Economic Impact of Custom Hiring Services of Machinery on Farm Economy in Punjab

The study revealed that hiring-in farm machinery services rather than owning the same led to substantial economic benefit to farmers. The farmers owning farm machinery had invested almost two and half times more on this account when compared to the farmers who took the benefits of custom hire services of farm machinery. While, custom hiring of farm machinery resulted into 26% higher operational machine costs; huge saving of investment resulted into comparatively lower fixed costs of crop cultivation on machinery account (depreciation and interest) to the tune of about 63%. Overall, per hectare cost of crop cultivation on farms depending upon custom hire services was about 12 per cent lower than that on the machinery owning farms. Though the returns over variable cost were higher on the machinery owning farms; higher fixed costs outpaced such gains of lower operational costs on these farms and resulted into relatively significant low net returns viz. only Rs. 1038/ha in comparison to Rs. 10,134/ha on the farms depending on custom hire services of farm machinery. Thus, the custom hiring of farm machinery provides a viable option to the farmers especially smaller ones through reduction in total cost of cultivation and increase in profitability. For benefit of the farming community especially smaller ones, the study suggests for strengthening and extension of the custom hiring services of farm machinery through establishing/promoting the Agro Machinery Service Centers throughout the state.