Agricultural Engineering

The Power Tiller is one of the many farm mechanization inputs being refinanced by NABARD. Unlike tractors, power tillers are non-controversial so far as the displacement of labour is concerned. In fact power tiller sets all such controversies at rest since it engages more labour per unit of land than tractor and bullock farms and is particularly useful in the intensive cultivation of paddy as has been the experienced in Japan, Tiwan and some Far East countries. This is the reason why NABARD is liberal in supporting power tillers. This liberal approach of NABARD is perhaps not known to the public at large so far. Therefore, it is felt that various financial institutions and borrowers must be informed of the interest NABARD takes in promoting power tillers especially considering the fact that the majority of farmers are small with land holding below 2 hectare who can hardly afford costlier tractors. Farmers particularly of paddy areas which comprise 28 % of the arable land in the country face the challenging task of timely preparation of seed bed and transplanting of paddy seedlings. The existing manual labour and animal power do not deliver the quality of seed-bed which the genetically potential HYVs of paddy demand. In addition to seed bed preparation, many other operations like interculture, plant protection, harvesting, threshing, irrigation etc. can be successfully accomplished by a power tiller. Therefore, the power tiller should become a popular device in the cultivation of paddy, in particular, and other crops in general for the smaller farmers. 2. Paddy Cultivation and the Power Tiller

2.1. Typical Operational Needs of Paddy

Paddy is the stapple food for many Indians and those who had the occasion to watch the various operations involved in its cultivation are bound to term paddy as the most difficult crop. Still it is not easy to replace paddy by more profitable a crop given the soil, water and agro-climatic factors of an area which primarily suited to paddy. Imagine during the rainy season when there is knee-deep standing water, can any other crop survive ? In other words the paddy growing areas which are mainly concentrated in the coastal belts and some upper reaches of the Indo-gangetic belt would continue to remain under paddy during Kharif and in combination with other crops during other seasons. In some areas like Kerala, Tamil Nadu, Andhra Pradesh, Orrisa and West Bengal where precipitation is good and some assured irrigation is available, a second paddy crop is taken. Some farmers even take three crops of paddy in a year because of its food value and where better rainfall and supplementary irrigation is available. Therefore, paddy crop poses a great challenge because of the vastness of area it covers and exceptionally different pattern of tillage and cultural practices it demands as compared to other crops.

2.2. Problematic Operations in Paddy

Let us have a look at the various operations which the paddy crop demands so as to understand the role, a power tiller can play in tackling them. The scientific concept of growing paddy as known so far involves transplanting of seedlings in well puddled fields. Rearing the seedling in a small nursery is not a difficult job; but puddling the field to transplant the seedlings is the most energy consuming and difficult operation. It is also well known that paddy is suited to heavy and medium soils. Under the traditional method, the farmers puddle the field when the land is fully saturated and filled with standing water. The desi ploughs and bullocks are used for puddling, but not only they are inadequate to stir the soil sufficiently for uniform settling but also are quite strenuous ever witnessed for any crop operations. Those who use tractor with harrow, cage wheels and leveller although have an edge over desi plough and bullocks but are not adaptable in all soil conditions due to technical and financial constraints. Many of the tractors in India are not primarily designed for operations in paddy fields. They are mostly of medium or heavy types with low ground clearance and inadequate sealing mechanism against mud. These tractors have a tendency to sink in the puddled soils and this makes them unsuitable for paddy cultivation. If a tractor is used for transplantation, the disturbance to puddled soil is so high that transplanted seedlings face the difficulty of proper stand and stability. More importantly, our small size plots of land make it quite cumbersome, tedious and time consuming for most of the available tractor models to meet the requirements of paddy field operations.

Transplanting of paddy seedling is one of the most laborious jobs. The major part of the job is under taken mainly by female labourers. However, in peak transplanting season it becomes difficult to meet the labour demand even at much higher wage levels resulting in delayed transplanting and loss in yield. Yet this operation continues to be done by women as adequate technology is still not available in the country. So far, whatever transplanters have been developed in Japan and Taiwan are operated by power tiller. Therefore, till a suitable power tiller operated transplanter is adapted in our country, human drudgery would persist in this sector.

The other problematic operation in paddy is weeding. It is mostly carried out manually by hand pulling which is strenuous and back-breaking. Since weed infestation is serious during initial stages of crop growth, atleast 2 to 3 weeding operations in a span of 1 to 1 ½ months become inevitable. Even if the transplantation is done in rows, the weeding either by bullock or tractor is not practicable because of close row spacing and other field conditions. Therefore, the burden of strenuous operation is helplessly being carried out manually. A power tiller can successfully complete this task.

2.3. The challenge for Paddy Cultivation

The challenge in the cultivation of paddy is two fold. In the first place, even after knowing that paddy is a difficult crop in terms of operations, its cultivation can not be discontinued because no other crop can survive in standing water conditions and also paddy is such a popular food crop that it would have to be grown irrespective of challenges it may face. On the other hand, a vast area as much as 34 million hectares which is under paddy cultivation and in this age of scientific agriculture, human drudgery associated with its low yield cannot be allowed to persist. It is a kind of a permanent burden on the paddy growing farmers of India, which needs to be tackled by using suitable devices.

2.4. Power Tiller for Paddy Cultivation

Power tiller technology can ease the situation to a great extent and can make the life of farmers harmonious besides raising the yield and monetary gain. What a farmer can not perform with the help of bullocks and tractors with implements, power tiller can; thus bring in new hope to paddy growing farmers. Japan is known for its high yield of paddy. They follow intensive cultivation practices through power tillers. In the beginning, Japanese farmers used diesel engines only for pumping water in their farms and later they modified European and American two wheel garden tractors. They mounted the same diesel engine on these tractors and called them as power tillers and by mid-fifties Japanese farmers adopted them in a big way. The peculiarities of situation of farming condition in Japan was that the average land holding was no more than 1 ha. Apart from the intensive power input of 3.5 hp/ha., the labour engagement was 2.04 man units/ha, whereas in India, it is merely 0.9 man unit/ha. By visualizing the similarities of land holding patterns in the two countries, many manufacturing units were licensed by the government during the mid-sixties to manufacture power tillers with Japanese collaboration. After its introduction in India, several follow-up studies were conducted to find out the effectiveness of power tillers under Indian conditions.

2.5. Post Introduction studies on Power Tillers

Indian Council of Agricultural Research (ICAR) took special interest in power tillers and launched a countrywide coordinated scheme of power tillers to test their usefulness through selected centers. Experiments were conducted for paddy and other crops as well. To have a comparative performance of the bullock, tractor and power tiller farming systems, studies were conducted for paddy and wheat crops. In the ultimate analysis the following observations were made:

2.5.1. Paddy Crop - The findings at IIT, Kharagpur shows that the energy use per hectare for the paddy crop was the least with the bullock system followed by the power tiller system but taking the higher yields of power tiller system, the energy as well as the cost per quintal of the grain was minimum with the power tiller system even though the cost of operation per hectare were nearly the same for both power tiller and the tractor farming systems.

Another study at JNKV, Jabalpur shows that the energy requirement per hectare is minimum with the bullock system followed by the power tiller system. As regards the cost of operation per hectare, the power tiller system is the cheapest followed by the bullock system.

Both the studies emphasise that energywise as well as costwise, the power tiller system is advantageous for paddy cultivation.

2.5.2. Wheat Crop - Whereas the power tiller has been mainly considered suitable for paddy cultivation, the Indian experience has been a step better. At IIT, Kharagpur even the yield of wheat has been observed to be better when the power tiller is used as compared to bullock and tractor farming. Although the cost of cultivation is cheapest for tractor farming but owing to better yield, the cost of cultivation per quintal is least for power tiller farming . Studies at JNKV, Jabalpur show that the energy requirement as well as cost of operation per hectare of wheat cultivation is minimum with the power tiller system. Studies at GBPUA&T, Pantnagar also show a lower energy requirement per hectare of wheat production by power tiller farming system. All the studies favour the use of power tiller for wheat cultivation in these regions.

2.5.3. Other Crops - The studies on wheat crop proves the fact that power tiller can be successfully used for crops other than wetland paddy. Now farmers are making alternative use of power tiller in many other crops like Groundnut, Ragi, Cotton, Jowar, Bajra, Potato and many other field crops. In horticultural and plantation crops, whether in the hills or in the plains, there cannot be a better choice than power tillers for their cultivation. 2.6. NABARD's findings about Power Tiller

Over a period NABARD has conducted several studies and come out with the following findings :

2.6.1 Benefits:

• The power tiller appears to be replacing the animal power more effectively and help in increasing demand for human labour.

• The small and marginal farmers form major clientelefor custom hiring of power tiller. In highly fragmented and small holdings, power tiller is preferred for arduous farm operations like puddling and preparatory tillage.

• The power tillers are cost effective source of farm power as the power tiller owner are able to recover even the fixed cost and earn handsome margin from custom hiring unlike the tractor owner, who are not able to recover the fixed costs out of the custom hiring charges. Economics of a power tiller put to annual use of 800 hr under custom hiring has been worked out. The details are as shown in Annexure-1

• Power tiller helped in reducing the seasonal fallows and thereby substantially increasing cropping intensity.

• The power tiller enables farmers to diversify cropping pattern and increase in yield of crops. They also adopt High Yielding Varieties (HYV) .

• The power tillers are more effective in the areas having high concentration of small and marginal farmers and highly fragmented holdings.

• Power tiller are preferred by small farmers and are being used primarily for earning cash income through custom hiring. Thus, this machine provides opportunities for self employment in rural areas. Even marginal farmers and landless labourers effectively and profitably use the power tiller for self employment.

• The incremental income gained from the activity is found to vary between Rs. 30786 in East coast plains to Rs. 75434 in Southern Plateau and hill region. In conclusion, it proves that the level of incremental income in power tiller is high and repayment of loan is relatively easier. therefore , power tillers are likely to improve the economic conditions of smaller farmers who may choose to use them.

3. Power Tillers and Its Special Features

From the very word "power tiller", one can make out that there is a tiller which is powered. In this case the tiller is powered by an internal combustion engine and so is the name derived. A power tiller is a tractor with a difference. It is not a four wheel tractor but a two wheel tractor with a rotary tiller more commonly known as rotavator. The power from the engine is transmitted to the drive wheels and the rotavator through "V" belts, chains and sprockets and gear trains. Because of two wheels, an operator generally has to walk behind the power tiller to guide the direction of travel for various operations. There are hand clutches to engage and disengage power to the wheels and the rotavator unit. Depending upon the mode of operation, three types of power tillers are there -

• Pull Type - The power tiller which pulls different types of implements.

• Tilling Type - The power tiller which uses an engine power driven tilling device, such as rotary and crank or screw blades.

• General purpose Type - The power tiller which can be used for a number of farm operations, including the types defined under pull type and tilling types.

The power tiller now being marketed in our country belongs to the general purpose type. Some of the special features of power tillers are as follows :

3.1. Because of smaller size, two wheels and limited constructional arrangements, the power tiller becomes one of the lightest yet most effective farm power sources. Since it has only two wheels, it has to be balanced to stand with the help of an implement attached to it for the desired operation. Its operations is controlled by an operator through its extended handles by walking behind it.

3.2. One of the special features of a power tiller is that its both the wheels can do two jobs at the same time. It makes the power tiller move forward through traction of its wheel with the ground and at the same time change the direction as operator desires. It has such an unique arrangement of gears and clutches that while the drive wheels continue to act to push the power tiller, it can be made to turn freely about one of the wheels. As a result of this arrangement the power tiller takes the least space to turn and manoeuvres in the smallest and irregular shaped fields with great ease which the bullocks or tractors can rarely do. In other words, it is a great saver of time and expenses on field operations.

3.3. In Japan where paddy in small holdings is predominant, emphasis was laid on rotary tilling of wet paddy fields which has been acknowledged as ideal for puddling operations. For this reason the rotary tilling arrangement has been made an integral part of the power tiller. The puddled soil through single rotavation settles well and makes transplanting of paddy seedlings easy. The use of rotavator is also highly effective in mixing the green manuring crops, crop-residues, fertilizers and manures. When the rotavator is in use, power tillers derive automatic stability during field operation and become ease for the operator to operate. It must be noted that the rotavator can be used not only in the wet paddy fields but also in dryland conditions with a separate design blades. The design of blade for dry rotavation are such that a single rotavation for preparatory tillage can suffice the need for ploughing, harrowing and even planking. After single operation of rotavator, the seed can be sown directly for most crops. This remarkable feat can only be achieved by a rotavator. This makes the seed bed preparation cheap and less time and energy consuming for many crops. Indian Standards Institution (ISI) also has published standard (6690-1972) for rotavator blades to provide information to users regarding the blades that can be used for different crop and soil conditions.

4. Operational Capability

Given the right set of matching implements and attachments, the power tiller is capable of performing most of the field operations be the stationery or mobile type. Its capability in particular for wetland paddy cultivation is unique, which no other machine or animal power can equal. The capability of power tiller in general, for performing different operations can be summed as follows:

4.1. For wetland paddy cultivation, the power tiller can puddle the fields with rotavator and cage wheels much more uniformly and would give atleast 8 times higher output in a day than bullock operated puddling. The cage wheel, in particular, provides a floating effect to the power tiller in wet paddy fields, in addition to puddling the soil.

4.2. Power Tillers are capable of performing operations right from primary tillage to transportation of crops which may include ploughing, harrowing, cultivation, planking, ridging and furrowing, sowing, fertilizer application, pumping water, interculture, plant protection, harvesting, threshing and lastly the transport operation. In short the power tiller can render all these services for many types of crop production. Table - 1 would provide an idea about the various capabilities and output of a power tiller.

It would be evident from the table on operational capability of power tiller that while it is one of the useful farm-power sources for paddy cultivation, it is equally efficacious in other crops for performing different operations both stationery and mobile. One of the points of advantage with the power tiller is that for stationery operations, the power tiller engine can run with maximum efficiency since they are small engines between 6 to 12 hp and match well with attachments like threshers, pump sets, chaff cutters, winnowers etc. The main advantage of using power tiller engines for stationery operations over other diesel engines is that they can be moved easily on their wheels from one place to another and do not require additional transportation arrangement. Besides the power tiller occupies very little space to move about and can negotiate narrow village and farm roads with ease.

5.1. Costwise the power tiller should be an obvious choice of smaller farmers, if they are intending to have a mechanical power source for farm- operation. Today the average cost of a power tiller is Rs. 95,000/-. The cost of a matching mould board plough, tiller, pumpset, sprayer, thresher etc. will amount to Rs. 25,000/-. Correspondingly, the cost of trailer will amount to Rs. 15,000/-.

5.2. The maintenance of the power tiller is easy .

5.3. It is ideally suited for mechanizing small farm holdings which account for 80 % of the farm holdings of the country.

5.4. It is well recognized that paddy is one of the most difficult crops to grow. Puddling and the other tillage operations by the power tiller helps a great deal to minimize the operational vagaries by more than half and increases the yield. The power tiller is therefore, a real friend of farmers in increasing the production of paddy crop.

5.5. The light weight of the power tiller is a favourable factor for working in wet as well as dryland conditions. It creates the least disturbance of soil structure, can cross over the bunds separating the small holdings, does not sink in wet paddy fields, can climb steeper hill slopes and conveniently operates in bench terraces and can manoeuvre the narrow pathways of rural areas.

5.6. Power Tiller reduces the drudgery of long walking in the field during operations as compared to operations by bullocks. For example where ploughing by bullocks and country plough may take 20 - 25 kms of walking to complete an acre, the power tiller may take 3 - 4 kms of walking to complete the same area.

5.7. Power tiller demands less body effort as compared to operation by bullocks. The bullock implements require the hand and body pressure to achieve depth and alignment of the implement in use, whereas, in power tiller the implements are mostly self guided. This reduces human drudgery to a great extent.

5.8. The comparative higher output of operation by the power tillers as compared to bullocks reduces the operational time and achieves timeliness in operation.

5.9. Learning to operate a power tiller is much easier as compared to tractor and does not require driving license.

5.10. Power Tiller farmers tend to have more diversified cropping pattern than in control farms. After acquiring the power tiller they take more paying crops. This significantly reduces the seasonal fallows and thereby substantially increases their cropping intensity, employment and income.

With so many advantages of power tiller for cultivating paddy and other crops and its suitability to smaller holdings, it is undoubtedly an intermediate technology between bullocks and tractor farming. In the prevalent conditions of Indian Agriculture, where tractor prices are high and continuously on the rise, Indian farmers especially the small land holders should find an answer in the use of the power tiller. 6. Reasons for low preference for Power tillers

During the green revolution period of mid-sixties, the prospect of the power tiller was considered very high. It was estimated during the fourth five year plan that the annual demand for the power tiller may sky-rocket to 80,000 units. However, the experience over the years shattered the hope when the demand could barely reach 2,540 units (1975-76) per annum. Till the end of 1986, the situation did not alter much but by the year 1998 the annual sale has been picked upto 14000 units. Although many reasons have been extended from time to time for low response to power tillers and GOI even set up a committee to investigate the difficulties of promoting power tillers, it appears that some of the important aspects of potential power tiller users have not been accounted for in sufficient measure. The GOI committee's findings in the "Report of Committee on Power Tillers" (1975) indicates the major reasons for low demand as (i) non-availibility of 3 to 5 hp low cost power tillers , (ii) rising of selling price, (iii) lack of confidence in farmers due to absence of training and after sales service, (iv) non-availibility of well matched implements etc. There seems to be some still deeper reasons for the power tiller not drawing the attention of potential users. Mentioned here are those farmers who (a) have smaller holdings of 2 ha or so (b) cultivate paddy and (c) share bullock or tractor services from other on custom basis. Although these farmers have the potential to make investments and generate capital from the farm, they do not have sufficient courage to take higher risk of investing say Rs. 1.35 lakh in power tillers. What makes them suffer is the lack of entrepreneurship. There is also a fear amongst them that if they borrow money and unable to repay it then they may even lose their small land holdings. It is not that such potential buyers are waiting indefinitely to make choice of an appropriate farm power source but the number who are deciding in favour of power tillers are small. A large chunk of potential buyers may not have enough savings to contribute for margin money thereby making them ineligible for loan from banking institutions. A desired proportion of unwilling potential buyers can be motivated into becoming actual buyers by assuring them of necessary credit support and giving them complete understanding of the repayment ethics etc. alongwith the promise that their land would remain safe if they follow them. Financial institutions cannot do it alone and government and cooperative efforts would be needed. Particularly for power tiller purchase and arranging margin money, farmers could be told that it would be better for them to join hands with some other farmers to raise margin money and buy a power tiller for collective use. Government assistance provided to such farmers also needs to be brought to the knowledge of potential buyers. In other words, the time has come when the potential power tiller buyers should be encouraged to be more self dependent to increase their crop production and productivity. If some of these measures do not materialize to cover the potential power tiller buyers, the yield levels of paddy in particular, and other crops in general may not achieve the desired growth rate. 7. Availability of Power Tiller and its Matching Implements

The power tiller industry has gone through a very rough weather and many units folded up their manufacturing activities. However, during the recent years a few new units have also come up with manufacturing of power tillers. Some of them are assembling Chinese completely knocked down units for marketing in India. A few units now under development have many hurdles to cross. Some 17 organisations under State and Central sectors are engaged in further improvement and development of power tiller attachments. Time to time the proven implements are being released for manufacturing, making power tiller operation more versatile and efficient. 8. Bank Finance for Purchase of Power Tillers

Power Tillers are relatively costly inputs. Farmers can hardly afford to buy power tillers from their own resources. Bank finance is available in the sector from various commercial banks, SLDBs, central and state cooperative banks and regional rural banks who can avail refinance from NABARD. During the year 1997-98 out of the 14000 power tillers sold, 10000 were refinanced by NABARD i.e., 70 % of the total sale. However, off late the farm mechanization sector is witnessing decreased ground level credit flow. The GLC flow to the sector decreased from

Rs. 3847 crore in 2001-02 to Rs. 3600 crore in 2002-03. Correspondingly, only 2000 units were refinanced by NABARD. Farmers have to approach any of the bank of their choice and furnish certain information to enable the bank to examine their request and extend loan. Over the years NABARD has simplified the refinance disbursement procedures. Earlier it was on schematic basis which was discontinued in the year 1984-85. In order to avoid delay, it has been made on automatic refinance (ARF) basis in which the viability of the activity is left to be assessed by the financing banks. Automatic refinance- Farm Sector (ARF-FS), refinance assistance subject to an upper ceiling limit of Rs. 20 lakh / borrower is provided to all the financial institutions as per the latest the latest policy. The total financial outlay (TFO) of the project/ scheme under ARF-FS should not exceed Rs. 30 Lakh. In order to supplement the efforts of GoI in mechanization of farm operations in the country, NABARD has been issuing the refinance policy for farm mechanization every year. The Policy for the year 2004-05 has been released. The same is annexed to this model project at Annexure-2. It has been NABARD's endeavor to finance quality farm machinery and equipment to the farmers. Therefore, power tillers which meet the Minimum Performance Standards (MPS) alone are only eligible for refinance support from NABARD. As on date 8 different power tiller models are meeting the MPS standards. The details about the same has been mentioned at Annexure-3. The quantum of refinance support available to the banks from NABARD and the interest chargeable on refinance have been depicted in Annexure-4. 9. Potential of Power Tiller's Use

Power tillers can be used throughout the country where the following situations exist:-

9.1. Where paddy is predominant. Where other predominant crops are cultivated in combination with paddy.

9.2. Where intercropping and interculture is practiced in horticultural and plantation crops.

9.3. Small land holdings upto 2.5 hectares and HP requirement is lesser.

9.4. Where dearth of power for cultivation hinders timely operation.

9.5. Hilly areas where narrow bench terraces are difficult to negotiate.

9.6. Where farmers cannot afford to buy tractors.

If in the situation described above power tillers are put to use, it is anticipated that there would be a vast potential for the use of power tiller. If Japan can boast up putting 6 million and China 1.9 million power tillers in use in their farms where cultivated areas are just 5.27 and 100 million hectares respectively, it should not be difficult in India to increase power tiller use where cultivated land is 140 million hectares. It must be added that the average holding size of both these countries are similar to India. The National Commission on Agriculture in its report (Chapter 50) has anticipated that power tiller and small tractors would be more suitable in the smaller holdings as an immediate alternative to bullocks and that 1.8 million power tillers/small tractors may have to be inducted by the turn of the century in order to meet the power gap. The proposed centrally sponsored scheme "Comprehensive Scheme for Modernization of Agriculture through mechanization being implemented during the IX five year plan period visualize financial assistance for the purchase of 15000 power tillers and 80000 numbers of self propelled specialty machines with the basic objective of providing adequate farm power support to the small farmers. This will be an added advantage to power tiller use in the country. 10. DOs and DON'Ts

In order to safeguard the interest of bankers and borrowers, it would be necessary to take certain precautionary measures . As a ready reckoner, some of the important measures are shown in the form of DOs and DONTs in Annexure 4. 11. Role of NABARD

Financing of power tillers involves term loans whose repayment period extends upto seven years. Due to resource constraints, the banks need further financial assistance. NABARD serves as an apex banking institution to provide refinance to the banks financing to augment their resources. Individual applications of borrowers are received at the branches of these banks which inturn sanction the loan observing the prescribed guidelines of NABARD. NABARD also has the responsibility of playing a role in developmental banking. For any difficulty in getting term loan for power tillers, borrowers may initially contact regional offices of NABARD situated in most of the state capitals. On the part of NABARD it plays the proactive role to disseminate information, guide bankers and farmers on technical and financial aspects and to ensure that the genuine buyers of power tillers are provided with necessary financial assistance. If the usefulness of power tillers are communicated well to the farmers by various banks, it should be possible to achieve a moderate growth rate of 5 % in the financing of power tillers in the coming years. 12. Summing up

In order to keep up with the pace of modernization of agriculture, use of appropriate technology has become inevitable. Power tillers have come to stay in the agricultural scene of the country, particularly, in paddy growing areas. However, they have not received the response they deserve. Paddy crop and the fragmented land holdings offer the ample opportunity for the power tiller to play its role; but the farmers , who can be potential buyers need to be encouraged. When power tiller have proved successful in countries like Japan, Taiwan and China, it is likely to prove a success in India as well.

Annexure-2

Ref. No. NB. DPD. FS / 69 / 145 / 2004-05
Circular No.131/ DPD. FS- 11 /2004
05 June 2004

The Chairman/Managing Director /Chairman and Managing Director
All Scheduled Commercial Banks/
All Regional Rural Banks/
All State Co-operative Agriculture and Rural Development Banks/
All State Co-operative Banks/
Scheduled Primary Cooperative Banks

Dear Sir

Refinance support for Farm Mechanisation[FM] Programme --

Policy for the year 2004-05

The policy for providing refinance assistance to banks for farm mechanisation has been finalized for the year 2004-05. The policy would cover financing purchase of new tractors, second tractors (new) and second hand tractors, trailer without tractor, power-tillers, power-threshers, sprayers, combine harvesters and other farm machinery, whether as implements of tractor/power tiller or separately. The major policy changes are :

i. The refinance for financing second hand tractor will be eligible for all the states, as against 9 states covered presently.

ii. Refinance would be available even in the case of secondary sale of the tractor.

iii. Margin money requirement has been reduced to 5-10%.

iv. The productive use of tractors for agricultural purposes as stipulated earlier by NABARD has been relaxed and the discretion will be with the financing bank within the overall financial viability of the investment.

v. The ceiling of Rs.25,000/- for repairs has been enhanced to Rs.50,000/- and for replacement of engine, it would be as per the cost of engine of standard make of the tractor. The enhanced limits for repairs/replacement of tractors should be in conformity with the price of standard make and should be verified with reference to invoice.

vi. The facility for repairs and renovation of tractor will be available irrespective of loans availed for purchase of tractors or not. Further, the condition to make the loan available for repairs/replacement of spare parts only after repayment of loans availed of for tractor has been relaxed, which was hitherto available only if the loans availed for the purpose of purchase of tractors has been fully repaid.

vii. Wherever tractors are comprehensively insured, loans may also be granted for repairs of damage caused to the tractors due to accident as a special case. However, such loans be restricted to the cost of repairs less the insurance claim received/receivable.

02. The General and Special terms and conditions applicable to financing/refinancing under FM Programme including that for the relaxations given above are given in Annexures I & II respectively.

03. Refinance assistance extended to SCBs/DCCBs for financing good working Primary Agricultural Credit Societies (PACS) for acquisition of tractors and other farm machinery exclusively for custom hiring to the farmer members, especially the small and marginal farmers, will continue during 2004-05.

04. Refinance assistance will continue to be available to banks for financing eligible State Agro Industries Corporations (SAICs) for providing custom hiring services.

05. The refinance allocation for the following categories will be as under :

06. The refinance assistance for the FM programme is available under Automatic Refinance Facility. For the purpose of drawal of refinance, the banks may submit their drawal applications, in duplicate, together with a statement showing the particulars of the physical units financed and the actual loan disbursements made district-wise, as per the proformae in Annexures III (A - C) to the concerned Regional Offices of NABARD, once in a quarter, or for a shorter period of not less than one month, as per the instructions issued earlier in this regard.

07. We are sure that the relaxations extended in the norms and simplification of procedures/formalities for availing refinance, would result in enhanced credit flow to farmers for purchase of various farm machinery under the FM Programme. You may accordingly, issue suitable instructions to your branches/PCARDBs/DCCBs. The drawal applications for availment of refinance against the scheme may be preferred to our respective Regional Offices.

08. We also emphasize the need for providing wide publicity to the relaxations made available to farmers. You may, therefore, make necessary arrangements for effective marketing of the scheme to popularise it benefiting more and more farmers through bank credit.

09. Please acknowledge receipt.

Yours faithfully

(S.M.Mehta)
Chief General Manager

Encl: As above

ANNEXURE - I

Farm Mechanisation Programme (FMP) - 2004-05

General Terms and conditions:

Appraisal norms:

The loan applications shall be appraised on a case by case basis, in terms of incremental income from the proposed investment including income from custom services, adopting among other things, the following norms:

Minimum Acreage / Minimum Hours of Work:

02. Each individual or group of individuals to whom a joint loan or group loan is sanctioned should use the tractor / power tiller etc. for cultivation on his/her/their own-farm. The minimum acreage / minimum hours of use for different kinds of machinery will be as per the Table I given below. While prescribing the minimum land holding, necessary precautions may be taken by the banks so that the loans issued for purchase of the asset do not become infructuous.

Table I

03. The banks shall also ensure the following :

The borrower purchases necessary implements along with the tractor / power tiller.

The banks shall satisfy themselves regarding actual cost of tractor/power tiller/combine harvester/thresher/sprayer by verification of invoices/quotations/vouchers/bills before sanctioning/ disbursing loan under the programme.

Selection of tractor/power tiller/combine harvester/thresher/sprayer may be made by farmers having regard to the terrain, soil conditions and their use.

The banks shall ensure that arrangements exist/ have been made by manufacturers/dealers for supply of spare parts, after sale service and repair facilities to the beneficiaries in the scheme area or that these are generally available in the area.

The banks shall either provide short-term credit to those availing of loans under the programme or shall satisfy themselves that such credit is provided to the beneficiaries by the PACS, and other banks to the extent required.

The banks shall make payment directly to the suppliers in respect of farm machinery and implements purchased by the borrower.

Comprehensive insurance cover shall be obtained in respect of the assets acquired by the borrower from the loan amount and such insurance cover shall be available during the currency of the loan. The relative policy should be got assigned in bank's favour and the assignment registered with the insurance company. The financing banks may, however, at their discretion, settle for a third party insurance with 'theft clause' keeping in view their own risk perception in this regard. This is desirable in the interest of the borrower as well as the financing bank.

Hypothecation of machinery to the financing bank has to be prominently displayed on the machinery.

Down Payment (Margin Money) for bank loans:

04. Banks may prescribe a down payment of 5% to 10% of investment cost. Capital subsidy, wherever available, may be reckoned towards margin money /down payment. In the case of SCARDBs, the down payment would be exclusive of share capital contribution.

Security for bank loan:

05. The security from the borrower for loans sanctioned shall be as per the Reserve Bank of India instructions issued from time to time.

Terms and conditions for refinance assistance:

Mode of refinance and quantum:

06. The refinance assistance to the CBs / Cooperative Banks / RRBs for their financing would be available under Automatic Refinance Facility i.e. without prior sanction of schemes. It will be available to banks at the rate indicated below.

Table – II

Refinance as percentage of bank loan

@ The quantum of refinance is 95% in Bihar, Jharkand, Orissa, MP, Chattisgarh, Eastern UP and West Bengal.

07. The interest rate to be charged to the ultimate borrowers may be decided by the financing bank as per RBI guidelines. The rate of interest on refinance to banks will be as prescribed by NABARD from time to time. At present, the following rates on refinance are applicable.

Table III

Rate of interest on refinance

[Effective from 13 February 2004]

Repayment Period:

08. The repayment period for various types of activities financed under the FM programme would be as follows:

Table-IV

Repayment Period of Bank loan

* Though the maximum repayment period for second hand tractors has been kept at 7 years, the banks should exercise due care while fixing the repayment period keeping in view the remaining economic life of the assets.

** The repayment period for loans towards repairs/renovation may be fixed on a case to case basis with maximum of 5 years, subject to the remaining economic life of the tractor and wherever original loan availed for purchase of the tractor, this may run concurrently with the original loan.

Others:

09. Disbursement of refinance will be subject to the eligibility criteria laid down by NABARD and observing the stipulated terms and conditions by banks.

ANNEXURE - II

Special Terms and Conditions:

01. New Tractors:

The borrower shall purchase a minimum of three implements including a trailer, unless these implements are already owned at the time of its purchase. The implements should be of good quality preferably of BIS standard and matching with HP of the tractor.

The tractor financed shall have the necessary Commercial Test Report (CTR) as per BIS Code issued by the Central Farm Machinery Training and Testing Institute (CFMTTI), Budni, Madhya Pradesh. Compliance with Minimum Performance Standards (MPS) already made compulsory by the GOI, MoA, is likely be introduced by NABARD, as a condition for eligibility in the next year or two. This interim period will provide adequate time to tractor manufacturing companies for making their existing model(s) MPS compliant and avoid difficulties later, once MPS becomes mandatory for NABARD refinance.

Minimum acreage / Minimum hours of use:

As per Table I shown in Annexure I.

Registration with the RTA:

Tractors shall be registered with the concerned Regional Transport Authority (RTA) and the hypothecation charge of the bank in respect of them shall be recorded with the RTA. Banks may further note that in terms of Govt. of India, Ministry of Transport and Highways letter No. RT- 11017/31/2000- MVL dated 12 December 2000 on the illegal use of tractors, addressed to the transport secretaries/commissioners of States/UTs, "No tractor carrying passengers/goods (other than agricultural produce) should be allowed on road unless it possesses a valid permit and other related documents".

02. Second Tractors:

All special terms and conditions, as applicable to new tractors, will also be applicable for financing purchase of second tractors. In addition, it may also be noted that the refinance will be available provided that a minimum period of three years has elapsed since financing the borrower for purchase of a tractor earlier and the previous loan has been fully repaid.

03. Second Hand Tractors:

All special terms and conditions as applicable to new tractors will also be applicable for financing purchase of second hand tractors. In addition, following will also be ensured:

Financing should be provided, only in respect of first/second resale of tractors, for which the borrower should arrange for production of a suitable evidence.

Tractors that are not more than 7 years old would only be eligible for financing by banks. Banks are, however, advised to exercise due care and satisfy themselves about the good condition of such tractors.

The cost of the second hand tractor should be assessed by an authorized dealer of the 'make' of the tractor or in case it is approved by a surveyor, duly certified by the authorized dealer or calculated by applying 10% depreciation, whichever is less.

Minimum hours of productive use of the tractor for agriculture purposes may be determined by banks taking into account the financial viability and recovery aspects.

The repayment period for the financing of second hand tractor should be fixed keeping in view the balance economic life of the tractor.

04. 'Kamdhenu Bullock Drawn tractor'

'Kamdhenu Bullock Drawn tractor' developed by Bharatiya Cattle Resource Development Foundation, New Delhi has been certified as a "Bullock Drawn Multi Tool Bar" in the CTR issued by the GoI, MoA (NRFMTTI, Hissar Haryana). It is an animal drawn tool carrier equipment with provision for different attachments for carrying out tillage operations and will be eligible for refinance under our FM programme.

05. Trailer without Tractor ( for States of Punjab,

Orissa and Madhya Pradesh only )

All general terms and conditions applicable to financing of farm machinery as in Annexure-I will be applicable.

06. Trailer/Two trailers in Sugarcane growing areas

All general terms and conditions applicable to financing of farm machinery as in Annexure-I will be applicable.

07. Renovation/ repairs/replacement of spare parts of Tractors:

i. Eligibility for availing refinance

All farmers irrespective of the fact whether they had availed of bank loan or not for purchase of the tractor would be eligible for obtaining loans for repairs/renovation/replacement of spare parts of their tractors.

Bank loans for repairs/renovation/replacement of spare parts of the tractor may be allowed as a supplementary loan during the currency of original loan availed of for the purchase of the tractor, provided there is no default in repayment of earlier loan. The repayment of loans released for repairs will be made concurrently with repayment of original loan of tractor.

Bank loan may be allowed in respect of damages caused to the tractors, due to accident, as a special case. The banker has to take adequate care in assessing the damage. It is reiterated that the tractor must be insured comprehensively during the currency of loans in the interest of the farmer as well as financing bank.

Bank loan for the purpose will be available once only.

ii. Quantum of loan

The quantum of loans for repairs and replacement of spare parts such as fuel injection pump, clutch, front and rear axles, brakes, crank shaft, crown wheel, incidental labour charges, etc., should not exceed Rs.50,000/-.

The new engine to be replaced is of standard make of the same company and the quantum of loan towards the cost of the engine is to be determined by the financing banks based on the approved price of the company.

The banks should satisfy about the reasonableness of the quantum of loan for repair/renovation/replacement of spare parts and engine of tractors and it should be in conformity with the price/cost of parts of standard make and should be verified with reference to invoice/quotations.

The quantum of loans for the repairs due to damages caused to the tractor on account of accidents is to be restricted to the difference between the total expenditure to be incurred towards repairs/renovation or replacement of spare parts and the insurance claim received/receivable.

iii. Repayment period

As per Table IV shown in Annexure I.

iv. Authorized service agency only to undertake repairs

The tractors should be got repaired in a service centre of the authorized dealer appointed by the manufacturer of the particular make or from Agro-Service Centres of the State Agro- Industries Corporations or from any other government workshop.

Payment should be made by the bank directly to the service station towards the cost of the repairs and the cost of the spare parts.

08. Power threshers and power sprayers

Minimum acreage/Minimum hours of use:

As per Table I shown in Annexure I.

ii. Repayment Period:

As per Table IV shown in Annexure I.

iii. Other terms and conditions:

Only BIS marked good quality new threshers/diesel engines/ electric motors should be financed. Threshers that have built in safety device as per BIS mark only should be financed. In this connection, the Government of India Ordinance dated 16 October 1981 regarding Power Threshers (Quality Control) Order 1981 stipulating the following schedule may be adhered to :

IS : 9019-1979 code of practice for installation operation and preventive maintenance of Power Threshers

ii. IS : 9020-1979 general and safety requirements for Power Threshers

i.IS : 9129-1979 technical requirements for Super Electric System for Power Threshers

Whenever thresher alone is financed it should be ensured that the borrower has the prime mover i.e. diesel engine/electric motor or tractor (in case of tractor operated threshers).

Banks shall ensure that the borrowers buy a post-warranty service for the period of loan and that the arrangements for supply of spare parts, after sales service and repair facilities are available in the scheme area.

Whenever electric motors/diesel engines are financed, it should be ensured that the same are utilised for other purposes also during the off season.

While apprising the loan application, care should be taken that density of the machine/implement in a particular area does not increase beyond optimum level so that the scope for custom hire is not affected.

09. Combine Harvesters:

The Models of combine harvesters tested by CFMTTI, Budni, MP and NRFMTTI Hissar, Harayana and Dept. of Industries, Punjab will be eligible for bank finance. The test code is IS : 8122 ( Part I )- 1994 and 8122 ( Part II )- 1981.

The banks should satisfy themselves about the technical feasibility and financial viability. Since the use of combine harvesters is restricted only to the harvesting seasons, the density of population of such harvesters, scope for custom hiring, impact of density on custom rates etc., will have to be kept in view by the banks.

The loan component may include necessary accessories, if any.

Minimum acreage/minimum hours of use.

As per Table I shown in Annexure I.

The loans shall ordinarily be sanctioned only to those borrowers who enjoy high credit-worthiness and would be in a position to operate combine harvesters successfully during the currency of the loan.

Repayment period : As per Table IV shown in Annexure I.

Refinance will be available for purchase of new combine harvesters only.

10. Power Tillers:

All special terms and conditions as applicable to new tractors will also be applicable for financing purchase of power tillers. In addition, following will also be ensured:

Commercial Test Reports (CTRs )/Minimum Performance Standards (MPS)

Banks have to ensure that the Power Tillers financed by them have necessary commercial test report as per BIS Code issued by the Central Farm Machinery Training and Testing Institute (CFMTTI), Budni, Madhya Pradesh. The Power tillers meeting the Minimum Performance Standards ( MPS) alone will be considered eligible for refinance from NABARD.

iii. For increasing the flow of credit for purchasing power tillers following initiatives may also be taken by banks :

a.Advise the field level functionaries to encourage small and marginal farmers to go for power tiller, it being a cost effective machinery.

b.Identify the areas having potential for financing power tillers taking into consideration the cropping pattern, average size of land holding and demand in a particular area.

c.Prepare a banking plan for power tillers in compact areas like blocks over a period of say, three years.

d.Earmark for financing power tillers a reasonable portion of allocation of refinance made to the bank under Farm Mechanisation.

e.Coordinate with concerned Govt. Departments and others to ensure that required linkages are established for successful implementation of the banking plan.

iv. Minimum acreage/Minimum hours of use

As per Table I shown in Annexure I.

v. Repayment period : As per Table IV shown in Annexure I.