India's Economy: On the Cusp of Big Change
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May 4, 2012

As a shiny red harvester bounces across the black earth into the first row of sugar cane, excited schoolchildren run after it and several dozen men stand gaping in the wake of its swift progress. It's the first time that Perle, a village on the banks of the Krishna river in Maharashtra state, has seen a machine used for cutting the tough cane. "This machine will harvest my entire field today," says Prashant Kadam, the young owner of the compact two-acre plot. "Had it been harvested by laborers, they would have taken at least a week."

A short drive away in a field where the sun is just getting hot enough to halt work, a team of 12 couples cut cane the way it's been done for centuries, with machetes. They load the cane into carts each pulled by two white bullocks with gaily painted horns and head for the local mill which dominates this sugar-growing valley some 300 kilometers south of Mumbai.

It is a way of life that is fast disappearing in the world's second-biggest producer of rice, wheat and sugar. India is finally embracing mechanization after centuries of farming with methods the United States threw out with the British. Interviews with farmers, tractor salesmen, economists and agricultural officials show a country on the cusp of deep change. Indian food consumption is rising and farmers are under pressure to produce more, faster and cheaper.

Yet Indian farms traditionally use far fewer farm machines than their peer nations, partly because their acreage is so small. Lately, however, farmers have been buying new tools and machines to cope with a labor shortage triggered by government policies aimed at promoting non-agricultural work. Tractor sales have increased 42 percent in India over the last five years to an estimated 552,434 in 2011/12, according to industry figures. The consequent boost to their productivity is helping them sustain more expensive lifestyles and that could spur India's cantering growth, averaging 7-8 percent a year.

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The sweeping changes are crucial as India adds the equivalent of an Australia to its 1.2 billion people every year. Many of them are too poor to feed themselves and rely on government subsidized grains. At the same time, the swelling middle class of Asia's third-largest economy is demanding more and better quality food. By 2020-21, Indians will consume 280 million metric tonnes of food grains a year, compared with a record output of 241.6 million metric tonnes in 2010/11, said V. Venkatachalam, special secretary at the Farm Ministry. At the moment, India still uses under half the amount of power on farms that rival Asian giant China does and a tenth that of Japan.

It was Sangramsingh Jayanvantrao Jadhav's father who bought the harvester that caused such a sensation in Perle, where cane has grabbed more than 80 percent of cultivatable land. Jadhav takes the harvester around to neighboring farmers, such as Kadam, who can work late into the night and through the noon-time heat in its air-conditioned cab.

"The harvester is new for the farmers. So we are convincing them about its benefits," says Jadhav. "From next year, we will be working in full swing."
Renting out equipment makes sense for many farmers in India, whose plots and income are too small to justify outright purchases of expensive vehicles and tools. Farm Minister Sharad Pawar has thrown his support behind custom hiring and the Central Institute of Agricultural Engineering (CIAE) says renting equipment could be the best way to boost production in India.

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"Small farm holdings mean every farmer can't have the equipment. So what we are saying is let there be intermediaries who could purchase the equipment and then provide it on a custom hiring basis," says Pitam Chandra, who heads the CIAE. Jadhav, who earned an MBA in agriculture and works in a bank, says he spends as much time as possible working with the harvester "because I like to be here."