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obtained from the Registrar, Cooperative Societies, Punjab about the number of PACS running Agro
Service Centers six districts namely, Ludhiana, Fatehgarh Sahib, SBS Nagar, SAS Nagar, Ropar, Patiala
were selected for the study. Care was taken to ensure equal coverage to districts having Percentage of
PACS running Agro Service Centers as well those with low Percentage.
Major Findings & Recommendations:
The agriculture sector in Punjab is characterized by over mechanization, resulting in a significant
increase in fixed cost of farming, declining profitability, and relatively high levels of farmer indebtedness.
At a time when most of the farm operations in major crops like wheat and rice have been mechanized,
comparatively high cost of farmmachinery are endangering the economic viability of farmers, especially
of small and marginal farmers. The study reveals that there is greater awareness and demand for custom
hiring.
The impact of custom hiring Services on profitability of small and marginal farmers was measured and it
was found that those small and marginal farmers who takes a tractor and implements on custom hiring
rather that owning, can earn up to 87 % more than those who owned machines / implements. Even if
the small and marginal farmers purchase only tractor and other implements, they would still earn 48%
more than those who own machines/ implements. Thus, custom hiring has a positive on small and
marginal farmers.
But if a large farmer takes tractor and implements on custom hiring he/she can lose up to 20%that those
who own machines/ implements. So, it is advisable for large farmers to use his / her own machinery for
farm operation.
The maximum size holding for which benefits of custom hiring Services can be derived was measured
at 9.38 acre.
Though there are some technical and non-technical drawbacks associated with the Agro Service Center
if managed properly, they are likely to become viable since there is great demand of custom hiring and
it has positive and significant effect on profitability of small and marginal farmers.
Thus custom hiring Services has a positive impact on small and marginal farmer.
The Agro Service Centers were started to provide the custom hiring Services of various machines to the
farmers at appropriate times and at reasonable rates so as to reduce the fixed costs of farm operations
and reduce the burden of capital investments. The study revealed that only six out of the total number
of Argo Service Center studies, had BCR of more than 1 and IRR more than 15% further there were five
Agro Service Center having BCR ranged between 0.8 – 1.0.
On deeper examination, it was observed that Agro Service Center, with BCR less than 1 suffered from
the drawbacks viz. Injudicious judgment in purchasing machines,Unreliable Machine operator & Lack
of Technical awareness among the Agro Service Center staff.
If the above drawbacks are addressed, Agro Service Centers are likely to become viable since there is
great demand of custom hiring marginal farmers. Thus it can be concluded that if the Agro Service
Center are managed properly, they can be viable activities.
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