– Our man-HariRam has been able to save enough to either buy some more land or a tractor
– Hari like most other farmers is not sure about credit- either the rates are too high or the micro-credit firms have not really reached his village yet- This means that he cannot really buy both the tractor amp; the plot at the same time
– HariRam’s current plot size doesnt really need him to buy a tractor
– If he decides to buy land- he will have to stretch himself really hard for 2-3 years before he can afford a tractor.
– if Hari buys the tractor-he sees a high rate of depreciation on his asset which will not see full scale utilization
What do u think the Indian Farmer should do?
I suggested Hari to find a few other such farmers in his community & then
– Either pool the money amp; buy a common tractor
– Or buy a tractor & start lending/leasing to these other needy guys also. He rejected my 2nd idea rightaway- saying “If i start making money by lending tractors to others- these other guys will also buy it & I would not see the ROI on my investment”.
So put on your strategic mgmt caps & tell Hari what he should be doing.