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The Impact of Formal Mechanization Access on Agricultural Productivity and Informal Rental Markets

Agriculture India

Photo Credit: Joseph D’Mello

Using machines to increase farm productivity has become a primary feature of modern agriculture in developed countries, but mechanization remains rarely used in lower income countries. In India, in the midst of declining plot sizes for small farmers, increasing agricultural productivity remains central to alleviating poverty. Mechanization can boost productivity, but accessing equipment is typically difficult for smallholder farmers since farmers who informally rent out machines usually prioritize larger farms.  In recent years, private providers of equipment services have leveraged new technologies, such as mobile phone apps, to rent out machines to farmers. However, there is little evidence on whether access to formal machine rentals will increase mechanization among smallholder farmers, or whether increased mechanization affects smallholder farmers’ labor allocation and productivity. For this evaluation, researchers have partnered with one of the biggest providers of rental agricultural equipment in India to randomly provide farmers in Karnataka with either (a) a voucher to subsidize mechanization rental access from an implementation partner or (b) an equivalent cash grant. They study whether lowering financial barriers to formal machine rentals will increase mechanization, and whether increased mechanization affects smallholder farmers’ labor allocation and farm productivity. Results forthcoming.

 

All PIS on Project
  • Namrata Kala
  • Julieta Caunedo
Partners
  • J-PAL South Asia
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