Growing the service economy for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: lessons from custom hiring services for zero-tillage

Zero-tillage (ZT) is a proven technology for enhancing wheat productivity and, hence, food security in the Indo-Gangetic Plains, while reducing production costs. However, very few farmers possess their own tractors much less the specialized seed drills required to implement the technology. As a consequence, adoption of ZT largely hinges on affordable access to custom hire services. In Eastern India, the service economy for ZT is expanding, but remains in the early stages of growth. ZT service businesses remain largely uncharacterized, and related business dynamics poorly understood. To address this knowledge gap and derive recommendations for an efficient targeting of public sector support for those service providers (SPs) who are poised for growth, we identified factors that influence ZT entrepreneurship, encompassing new business formation and the resulting scale of the enterprise. We used data from a census of 270 ZT SPs in Bihar, as documented by the Cereal Systems Initiative for South Asia (CSISA). To identify determinants of engaging in ZT service provision, the data were pooled with those of 1000 randomly-selected wheat farmers located in the same districts. We applied Heckman’s two-step estimation procedure to derive unbiased estimates of determinants of the scale of the ZT service businesses. ZT SPs are generally larger, tractor-owning farmers who have taken up service provision as a side business since 2010 or later. Only 8.3 % of the surveyed farm households owned a tractor, demonstrating the importance of service provision for accessing ZT and other mechanization technologies. ZT SPs expanded their businesses considerably from 2011 to 2012 to an average total of 20 clients and 50 ha serviced per SP. However, larger areas were primarily achieved by servicing larger client farms. Well-educated farmers with larger land holdings and extensive social networks are most likely to become ZT SPs. However, among this stratum, the relatively smaller scale farmers were most likely to provide services at a sizeable scale. To efficiently accelerate the spread of ZT technology, we conclude that these smaller-scale tractor-owning farmers are the most sensible targets for purchase subsidies on ZT drills as well as the primary audience for business development training. Since a considerable fraction of the ZT area expansion resulted from service provision to larger client farms, there is a need to develop business models that enhance the social inclusiveness of ZT services by reducing the transaction costs of reaching smallholders.