Different Models of Custom Hiring Centres for Agriculture

India’s agriculture is dominated by small and marginal farmers – around 85% of all landholdings are held by this group, making individual ownership of tractors, combine harvesters, or precision seeding equipment economically out of reach. Custom Hiring Centres (CHCs) fill this gap by offering farm machinery on a pay-per-use basis, allowing even a farmer with one acre to access the same equipment used on large commercial farms. But not all CHCs look the same. Depending on local cropping patterns, financial capacity, and the specific needs of farmers in a region, CHCs are structured around two primary models: the Tractor Centric Model and the Operation Specific Model. Understanding these two frameworks helps clarify how mechanization actually reaches the ground level in Indian agriculture.

Why CHC models matter 🔗

A CHC is not simply a shed full of machines. It is an organized service delivery system, and the model it follows determines what machinery it stocks, which farmers it serves, and how financially viable it is over time. The ideal CHC is located within a 5 to 7 km radius of the farms it serves, typically covering four to five villages, so that transport time and cost remain low. The choice of model, therefore, is not administrative paperwork – it directly shapes whether the right machine reaches the right farmer at the right time.

India’s Sub-Mission on Agricultural Mechanization (SMAM), launched in 2014-15, explicitly calls for establishing CHCs that are “location and crop-specific.” This policy direction recognizes that a wheat-belt district in Haryana has entirely different needs from a paddy-growing district in Andhra Pradesh, and the CHC model must reflect those differences.

The tractor centric model 🔗

The Tractor Centric Model is the most widely adopted and straightforward framework for setting up a CHC. As the name indicates, a tractor – typically in the 35 to 50 HP range – serves as the core asset around which all other services are organized. Because a tractor can be fitted with a wide range of attachments and implements, a single machine can serve multiple farm operations across different crop types and seasons.

Core services offered 🔗

The services under this model follow a farmer’s seasonal calendar. Primary tillage using disc plows or mould board plows breaks and turns the soil before sowing. Secondary tillage through rotavators and cultivators prepares a fine seedbed. Mechanical seed drills are used for sowing, ensuring uniform seed placement and proper spacing. During the crop growth period, tractor-mounted sprayers cover large acreage for pest and disease management. After harvest, the tractor with a trailer is used to transport produce from the field to the threshing yard or market. A standard unit under this model may also include a power tiller for small farm plots where a full-sized tractor cannot manoeuvre, a multi-crop thresher, a winnower, sprayers, and basic repair tools.

Why this model works across regions 🔗

The fundamental advantage of the Tractor Centric Model is its broad applicability. Because the operations it covers – plowing, sowing, cultivation, transportation – are needed on virtually every farm regardless of crop type, this model generates steady, year-round demand. It is not tied to one crop or one season, which reduces the financial risk for the CHC operator.

This model is particularly well-suited for regions with diverse cropping patterns and varying farm sizes, where no single specialized machine would find enough demand on its own. The NABARD model scheme for CHCs is built largely around this framework, with a project cost typically beginning at around ₹15-20 lakh, making it a viable entry point for individual entrepreneurs, Farmer Producer Organizations (FPOs), and self-help group federations.

From a financial standpoint, this model also offers more predictable income. Plowing and sowing services generate income in every cropping cycle, and tractor rental rates – typically calculated per hour or per acre depending on the region – are well understood by farmers, reducing negotiation friction. The model is flexible enough to accommodate both advance bookings and walk-in arrangements.

Limitations to keep in mind 🔗

While versatile, the Tractor Centric Model does not address operations that require highly specialized machinery. A combine harvester, a rice transplanter, or a laser land leveller cannot simply be attached to a standard tractor – they require separate, dedicated machines. This is where the second model becomes necessary.

The operation specific model 🔗

The Operation Specific Model is designed around a single high-value agricultural operation or a cluster of closely related operations. Rather than offering a broad menu of services, this CHC focuses on delivering one function with precision, efficiency, and the right machinery. The most prominent example across India is a harvesting-focused CHC built around combine harvesters.

What makes this model different 🔗

The equipment at the centre of this model is usually expensive, technically complex, and suited to a specific crop or operation. Research on CHC models across Madhya Pradesh and Telangana has documented Government, FPO, NGO, and KVK-based CHC structures, each with different operational emphases. Within these, operation-specific configurations tend to appear in areas with a dominant cash or staple crop – such as paddy, wheat, sugarcane, or cotton – where a particular mechanized operation creates a clear bottleneck every season.

Harvesting is the most time-sensitive point in any crop cycle. A delay of even three to five days during the harvest window can cause grain shattering, lodging losses, or weather damage. Combine harvesters solve this problem – but they cost anywhere from ₹25 to 40 lakh, putting direct ownership far beyond the reach of most smallholders. An Operation Specific CHC brings this machine within reach on a per-acre rental basis.

Common operation-specific configurations 🔗

Harvesting CHCs with combine harvesters are the most visible form of this model, primarily in wheat-rice belts of Punjab, Haryana, and western Uttar Pradesh. But the model extends to other operations as well. Rice transplanting CHCs deploy paddy transplanters in states like Odisha, West Bengal, and parts of Tamil Nadu, replacing the labour-intensive manual process of transplanting seedlings. Crop residue management CHCs – a growing priority in Punjab, where farmers can access complete crop residue management (CRM) packages including machinery, tractor, fuel, and driver at around ₹2,000 per acre – are a direct response to the paddy straw burning problem. Zero-till seed drill CHCs serve conservation agriculture zones where minimum tillage is being promoted. Laser land levelling CHCs address soil preparation in canal-irrigated areas, improving water use efficiency.

Drone-based spraying is also emerging as an operation-specific service, with CHCs deploying agricultural drones for pesticide and fertilizer application, particularly in difficult-to-access terrain.

Financial and operational logic 🔗

Because the equipment in this model is expensive, the financial viability depends heavily on high seasonal utilization. A combine harvester must cover enough acreage during the 4-6 week harvest window to generate sufficient revenue to recover its cost and maintenance. Industry observations suggest that CHC machinery needs at least 500-600 hours of utilization per year to remain financially sustainable after the subsidy phase ends. This means the Operation Specific Model works best in areas with large, concentrated acreage under a single crop, ensuring dense demand during the operating window.

The SMAM scheme provides financial assistance of up to 40% of project cost for CHC establishment, with project costs up to ₹250 lakh eligible for support, making the acquisition of expensive specialized machinery more feasible for entrepreneurs and FPOs.

Choosing the right model: what determines the fit 🔗

The decision between a Tractor Centric and an Operation Specific CHC is not a matter of preference – it follows from a clear reading of the local agricultural reality. Several factors guide this choice.

Cropping pattern: Regions with uniform cropping – predominantly wheat-rice rotations or large paddy cultivation zones – tend to support the Operation Specific Model because peak demand is predictable and concentrated. Areas with mixed crops and diverse farm sizes are better served by the Tractor Centric Model’s flexibility.

Farm size and fragmentation: India’s average farm holding has shrunk from 2.82 hectares in 1970-71 to 1.1 hectares in 2010-11, with 63% of holdings below one hectare. In highly fragmented settings, a general-purpose tractor-based CHC often proves more practical, since specialized machines may not be economical for very small plots.

Capital availability: The Tractor Centric Model requires a lower initial investment and generates more distributed income across the year. The Operation Specific Model requires higher upfront capital but can generate concentrated revenue during peak periods – provided utilization targets are met.

Labour availability: In labour-surplus regions, farmers may be less inclined to mechanize certain operations. In labour-scarce or high-wage areas, the case for mechanization – and therefore for dedicated operation-specific CHCs – is stronger.

Infrastructure and connectivity: States like Punjab and Haryana have over 15,000 CHCs, while eastern and hilly states remain severely under-served due to terrain and poor road connectivity. Heavy specialized machinery is harder to deploy in areas with poor road access, making lighter, tractor-based setups more practical in such contexts.

How the two models complement each other 🔗

In practice, the Tractor Centric and Operation Specific models are not in competition – they address different points in the farming calendar and serve different needs. A farmer in a paddy-growing district may rely on a local Tractor Centric CHC for land preparation and sowing, and then turn to an Operation Specific harvesting CHC when the crop is ready to cut. The two models, operating together within a region, can collectively mechanize the entire crop cycle from tillage to post-harvest handling.

This is the logic behind emerging hub-and-spoke configurations, being piloted in Gujarat and Karnataka, where a large mother CHC with specialized equipment is supported by smaller village-level service points handling routine tractor-based work. The two CHC models, in this sense, are building blocks of a larger mechanization ecosystem rather than standalone alternatives.

Digital platforms are increasingly being used to coordinate demand across both model types. Apps such as “Kisan Rath” in Telangana and “Tractor Seva” in Madhya Pradesh are reducing waiting times and improving service transparency – particularly important for operation-specific services where peak-season bottlenecks can mean waiting periods of five to fifteen days.

Implementation realities on the ground 🔗

Both models require more than good machinery to succeed. Operator skill is a consistent bottleneck – research across CHCs in Telangana and Madhya Pradesh found that scarcity of skilled labour remains a primary constraint on operational efficiency. A combine harvester or a laser land leveller is only as effective as the person operating it.

Community trust also matters. Older farmers in particular may be skeptical of new machinery, especially for operations they have performed manually for decades. CHC operators who invest in field demonstrations – showing results on actual plots, transparently – tend to see faster adoption. Studies on custom hiring in Kanker district found that 38% of users were small cultivators, followed by marginal and medium farmers, indicating that when trust is established, small farmers are among the most responsive users of CHC services.

Regulatory frameworks also matter. Researchers have recommended that government officials monitor CHC operators to ensure machinery is dispatched as per registered bookings, with suitable regulatory structures to attract private investment alongside public funding. Without accountability mechanisms, high-demand machines can be informally rationed or diverted, defeating the equity purpose of the CHC.

What do you think? Does the region you are familiar with have more demand for a general-purpose Tractor Centric CHC or a specialized Operation Specific one – and what local factors drive that need? If both models were available in the same village, how would farmers ideally divide their use across the crop cycle?

References

1. https://www.nabard.org/auth/writereaddata/tender/0303201304Custom%20Hiring%20Centre_Model%20Project_FPO%20Financing.pdf
2. https://agritech.tnau.ac.in/banking/nabard_pdf/Farm%20mechanization/3.Custom_Hiring_Centre.pdf
3. https://tractorkarvan.com/blog/sub-mission-on-agriculture-mechanisation
4. https://www.agrijoy.in/post/farm-mechanisation-in-india-the-growing-role-of-custom-hiring-centres
5. https://aatcc.peerjournals.net/wp-content/uploads/2024/12/Strategy-for-effective-functioning-of-Custom-Hiring-Centers-CHCs-Models-in-India.pdf
6. https://www.ceew.in/publications/improving-access-to-crop-residue-management-solutions-with-custom-hiring-centres-in-agriculture
7. https://sdiopr.s3.ap-south-1.amazonaws.com/2023/Nov/24-Nov-23/2023_AJAEES_109376/Rev_AJAEES_109376_Mas_A.pdf
8. https://www.researchgate.net/publication/395788926_Custom_Hiring_Centers_in_Indian_Agriculture_A_Comprehensive_Review