Growing the service economy for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: lessons from custom hiring services for zero-tillage

Abstract

Zero-tillage (ZT) is a proven technology for enhancing wheat productivity and, hence, food security in the Indo-Gangetic Plains, while reducing production costs. However, very few farmers possess their own tractors much less the specialized seed drills required to implement the technology. As a consequence, adoption of ZT largely hinges on affordable access to custom hire services. In Eastern India, the service economy for ZT is expanding, but remains in the early stages of growth. ZT service businesses remain largely uncharacterized, and related business dynamics poorly understood. To address this knowledge gap and derive recommendations for an efficient targeting of public sector support for those service providers (SPs) who are poised for growth, we identified factors that influence ZT entrepreneurship, encompassing new business formation and the resulting scale of the enterprise. We used data from a census of 270 ZT SPs in Bihar, as documented by the Cereal Systems Initiative for South Asia (CSISA). To identify determinants of engaging in ZT service provision, the data were pooled with those of 1000 randomly-selected wheat farmers located in the same districts. We applied Heckman's two-step estimation procedure to derive unbiased estimates of determinants of the scale of the ZT service businesses. ZT SPs are generally larger, tractor-owning farmers who have taken up service provision as a side business since 2010 or later. Only 8.3 % of the surveyed farm households owned a tractor, demonstrating the importance of service provision for accessing ZT and other mechanization technologies. ZT SPs expanded their businesses considerably from 2011 to 2012 to an average total of 20 clients and 50 ha serviced per SP. However, larger areas were primarily achieved by servicing larger client farms. Welleducated farmers with larger land holdings and extensive social networks are most likely to become ZT SPs. However, among this stratum, the relatively smaller scale farmers were most likely to provide services at a sizeable scale. To efficiently accelerate the spread of ZT technology, we conclude that these smaller-scale tractor-owning farmers are the most sensible targets for purchase subsidies on ZT drills as well as the primary audience for business development training. Since a considerable fraction of the ZT area expansion resulted from service provision to larger client farms, there is a need to develop business models that enhance the social inclusiveness of ZT services by reducing the transaction costs of reaching smallholders.

Climate and landscape mediate patterns of low lentil productivity in Nepal

“…However, smallholder farmers may not be able to purchase farm mechanization due to capital constraint. They could, however, hire the mechanization services if service providers rent-out the services [85]. Hence, supporting the emergence of mechanized service provision through small and medium-sized entrepreneurs is a scalable means to address these downward forces on technical efficiency [85].…”

Farm machinery use and agricultural industries in India: Status, evolution, implications and lessons learned

“…where the number of self-propelled and tractor-driven combines has increased from 3,000 and 5,000, respectively, in 2000/2001 to 8,000 and 6,000, respectively, in 2010/2011 (CSAM 2014). Custom-hiring services with tractor-pulled zero-till machines have also been emerging, albeit with 60 percent subsidies on machines that typically cost for Rs 55,000 (or about US$1,000) (Keil, D'Souza, and McDonald 2016).…”

Zero-tillage is a proven technology for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: what determines farmer awareness and adoption?

“…we interacted individual-network and villagelevel ZT adoption rates with dummy variables indicating the farm size tercile the respondent household belonged to. Since farmers' access to the ZT technology largely depends on service providers (Erenstein and Laxmi 2008;Keil et al 2016), a variable reflecting the proximity of a ZT service provider is included in the model. Using the GPS co-ordinates of ZT service providers in the survey districts, which were available through CSISA, we created variables measuring the number of ZT SPs in various radiuses around individual sample households, ranging from 500 m to 20 km.…”

“…The variable Cultivable area is included in the models as a wealth indicator and a factor that may influence the adoption of ZT directly, as the provision of ZT services on small farms is associated with higher per-hectare transaction costs and, hence, is likely less attractive for service providers (Keil et al 2016). The model indicates a statistically highly significant positive influence the adoption of ZT.…”