Agricultural Economics Research Review Vol. 27 (Conference Number) 2014 pp 103-110 DOI: 10.5958/0974-0279.2014.00012.3 Role of Cooperatives in Institutionalization of Custom Hiring Services in Punjab§ S.S. Chahal*, P. Kataria, S. Abbott and B.S. Gill Department of Economics and Sociology, Punjab Agricultural University, Ludhiana-141 004, Punjab Abstract The study has examined the role of Cooperative Agro-Service Centres (CASCs) in institutionalization of custom hiring services in Punjab based on the primary data collected from 100 such CASCs spread over the state. The study has established the increasing level of participation of CASCs through their acquisition of sophisticated and costly farm machinery for custom hiring purposes. The involvement of the sample CASCs in providing farm services is increasing over time, in terms of number of beneficiaries and the operated area that got benefitted by the use of custom hired machinery. The financial health of the sample CASCs has been improving steadily with financial support extended to such centres in terms of subsidy on one hand and increasing reach on the other hand translating into increased earnings by way of custom hiring. The study has suggested replication of this model in other states of the country to reduce production cost and human drudgery. Key words: Co-operatives, custom hiring, institutional arrangement, mechanization, Punjab JEL Classification: C81, O17, P13, Q13 Introduction size, availability of labour and custom services, crop selection and cultural practices, all affect the selection The inadequacy of farm power and machinery with of an optimum equipment set and ultimately the number the farm-operators, and particularly with the marginal of equipments crucial for farm operations. It was and small farmers, has always been perceived as one advocated that custom hiring services have enough of the major impediments to increasing agricultural scope for providing better implements to their clients production and productivity. It has been envisaged that at competitive rates (Ranade et al., 2006; Kulkarni, farmers can benefit from technological developments 2009). in terms of large machines performing farm operations. But, these machines being costly remain out of the To provide machinery on custom hiring basis to farmers’ reach (Sharma et al., 2005). The custom hiring farmers on time and at reasonable rates, the services have the peculiarity of spreading the establishment of Agro-Service Centres was suggested. equipment ownership costs over a larger area. The farm A landmark step in this direction was the setting up of agro-service centres in Punjab in the year 1972, with the twin objectives of providing self-employment to *Author for correspondence educated youth and custom hiring services to the Email: [email protected] resource-poor farmers in Punjab. But, over time, these § The paper draws heavily from the Research Report of the project entitled, “Performance Appraisal of Agro Service got phased out due to farmers owning individually the Centres in Cooperative Sector of Punjab” funded by the small-powered machines. However, the new farm Punjab Farmers Commission, Government of Punjab, equipment, such as laser levellers, which are highly Chandigarh costly, has low annual use and requires high-power 104 Agricultural Economics Research Review Vol. 27 (Conference Number) 2014 Table 1. Selection of cooperative agro-service centres (CASCs) in Punjab Districts No. of CASCs selected Total districts per district CASCs Ludhiana, Bathinda, Ferozepur, Hoshiarpur and Moga 5 6 30 Amritsar, Jalandhar, Kapurthala, Patiala, Fatehgarh Sahib, Gurdaspur, Sangrur, Faridkot, Mansa, Mukatsar, Fazilka, Tarn Taran, Nawanshahar and SAS Nagar 14+1* 570 plus Ropar* *The total sample drawn was of 5 CASCs per district, whereas 3 from Ropar and 2 from SAS Nagar keeping in view the number of CASCs in these districts. tractors have become the demand of the modern Data and Methodology efficient agriculture. The Punjab State Farmers Commission took the initiative to strengthen the Selection of Cooperative Agro-Service Centres Primary Agricultural Cooperative Societies (PACS) by The agro-service centres operating in all the 20 providing one-time capital assistance as subsidy to own districts of Punjab in 2011-12, formed the primary the costly machines and equipment and work as sampling units for the present study. At the second Cooperative Agro-Service Centres (CASCs). stage, a list of all the cooperative Agro-Service centres The model of evolving primary agriculture co- was procured from the Punjab State Farmers operative societies in villages into agricultural Commission, Chandigarh. In consultation with the machinery custom hiring service centres, successfully Commission, a total of 100 CASCs were purposively demonstrated in several villages of Punjab has the selected. The selection of the cooperative agro-service potential to be replicated in other states. The model in centres was done on the basis of release of subsidy in Punjab focuses on reducing capital investment on each sample district (Table 1). machinery and making available latest machinery to small farmers through these centres. In Punjab, where Data Collection landholding of 62 per cent of farmers is below 4 acres and the fixed cost per acre due to heavy investment on The information pertaining to sources of purchase machinery was above ` 6,000 per acre, the model has of machinery and implements, income and expenditure been considered a boon in helping them sustain from custom hiring and other services provided, etc. agriculture and wriggle out of the debt trap by reducing was collected from the sample agro-service centres by input cost (Anonymous, 2010). In the state, the personal interview method. The data have been operations of the Agro Machinery Service Centres have presented by the descriptive statistics such as measures been generating profits to the extent of 2-30 per cent of central tendency and dispersion. of the annualized costs. Also, the hiring-in of machinery services from these centres has been found cheaper by Results and Discussion 16 per cent and 35 per cent as compared to the hiring- There is a need of radical restructuring to make in from private operators and self-owning of machinery, technology dissemination reach the resource-deficient respectively (Sidhu and Vatta, 2012). marginal and small farmers. Various innovative At present, there are 1045 Agro-Service Centres institutional arrangements have been evolved from time in the state, of which 208 are in the private sector and to time to make the system farmer-driven. It is pertinent 837 are in the cooperative sector. These centres provide to discuss the concept of institutionalization of custom hiring services to the needy farmers at agricultural structure in respect of Agro-Service Centres competitive rates. In this back drop, the present in the cooperative sector of Punjab. The pre-requisite investigation has been carried out to examine the role for the development is the acquisition of the farm assets of Co-operative Agro-Service Centres (CASCs) in and machinery. The subsidy provision to CASCs also institutionalization of custom hiring services in Punjab. scales up the process of institutionalization. The Chahal et al. : Role of Cooperatives in Institutionalization of Custom Hiring Services in Punjab 105 fundamental step for enumerating the success of any machinery and power is the only means by which they organization is to evaluate its physical and financial can reap the benefits of farm mechanization. performance. The perusal of Table 2 reveals that all the sample Procurement of Tractors and other Implements agro-service centres owned tractors. Prior to the year by CASCs 2009, the number of CASCs owning tractors stood at 12. With the purchase of tractors by 21 CASCs in 2009 The mechanization of agriculture has assumed and 48 CASCs in 2010, the number of tractor-owning greater importance for increasing agricultural CASCs increased to 81. The number of CASCs production and productivity by efficiently and purchasing tractors in 2011 and 2012 was 16 and 3 effectively utilizing scarce resources and costly farm respectively. One tenth of the CASCs surveyed owned inputs improving timeliness, and reducing labour cost more than one tractor. The study has also revealed and human drudgery. Agriculture in Punjab has been results that 96 sample agro-service centres owned laser transformed from subsistence farming, to mechanized levellers. It was noticed that the number of CASCs farming using mainly inanimate power sources like having laser levellers prior to 2009 was only 10 and it tractors, diesel engines, electric motors, etc. The increased to 76 in 2010. establishment of custom hiring facilities has great potential for adoption of mechanization systems and As many as 73 sample agro-service centres owned enhancing economic viability. The marginal and small rotavators also. The number of CASCs owning farms cannot enjoy the benefits of mechanization rotavators prior to 2009 was 10; it increased to 62 by through individual ownership. Custom hiring of farm 2010. It was found that 56 sample agro-service centres Table 2. Pattern of ownership in respect of tractor, machinery and farm implements with the CASCs in Punjab, 2009-12 Name of machinery/implement Prior to 2009 2009 2010 2011 2012 Total Tractors 12 (6) 21 (1) 48 (1) 16 (2) 3 100 Laser levellers 10 21 46 17 2 96 Rotavators 10 16 36 9 2 73 Ploughs 11 10 27 8 - 56 Plankers 4 7 16 8 - 35 Sprayers 4 1 2 2 - 9 Disc harrows 18 19 11 9 - 57 Two disc harrows 12 9 4 2 - 27 Three disc harrows 8 2 3 3 - 16 Cutters 8 3 4 1 - 16 Bund maker 6 8 12 2 - 28 Zero drill 14 1 1 - - 16 Drill 21 8 6 - - 35 Trolley 7 3 13 2 - 25 Levellers 7 3 4 2 - 16 Disc bund maker 4 1 2 2 - 9 Happy seeder - 2 6 2 - 10 Potato seeder 6 - - - - 6 Potato digger 3 - - - - 3 Generators 1 1 1 - - 3 Paddy planters - 2 2 - - 4 Note: Figures within parentheses indicate the number of societies owning more than one tractor 106 Agricultural Economics Research Review Vol.