Rental Markets of Agricultural Capital Goods as Substitute of Consolidation of Holdings

Abstract

Consolidation of small and fragmented holdings was felt necessary to make holdings large enough for viable use of capital goods, irrigation and various productivity-enhancing practices. However, agricultural operations across all size classes of holdings are now getting mechanised even in areas where this component of land reform remained largely unimplemented. With the emergence of rental markets, agricultural capital goods have now become available for hiring. A farmer, hence, can hire a capital good as per requirement rather than acquiring lumpy machines, which the farm cannot fully utilise. Field investigation in the Brahmaputra Valley has confirmed that these rental markets have enabled even small and marginal farmers to mechanise their tilling and irrigating operations. Rental market participants have also been found to be using production-enhancing inputs and practices. In fulfilling goals meant to be achieved through consolidation of holdings, the rental markets have largely substituted this long-pending agrarian reform.