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“Government needs to support the creation of an ecosystem where farmers are not penalised for disposing of paddy straw. As per the production and availability of paddy straw, there is a need to set up biomass power plants in every district so that the demand can be generated locally,” says Anil Menon, Head - Market Development, CLAAS Agricultural Machinery. In an exclusive interview with Mohd Mustaquim, Menon talks about their outreach programmes, preparations for climate change threat, challenges in Indian markets, their future roadmap in the country along with many other related issues...
CLAAS is globally known for high-end and technologically advanced farm machineries, but India is a different market dominated by small and marginal farmers, what customised solutions are you providing to the Indian farmers?
Headquartered in Germany, CLAAS is almost 110 years old now. We are in India for about 30 years. Considering the need for Indian market, we have set up a manufacturing plant in Punjab, near Chandigarh. Though CLAAS is a global player in agricultural machinery sector, but we think India’s local needs. We are the first multinational harvester manufacturing company to have complete manufacturing, designing and development, localised in India.
Around 83% of farmers in India are small and marginal, who may not buy these high-cost machines, so how do you see this as a challenge and how do you tackle it?
It's not a challenge. No farmer owns a harvester for his captive use whether he's big or small. Harvesters owned by contractors. If a farmer has to use manual labour for harvesting his crop, it costs him around four times higher than harvesting through our machines. In a year, a harvester runs for harvesting about 1000 acres. No farmer has such a landholding in India. Ninety five percent of the harvesters are owned by contractors, other five percent are owned by universities and some organisations.
Custom hiring is the important segment for farm machinery market in India, how do you operate in this segment?
We don't get into custom hiring directly. Contractors buy harvesters and they hire out these machines to the farmers. A contractor can have one or two or a fleet of harvesters with him. And therefore, the contractor is our customer and the farmer is end user. We only sell, service, maintain the harvesters. However, we promote custom hiring sometimes for new equipments through 'Dost Centres' where a contractor may not be willing invest in.
Though farm machinery is a product but actually a service once you sell it. Tell us about your after-sales service?
Exactly, that is where CLAAS differentiates itself. The sales team sells the first harvester while the second harvester is always sold as a result of service that we provide. CLAAS is globally known for after-sales services. We have a network of around 75 dealers across India. All our dealers stock machines parts. They have technicians, trained and supported by our service team. We conduct an online survey where a customer is interviewed after one month of the sell as well as after one year too. It's mainly knowing about the kind of support customers are getting from CLAAS. We share this feedback with our service team and dealers who work on it if there is any shortcoming with the service.
You are also running farmers training programme. Would you please elaborate this?
We conduct two types of training programmes. Though farmers are the end users, but contractors are the people who have to deploy operators for operating the machines. For operators, we conduct regular training and interaction programmes on how to operate and maintain the machines. For this, we have academies in many parts of the country such as in Faridabad in Haryana, Nabha in Punjab, Bhubaneswar in Odisha along with tie-ups with the universities.
The second types of training programmes are conducted with the farmers. We educate them not on the harvesting, but on the proper land preparation and sowing practices so that harvesters can be utilised effectively and they get benefited with mechanised harvesting.
You're operating pan India or in selected markets?
Today, we operate pan India but traditionally we have been in Southern Indian states like Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Kerala. We are now introducing machines for the north Indian markets. Our maize harvesters are sold across the country. Apart from Indian market, we are also doing good business in Sri Lanka which also one of our key markets.
Climate change is being seen as a big threat to agriculture sector, how is it going to affect Indian agriculture and how can it be tackled? What are your preparations?
Climate change is a broader term.I can only comment on CLAAS’ perspective on the issue. We have equipments to harvest the range of crops. Haryana and Punjab have been encouraging farmers to replace water intensive crop paddy with low water consuming maize so that groundwater consumption can be reduced. For harvesting maize, we have harvesters not only for maize grain but also for harvesting maize silage which is cattle fodder for dairy industry. Similarly, we have equipments for other low water consuming crops like grams, pulses, soybean and many others. Depending upon the climatic conditions if people want to move to other crops, we have solutions for them too.
Beyond harvesting, we have other equipment like balers. If a farmer wants to handle crop straw effectively rather than burning it which create hazard for environment, balers are the solution.
Stubble burning has become a big problem creating environment emergency every year. Do you have any solution to tackle this?
The root cause of stubble burning is a law (Punjab Preservation of Subsoil Water Act) brought in Punjab in 2009. Before the law, paddy used to be sown in the first week of June. The law was brought to minimise consumption of depleting groundwater and utilising monsoon rains. Due to this delay in sowing, the window between paddy harvesting and wheat sowing is reduced to 10 days from three weeks. In this little time, farmers have to clear the fields which results into intensive stubble burning. Coming to solutions, CLAAS has a straw management system(SMS) which the Punjab government is also trying to promote. In this system, paddy straw is chopped simultaneously during harvesting and then spread on the ground. Once straw is spread, it can be incorporated into the soil using ploughs or farmers can use happy seeders where without tillage wheat can be sown. We don't have happy seeders but have straw choppers. There's another solution too. Instead of chopping straw, it can be baled by our balers. Thereafter, it can be used as fuel in biomass power projects or for production of ethanol or biogas. There has been a news that all NTPC plants will have at least 10 percent of paddy straw as fuel rather than coal only. Dadri plant has already started, others are expected follow suit.
Farmers are already struggling for the right prices of their farm produce, would not it increase their cost?
Yes. If a contractor is charging a farmer Rs 300 per acre for straw management, market doesn’t give him that money as incentive. This is where the government is now looking at the challenges. They are trying to subsidise equipment for contractors by subsidising SMS solutions, balers, straw choppers attached to the harvesters. As the volume of paddy is so high you cannot just use one method to address the whole problem. You have to use gamut of solutions likes straw chopping and happy seeders, then you also need to use balers to feed the straw to biomass or ethanol projects or other usage. While the government is subsidising straw management system, they should also subsidise balers so that people will come forward and invest as it's not a small equipment to invest in. Furthermore, the government also needs to pay a certain amount to farmers per acre for the extra cost of engaging this equipment.
What steps need to be taken so that farmers get motivated and do straw management properly?
Along with subsidising the straw management system, there is a need to find an economic value for the straw bales. Today it's waste. There is a need of proper market linkage which can be done by making it fuel for power plants, using it for production of 2G ethanol and for compressed biogas (CBG). Slowly things are taking shape. The government needs to support the creation of an ecosystem where farmers are not penalised for disposing of straw. As per the production and availability of paddy straw, there is a need to set up biomass power plants in every district so that the demand can be generated locally. Coordinated efforts need to be in place on the level of Central and state governments along with the private players.
How do you see the future of technological disruptions like Internet of Things (IoT), Artificial Intelligence, remote sensing, drones, satellite imagery, GIS and GPS in India’s agriculture sector?
All these technologies have been started in agriculture. Very few depend on the government’s weather forecasting. A lot of start-ups have come up in this segment, using satellite imagery. They are providing fairly accurate weather updates. Through digital platforms, farmers are able to hire farm machinery from aggregators similar to Ola and Uber cab hiring model. It helps them get the benefits of high-tech machines even in their small fields. The advantage of this movement is that mechanisation will extend from tractorisation to rest of the farming activities, especially harvesting. Drones for example, are already being used for spraying of pesticides, soil mapping, crop monitoring. It is in nascent stage. The shortage of farm labourer and increasing labour cost can be driven force behind the usage these technologies in the future. The older generation of farmers were lesser adaptive, but due to the growing penetration of mobile internet in the villages which makes possible for new generation access to all kinds of information, are getting adaptive to the new technologies.
What challenges do you face in Indian market and how to tackle them?
No doubt India is full of complexities, but at the same time there is huge potential on offer. One is the fragmentation of land holdings. Already land holdings are small and further getting fragmented. When we deploy equipment we need to have certain land size. This is being addressed by contract farming where there can be a larger farmer who can take a lot of land on contract. The government is also promoting that.
Another big challenge is the retail finance availability. It is not easy to get finance for new equipments until you have some influence. Further, when you want a truck to get financed, the financier doesn’t want you to have a certain asset or proof of ownership of land. But in agricultural machinery, the moment you are looking at financing a harvester, he looks at your assets and proofs of landholding. In some growing markets like Assam, farmers are willing to hire harvesters but the contractor cannot get finance easily to buy a machine.
The third big challenge is substandard cheap imports, especially in the new markets where buyers are less aware about the machines. After 1, 2 or 3 years, these equipments are just waste. In the lack of awareness, people buy cheaper products and face loss. It is a big threat for us. We are manufacturing machines in India itself and facing big challenge from cheaper exports although the Government is promoting ‘Make in India.’ There needs to be awareness programmes from the government’s side. Recently, Indian government did not sign RCEP (Regional Comprehensive Economic Partnership) to safeguard dairy sector. Similar things need to be in place for safeguarding the farm machinery industry too.
What new offerings Indian farmers are going to get in New Year 2020 from CLAAS in India?.
There are lot of new offerings. We have state-of-the-art maize harvesters that are available in India. It is the beauty that maize header can be interchanged. A contractor can go into multiple crops with changing headers. We will be scaling up the availability of the silage harvesters like the Jaguar 25 tractor driven forage harvester in the new states. Concept of silage is slowly growing in India and therefore we will enter new markets with this product. We are going to introduce a range of large balers, both round and square, in India. We will offer next gen upgraded machines of our existing products. Furthermore, we are going to bring VTS, (vehicle tracking systems). We have a lot of things lined up for 2020.