Another kharif season has begun. On the farms three week old saplings of soybean and pigeon pea await a good spell of rain. Here are a couple of observations from this season on our farms.
- Weather windows are getting considerably shorter. This leads to a very short period in which most cropping activities like sowing, spraying and harvesting are required to be completed. Shrinking time periods have made farming demanding irrespective of land holding.
- The cost of farm technology – irrigation, crop care, harvest, post-harvest etc, is beyond what farmers’ incomes can support. This holds true for over 90% of farmers. An Indian farmer is frugal not out of choice but compulsion. The capex intensity right now is disproportionate to the income yield of a farmer’s holding.
- Agricultural financing is broken at several levels. A farmer is not creditworthy. He is deemed welfare-worthy of the government pennies and food aid driven by the very same food that farmers help grow. The paradox is phenomenal!
- The net effect of all of the above is that a farmer is forever in savings mode. I see better now than seeing smallholder agriculture practices as suboptimal and lacking thought.
- ‘Agri tech’ is a sham – The new age startups in agri who speak with buzzwords like IoT and intelligent farming, have no clue. At best, they are glorified call centers manned by armies of boys and girls from towns who are paid to incessantly call farmers to sell their ‘advisory’ services. One of the big name agri tech startup is busy pulling a fast one on farmers by pricing their soil testing services on per acre basis!
For our farms we bought a tractor this month. It is a Mahindra 65 HP 4WD tractor. In a district that has seen only sub-55 HP tractors, this is a first. By international standards, this is a utility tractor. From the dealer to the neighbourhood farmers, none seem to think that farming in the district can ever use a 65 HP tractor and yield returns. After going through a roller-coaster of financing troubles and loan procedures, we had a bank in town which was ready to finance 65% of the cost. Even this partial financing needed way more documents and securities than warranted for an agri sector loan. It is lost upon agri experts and bureaucrats alike that inadequate farm mechanization in India lies in hundreds of these processes in lending, knowledge support, farm extension services etc.
In summary, the kind of capital expenditure and investment that agriculture needs in India today, is beyond the capacity of the majority of its farmers. Governments have been primarily supporting welfare which keeps them a few steps away from falling over into impoverishment. The investment that does come in is by the way of capital earned from other sectors and invested in agri by entrepreneurs and new farmers.