FPO Earns ₹3.8 Lakh From Farm Machinery Hiring Centre

A Farmer Producer Organisation in the National Capital Region has created a business around renting farm machinery to small and marginal farmers.

The organisation invested ₹10 lakh to establish a Custom Hiring Centre. According to ICAR, the centre now generates ₹5.4 lakh in annual gross income and around ₹3.8 lakh in net returns.

The model gives farmers access to machines without requiring every farmer to purchase expensive equipment individually.

Farmers rent machines when they need them

The Custom Hiring Centre provides machinery for several farm operations, including ploughing, rotavation, sowing, spraying, threshing and crop-residue management.

Farmers pay for the service based on the time or operation involved. This can be useful for smallholders who may need a tractor-operated implement for only a few hours during a particular stage of cultivation.

Individual ownership can leave machines unused for long periods. Sharing equipment through an FPO allows the same machine to serve several farms.

ICAR says the centre offers machinery at affordable rates and helps farmers complete field operations on time.

The business case is also important for the FPO itself.

ICAR reports that the centre was established with a total investment of ₹10 lakh. It generates ₹5.4 lakh in annual gross income and ₹3.8 lakh in net returns.

The reported figures give the centre a capital recovery period of about 2.6 years.

The income does not come only from renting machines. A properly managed centre also needs scheduling, operators, maintenance and timely movement of equipment between farms.

For an FPO, these activities create a service business alongside its other agricultural operations.

Machinery can reduce labour dependence

Farmers often need several machines within a narrow period. Delays in sowing, harvesting or residue management can affect the next crop.

A local machinery centre can reduce the time farmers spend searching for equipment.

ICAR says the NCR-based centre has helped reduce dependence on manual labour and enabled more timely field operations. It also improves machine utilisation by keeping equipment in use across multiple farms instead of leaving it idle on individual holdings.

This is particularly relevant for small farms where purchasing a complete set of machinery may not make financial sense.

FPOs can become rural machinery hubs

The case also shows how an FPO can move beyond selling farm produce.

An FPO can aggregate crops, supply inputs, provide machinery services and connect farmers with markets. A machinery centre adds another service that members can use during the production cycle.

ICAR’s list of farm technologies includes equipment for land preparation, planting, direct sowing, residue incorporation and other agricultural operations.

The choice of machines needs to match the crops and farming systems in the area. A centre that buys equipment without enough local demand can struggle to recover its investment.

The business depends on good management

A Custom Hiring Centre is not simply a machinery bank.

The FPO needs to decide which machines farmers actually require, set reasonable hiring charges, maintain equipment and ensure that machines reach farms when needed.

Maintenance is also important. A machine that breaks down during the sowing or harvesting window can cause losses for several farmers at once.

The NCR example shows that machinery sharing can work as a business when the centre has enough users and keeps its equipment in regular use.

For small farmers, the benefit is access. They can use modern equipment without taking on the full cost of ownership.

For the FPO, the benefit is a new source of revenue.

The model gives farmer organisations another way to support members while building a business around a service that farmers need every season.