Mechanisation is prohibitively expensive at an individual farmer level. A good 55-horsepower tractor today costs upwards of Rs 6 lakh, whereas a harvester combine requires an investment of Rs 20 lakh or so.

In the case of sugarcane harvesters, the basic machine itself comes at Rs 95 lakh. Adding another Rs 35 lakh for ‘in-fielders’ — two tractors and trailers that collect the harvested cane billets — takes it to Rs 1.3 crore, which even big farmers cannot afford.

That explains why these machines are owned more by the mills themselves, who use it to harvest the crop of their growers. But this is changing, with the emergence of a new class of standalone ‘rural entrepreneurs’.

New Holland Fiat claims that out of the 323 cane harvesters it has sold in India, as many as 142 have been to entrepreneurs. Within that, 118 are in Maharashtra alone, with the owners often farmers themselves.

Take Sachin Sapkal, who grows cane on five acres at Sapkalwadi in Indapur Taluk of Pune district. During the 2011-12 sugar season, he harvested 15,000 tonnes from over 300 growers supplying to the Chhatrapati and Ashok cooperative factories. By charging Rs 300 a tonne, he would have grossed Rs 45 lakh of revenue.

Spreading the costs

As regards expenses, the biggest item is diesel. According to Sachin, harvesting one tonne of cane requires two litres, apart from 0.25 litres consumed by the in-fielders. On 15,000 tonnes and Rs 50/litre — which will only go up as diesel prices are decontrolled — that works out to almost Rs 17 lakh.

The second major head is maintenance, which he puts at about Rs 4.5 lakh a year. That includes Rs 3 lakh on the base-cutter blades (which are imported and need to be regularly replaced) and hose pipes, and another Rs 1.5 lakh on lubricants.

The third is labour. Sachin pays the operator of the harvester Rs 10,000 a month and those running the two in-fielders Rs 6,000 each. Besides, there is a helper, who gets Rs 5,000. For a five-month season, it comes to Rs 1.35 lakh.

The total operating cost, thus, adds up to roughly Rs 23 lakh. That leaves capital costs. On a Rs 1.3 crore investment, the interest alone would be Rs 15 lakh, assuming 100 per cent financing. After providing for depreciation as well, the entrepreneur is left with hardly anything.

The viability of his enterprise, therefore, depends entirely on managing fixed costs. The more the quantity of cane harvested, the faster he can recover the investment by spreading the fixed costs.

Sachin harvests 15 tonnes an hour or 100 tonnes on an average daily. On a 150-day crushing season, it translates into 15,000 tonnes. In Tamil Nadu, where the season is 250 days-plus, there are entrepreneurs who harvest 20,000 tonnes and more.

Farming BPO

The second way to bring down fixed costs is by state support. The Maharashtra Government currently extends a subsidy of Rs 25 lakh on sugarcane harvester purchases. To the extent it helps entrepreneurs like Sachin — and is not a recurrent subsidy like on fertilisers — this might be a worthwhile policy intervention. Promoting mechanisation is, ultimately, in every farmer’s interest. The small farmer may actually need it more, as his labour has a higher opportunity cost. By reducing the number of hours to be spent on the field — not to speak of drudgery — mechanisation helps release his family’s precious labour resources for other activities.

A time should come, when the ordinary farmer has the option to outsource most operations — from field preparation to inter-culture and harvesting — to entrepreneurs or cooperatives, owning the machines and deploying them in a large number of fields.

In the process, the farmer becomes more of an owner-manager of his holding, while the wider agricultural economy reaps the benefits of specialisation and division of labour that Adam Smith once talked about.