1Copyright © 2012 Mahindra & Mahindra Ltd. All rights reserved.

December 2013

Mechanization Trends in IndiaSanjeev GoyleMahindra and Mahindra

Fourth World Summit on Agriculture MachineryDecember 5-6, 2013 ~ New Delhi, India

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Snapshot

Mechanization Story So Far

Mega Trends in Mechanization

Challenges in mechanization and the way forward

Agenda

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Snapshot…

Arable Land :- 163 m Ha (50% of Land Area)

Net Cropped Area :- 140 m Ha (88% of Arable Land)

Gross Cropped Area :- 192 m Ha (35% of Area Sown Twice – 50 m

Ha)

Net Irrigated Area :- 68 m Ha (48 % of Net Crop Area)

Gross Irrigated Area :- 82 m Ha (43 % of Gross Crop Area)

Av. Size of Land Holding:- 1.3 Ha (80 % farms are Small & Marginal)

Indian Agriculture :- Contributes 15 % of GDP and employs 52 % of

working PopulationAnnual Report of the Ministry of Agriculture

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Mechanization Story…

Implements 2009 2010 2011 2012 2013

Rotavator60000 80000 100000 123000 103775

Harvester Self Propelled1500 2400 2400 1800 2250

Tractor Mounted Harvester3000 3200 3600 3300 1151

Rice Transplanter100 350 220 300 300

2006 2007 2008 2009 2010 2011 2012 20130

100000

200000

300000

400000

500000

600000

262489318427 302241303921

400203

480377

535210 525970

• There has been a sustained

increase in the adoption of

mechanization to

•ensure greater return on

investment (RoI)

• sustainability of agriculture.

• Mechanization primarily driven

by increased use of tractors,

which is replacing manual and

animal labour.

Tractor Sales

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Farm operations requiring high power inputs and low control are mechanized first (tillage, transport, water pumping, milling, threshing, etc.).

Farm operations requiring medium levels of power and control are mechanized next (seeding, spraying, intercultural operations, etc.).

Farm operations requiring high degree of control and low power inputs are mechanized last (transplanting, planting of vegetables, harvesting of fruits and vegetables, etc.).

Power intensive work, can be done faster mechanically and at a lower cost.

Converting human knowledge into machine knowledge is difficult and costly

General pattern in the growth of the mechanization in India...

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Drivers of mechanization in India

Mega Trends

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Demand to outstrip current productivity levels…

197

213

175

213

198

209

217

231234

218

242

252

150

170

190

210

230

250

270

F-01 F-02 F-03 F-04 F-05 F-06 F-07 F-08 F-09 F-10 F-11 F-12

Prod

uctio

n (in

mill

ion

tonn

es)

Fiscal Year

India’s population is expected to be 1.6 bn by 2050 calling for an annual food grain production of 333 mn tonnes which represents an increase in production of more than 1/3rd

There will be a huge stress on land resources calling for greater production with lesser land

Source: Agricultural Statistics at a Glance 2011, Ministry of Agriculture, Government of India.

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Relatively low yield gives scope for improvement…

Brazil China India USA0

100002000030000400005000060000700008000090000

48060

67443

35906

83489Rice/Paddy

Yiel

d (H

g/H

a)

Brazil China India USA0

10000

20000

30000

40000

50000

60000

23158

49952

31732 31148

Wheat

Yiel

d (H

g/H

a)India has one of the lowest crop yields in both Rice and Wheat as compared to US and ChinaWith an urgent need in increase of production, the yields need to increase dramatically to march up to the global standards

To produce more with lesser land will call for technologies that can improve yield

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Land holdings patterns call for smaller mechanization solutions…

Land fragmentation and no new creation of land available for agriculture

will call for flexible machinery adaptable to changing crop patterns

1985-86 1990-91 1995-96 2000-01* 2010-110

100002000030000400005000060000700008000090000

100000

Marginal Small Semi-mediumMedium Large

• Land Fragmentation has gone up with number of marginal farmers increasing from 56K in 1985-86 to 94K in 2011, an increase of 67.3% • Land available for agriculture has remained constant around 140 m Ha since 1970s

Source: Agricultural Statistics at a Glance 2011, Ministry of Agriculture, Government of India.

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Peak Agriculture Season (39%)

Shortage of agricultural labor triggering mechanization drive

MGNREGS wages are providing 'choice of work' to casual labour

in rural areas

Source: Impact of MGREGA on Farm Mechanization, FICCI, 2011.

39% of annual employment under MGREGA is provided during the peak agricultural

season creating shortage of unskilled labor..

Shortage of Labor in the Agri Sector will drive need for mechanization and will call for Machines with minimal human

intervention

Other factors contributing to

shortage of labor • Shift into services sector for better working condition• Increasing urbanization and migration of villagers in search of greater opportunities• Rise of rural entrepreneurs who are looking to set up businesses of their own

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India55%, 30%

Brazil14%, 75%

60%, 20%

Western Europe3.9%, 95%

China64%, 38%

Russia14.4%, 80%

USA2.4%, 95%

Argentina14%, 75%

Population Engaged in Agriculture vis-à-vis Level of Farm Mechanization...

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Challenges in Mechanization and the Way Forward

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Challenges and Drivers...

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Representing a huge opportunity

Tractors + Implements

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Capturing the full potential

Tractors: Opportunity

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Hiring

•Low hourly usage and high cost of ownership prevents tractor usage•Increasing focus on co-operative led tractor rental models

Value Tractors

•Increasingly fragmented land holdings and skewed economies of scale•Need for a low cost, low HP tractor. Eg: Yuvraj

Solution

Selling

•Mechanization limited to land preparation through tractors•Mechanization solutions for entire value chain

Rising opportunities to increase tractorization

Spain UK

France

Turkey Ind

ia US

Pakist

anCh

inaBra

zil0

10

20

30

40

50

60

70

80

9083

6964

58

3127 27

1813

Tractor Penetration

Potential for addressing the gap through alternate models of tractor usage

India lags far behind in tractor penetration by global standards

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Going beyond land preparation

Crop Specific Opportunities

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Non uniform mechanization: Skewed towards land preparation…

Seed Bed

Preparation

Sowing &

Planting

Crop Manage

mentHarvesti

ng

Post Harvest Operatio

ns

Agro Processi

ng

Rice

Wheat

Sugarcane

Cotton

Corn

75%

95%

95%

85%

90%

1%

45%

3%

5%

5%

2%

5%

2%

2%

3%

25%

40%

2%

0%

5%

Land Preparation Planting Crop Care Harvesting

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Land Leveling

Primary Tillage

Harvesting

Nursery &

Planting

Puddling

Transportation

Residue Handlin

g

Complete Mechanization Solutions for Rice

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Secondary

Tillage

Primary Tillage

Harvesting

Crop Care

Sugarcane Mechanization

Seeding

Transportation

Residue Handling

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The way forward for India…

• Appropriate technology requirement• Source

Identify

Creating an eco-system for farm mechanization

Village Craftsmen

Organized Farm Machinery Companies

Small Scale Industries

•Capability to carry out R&D for productivity increase and technology adaption

• Bulk of farm machinery today is manufactured by them• Located in clusters with wide reach

• Main source of supply and repair for farmers• Closest to the farmers leading to high trust

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