State PCS - Madhya Pradesh (MP PCS)

• 10 May 2025

Custom Hiring Scheme of SMAM

Why in News? 

The Custom Hiring Scheme under Sub-Mission on Agricultural Mechanization (SMAM) is supplying modern farm machinery to rural Madhya Pradesh farmers, boosting their productivity and income.  

Key Points 

• About Custom Hiring Scheme:  
  • This scheme has been launched with the aim of economically empowering small and marginal farmers through modern agricultural equipment and providing them self-employment opportunities. 
  • This is an important initiative running under the Union Ministry of Agriculture and Farmers Welfare . 
  • Under this, Custom Hiring Centers (CHCs) are established. 
    • These are centres from where farmers can rent agricultural equipment like tractors, harrows, rotavators, seed drills, reapers, threshers, dryers, sprayers etc. 
    • CHCs can be run by farmers, Farmer Producer Organisations (FPOs), cooperatives, gram panchayats or private entrepreneurs. 
  • Under the scheme, the government provides a subsidy of maximum 40% and interest subsidy of up to 3%. 
• Beneficiary Eligibility: 
  • Under the scheme, 12th pass unemployed farmers between the ages of 18 and 40 can apply. 
  • The selection is done through a lottery system, and the selected beneficiaries are given training and then allowed to purchase the device. 
• Importance: 
  • This scheme decentralises the reach of mechanisation. 
  • This ensures timely harvesting , solves the problem of labour shortage and improves the efficiency of agricultural operations . 
  • Youth get an opportunity to participate in agricultural service business, which also increases employment opportunities in villages. 

Sub-Mission on Mechanisation (SMAM) Scheme  

• About: 
  • It was launched by the Ministry of Agriculture and Farmers Welfare in 2014. 
    • Under this, subsidy is provided for purchase of various types of agricultural equipment and machinery to the extent of 40-50% for states other than NER (North Eastern Region) states and for NER states it is 100% limited up to Rs. 1.25 lakh per beneficiary.  
  • The Ministry of Agriculture has also developed a multilingual mobile app, 'CHC (Custom Hiring Centre) – Farm Machinery' which connects farmers with the Custom Hiring Service Centres located in their area. 
• Goal: 
  • Increasing access to agricultural mechanisation to small and marginal farmers and in remote areas where availability of electricity for agriculture is low. 

Farmer Producer Organisation  

• Introduction:  
  • FPO is a type of Producer Organization (PO) whose members are farmers and is promoted and supported by the Small Farmers Agri Business Consortium (SFAC). 
    • It came into existence in 2008, inspired by a recommendation (2002) of amendment to the Companies Act, 1956 by economist Y.K. Alagh . 
    • It can be registered as a public trust under the Companies Act, 2013, Societies Registration Act, 1860, or the Indian Trusts Act, 1882. 
  • Producer organisation is a group formed by producers such as farmers, non-agricultural class or artisans, which may take legal forms such as producer companies or co-operative societies with profit sharing among the members. 
• Objective and Need: India's agriculture sector is dominated by small and marginal farmers (87% have less than 2 hectares of land), who face seasonal and market risks, and struggle to get fair prices. 
  • FPOs help small farmers by facilitating bulk input procurement, better bargaining power, and ensuring better price realization at lower costs. 
  • These also improve market access of farmers, helping in achieving the goal of doubling income and entering global markets.