Tractor Service:

• Use of technology to cut costs, increase the profitability of cultivation, and thus not only expand the tractor market but also reduce drudgery in farm work.

• Could make tractor services perfectly divisible, accessible and affordable even by smallholders without owning the machine.

• For E.g. The government is incentivizing custom hiring centres through capital subsidies.

• Agri start-ups and innovators of the digital world need to enter this field and promote efficient utilization of farm machinery.

• Digitalization of Tractor Industry: Combining tractor services for ploughing and sowing seeds to using sensors, cloud computing and artificial intelligence for precision farming.

Conclusion: 

• Dovetailing the digital revolution with farm machinery has already started in the US and Europe, ushering in what Howarth Buffett (a farmer and brother of billionaire Warren Buffett) calls the “Brown Revolution”. 
• India can surely do it at a lower cost and serve the 550 million smallholders around the world.