CLAAS: German firm bets big on future of Indian agriculture

Mrityunjaya Singh, Managing Director of CLAAS India, reveals how technological inventions will make farming more sustainable and profitable for farmers.

Agriculture is going to be one of the largest areas of interest in India going forward. Although it contributes only 16 percent to the Indian GDP, its importance to the domestic economy cannot be underestimated because it feeds and impacts over 1.2 billion Indians. The industry is going through a phase of evolution – the wait is on for land ownership reforms along with massive mechanisation of farming.

CLAAS, the €4-billion German manufacturer of agri machinery, has been in the middle of that change and is working with thousands of farmers across the country. Their 52 dealers lease CLAAS machines to the farming community so they can reap the benefits of mechanised farming. Their machines have the capability to harvest and clear wheat and rice fields; a one-acre farm can be harvested in an hour.

CLAAS India Managing Director Mrityunjaya Singh spoke to YourStory about Indian agriculture and the changes taking place in the industry.

1. What do you see happening in agriculture in five years?

MS: I see several changes. The most important number that we have been tracking is the fall in farm labour from 230 million now to 190 million by 2022. Why is this happening? There is migration to cities; there are government schemes that assure people of a weekly wage. This makes people not want to work. On the other hand, farming needs skills and we as an agri company are proposing that we can actually stop migration. We have set up the CLAAS academy to train farm labour to use and service agri-machinery. We train these people in mechanisation. They will become experts who will stay back and help farmers. In India, the farmer is poor and employs people poorer than him to do the harvesting. CLAAS is working with six universities across India to impart this training to faculty and students. Apart from machines we work with them on methods of harvesting and seeds usage. Farming needs skill, investment and mechanisation. The farm-to-fork concept, which took off a decade ago, is even more relevant now. Farming is changing slowly, but we have to ensure that farmers get the right price. Today several mandis are digitised and there is a need for a real-time buying and selling platform that can remove the middlemen who distort pricing.

2. You mention capital. Perhaps the biggest barrier is being financed to make a farm profitable?

MS: Today lending to the segment is not based on any metrics other than it being a priority sector. Farmers lose their land because they borrow from sources other than banking channels. It is also the nature of the industry; it is dominated by small farms that are least productive. We have not been able to change farming for several years now. Today land is given by farmers to several unscrupulous unproductive elements who do not follow contracts. The government must enforce mechanisation to change the nature of farming in this country. They can do so by allowing Zilla Parishads and Panchayats to help farmers rent mechanised machines on a collective basis. Local MLAs can drive this and make harvesting faster and more productive.

3. Tell us a bit about CLAAS India and its experience?

MS: We have been in India for 27 years and have a large presence in the south. We have built this business with operators who buy from us and rent to farmers. The farmers pay on an hourly or per acreage basis. We have 6,000 vehicles in the market; of these, the mini harvester is very popular. We offer the farmer not only a machine to harvest, the machine even collects the husk. We convert the husk into fodder for cattle. This is a small line of our business where we ensure that the fodder is nutritious and increases the yield of milk. Globally, a cow produces 20 litres of milk per day. In India, it produces very little milk, the average is around 5 litres a day. Several governments can learn from what the Andhra government is doing; they believe in making farming productive and do not subsidise farmers. They did an amazing thing with the maize crop, where the seed was crushed and used as feed for the poultry and cattle industry. This was possible only with mechanised farming.

It is all about awareness and affordability. Today’s young farmers are also our rental operators. They understand the benefits of mechanised farming and the change it can bring to their lives.

4. How do CLAAS harvesters bring about change on the farm?

MS: These harvesters allow a single man to harvest the entire field. These machines are built for harvesting versatility — wheat, rice, maize, basmati, sunflowers, soybeans and other produce. The uniform weight distribution and maximum pulling power help extend the service life of the systems in tough working conditions. The harvesters are of a compact design and the low weight makes for good maneuverability in small fields, especially in India. The large 1,200-litre grain tank enables long working days with minimal interruptions for offloading. So if farmers can harvest a 100-acre farm in less than a week. Farming needs innovation and India will lead the way because many youngsters are looking to make farming productive. That said technology is needed in farming and government should actively support farmers and agri universities going on that path.

Overview of the Agri-sector

Companies like Mahindra and Mahindra, Preet, Kartar, Malkit and John Deere compete with CLAAS. All these companies, including CLAAS, have been competing to solve the same problem — lack of productivity in agriculture.

According to Economic Survey of India, the Indian agriculture sector is entwined in regulation, a living legacy of the era of socialism. The industry suffers from a lack of policy changes to make it productive. Beyond a reluctance to privatise, the ambivalence towards the private sector manifests in many other ways. While progress has been made in the last two years, producers in many states are still required by the Agricultural Produce Marketing Act to sell only to specified middlemen in authorised markets (mandis). When this system generates price increases deemed excessive, the Essential Commodities Act is invoked to impose stock limits and controls on trade that are typically pro-cyclical, thereby exacerbating the problem.

However, this is a small drop in a vast ocean. The harvester is just a small beginning and agriculture needs many more changes before it can be completely mechanised. Startups like PEAT, AIBONO and VDroneAgro are trying to modernise the industry by providing information symmetry. That said, an integrated strategy, a partnership with startups and large corporate, can change the way India farms.