Shri Y.C. NandaChairmanAFC Ltd.

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Shri L.N. Vasudev RaoGeneral ManagerUnion Bank of India

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Shri P.M. KshirsagarGeneral ManagerAFC Ltd.

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EDITORIAL

A.K. GargEditor-in-Chief

Welcome to the August edition of the magazine. In the cover storywe have focused on the Irrigation sector. The story scans theprogress made so far and looks at the main issues in water

management and its impact on agriculture. Clearly growth of agriculturehinges on availability of water and reach of irrigation. Organic farming, AgriBusiness, Agricultural Credit, Dairy Sector, Impact of Climate Change andSericulture are other articles that will definitely hog the readers’ attention.

India is readying for a second Green Revolution in the coming years. Thiswas the message from Prime Minister Dr. Manmohan Singh’s IndependenceDay address. He emphasised the need for another Green Revolution to meetthe requirements of a burgeoning population and changing food life styles.Expressing the resolve of the Central Government to raise farm production,the PM said, We need technology which would address the need of dryland agriculture...Our agriculture should also be able to deal with newchallenges like climate change, falling level of groundwater and deterioratingquality of soil.

To give a deep technology push to the farming sector, the Prime Ministerannounced the setting up of an institute in the name of renowned agriculturalscientist Norman Borlaug. The mandate of the proposed Institute will be tofacilitate availability of new and improved seeds and technology to thefarmers of India and South Asia in general. According to information, theinstitute will come up at Pusa in Bihar in collaboration with the InternationalMaize and Wheat Improvement Centre (CIMMYT) and work in tandemwith Borlaug Institute of International Agriculture based in Texas and otherresearch centres. The institute will be a force multiplier at the R&D front inagriculture.

In storage, there is news about new technology infusion. India is all set towelcome foreign technology to augment the storage capacity of grains.India is in talks with Argentina to develop a new technology for warehousing.Recently a team visited China to study storage technologies there. The recentcontroversy on rotting of wheat for want of proper storage facilities raisesthe urgency of the issue. India faces a shortfall of 15 million tonnes in storagecapacity. We wish all success to the new intiatives.

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Irrigation: Towards Optimum Water Use....6By G. Kalyan Kumar

Water Management: Problems and Prospects... 10By Mohammad Awais and Naheen Haider Zaidi

Rural Retailing In India...............................18By T. Seshu Kumar

Gramin Banks and Subsistent Farmers .......22By S.K. Deshpande and A.M.Degaonkar

Organic Farming and Global Trends ...........25By A.V. Tak & V.B.Tak

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Editorial Board

Published byAgricultural FinanceCorporation Ltd.Dhanraj Mahal, ChhatrapatiShivaji Maharaj Marg,Mumbai 400 001

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Editor-in-ChiefShri A.K. Garg

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DesignAtul KumarPrakash Chand Arya

Global Warming and its Challenges ...........30By D. Muthamizh Vendan Murugavel

Milk Production in Maharashtra ................33By Vijay Gorakh Patil

Gains of Bivoltine Cocoon Production ........36By Dr. S. Lakshmanan

Obituary – JS Tomar...................................39By Jayshree Vyas

Agri News .................................................40

6Financing Agriculture

COVER STORY

Since Independence, India has builtup a formidable irrigationinfrastructure. The gross irrigated

area is 78 million hectares and theultimate irrigation potential is around139.9 million hectare (Mha). With onethird of irrigated cropland in its kitty, thecountry is divided into six basins basedon the availability of water resources.More than 50 percent of all publicexpenditure on agriculture goes intoirrigation which falls into three categories– Major, Medium and Minor.

Surface systems, such as large dams, longcanals attract maximum investment.Deep-well projects involve large capitaloutlays. The perennial rivers of India havefacilitated development of river irrigationin many states, particularly in UP, AP,Punjab, Haryana, MP and Rajasthan.Well irrigation dominates in UP, Punjab,Rajasthan, Gujarat, Maharashtra andMadhya Pradesh.

Achievements

India’s emphasis on development of theirrigation sector right from independencewas to protect the farmers from thevagaries of monsoon. Some of the large-and medium-sized irrigation works inIndia like the Indira Gandhi Canalexpanded agricultural coverage to aridregions. Though India has the secondlargest irrigated area in the world, thearea under assured irrigation or at leastminimal drainage is not adequate. So,Indian irrigation is searching for ways andmeans to expand water use efficiency asthe current water use efficiency of canalirrigation is only 35 percent, which is thelowest in the world. It is estimated that10 percent increase in water useefficiency can bring an additional 14million hectares under irrigatedcultivation. India’s irrigation strategy hasto dovetail with sustainable use of waterresources.

Private Irrigation

Small and privately owned irrigationsystems (dugwells, tubewells, etc.)provide more than 50 percent ofirrigation in India. More than 70 percentof Indian farmers are small scaleoperators cultivating plots less than onehectare. Shallow-well schemes and smallsurface-water projects, mainly ponds ortanks are being supported bygovernment credit but otherwiseinstalled and operated by privateentrepreneurs. Roughly 42 percent of thenet irrigated area is from surface watersources. Tanks, step wells, and tube wellsprovide another 51 percent; with the restcoming from other sources.

AIBP

To expand the irrigation cover in thecountry and raise agricultural production,the Government of India launched theAccelerated Irrigation Benefits

IRRIGATIONFrom Heavy Investments toOptimum Water UseFrom Heavy Investments toOptimum Water UseBy G. Kalyan Kumar *

7Financing Agriculture

COVER STORY

Programme (AIBP) in 1996. Until March2007, the scheme created irrigationpotential of 45.53 lakh hactares. Onlymajor & medium irrigation projects of thePM package are assisted under AIBP.

The Bharat Nirman programme also hasan irrigation component to createirrigation potential of 10 million hectares.They include major and mediumirrigation projects. Its operational domainincludes Extension, Renovation andModernisation of major and mediumprojects. But it has no separate provisionof funds and no state wise allocationsare also made.

Poverty Eradication

Studies have established the variedbenefits of irrigation to the targetpopulation. The increased food securityto the country; increased agricultureincomes in irrigated areas; the successof the green revolution, are all linked totimely availability of water for cropsindependent of rainfall. In addition to thedirect benefits there are indirect benefitsemanating from forward and backwardintegration.

For every Rs 100 of direct benefits theBhakra dam generated 90 rupees of

indirect benefits for the regionaleconomy and made an impact in areaseven beyond the region (World Bank,2005). Similarly, the impact of the greenrevolution in the North Arcot region ofTamil Nadu proved that each rupee spenton irrigation led to an additional valuegeneration in the non-farm economy(IFPRI, 1985).

About 50 percent of the growth in thenon-farm economy was due toagricultural demand for inputs andmarketing services and the remaining 50percent was because farmers asconsumers had higher purchasing powerto buy more consumer and other goods(Chambers, 1988). In fact, the provisionof irrigation improved the returns onsocial sector investment as well.

Returns to five years of education were32 percent in irrigated districts and zeroin un-irrigated districts (Pritchett, 2002).Chambers (1988) mentions that impactof irrigation on the livelihoods of the ruralpoor about employment incomes,security against impoverishment, non-compulsive migration, and improvementin the quality of life. In terms of foodsecurity in India, the 35 percent irrigatedarea provides more than 60 percent ofthe food production.

Studies show that at the village level,irrigation provides more employment andthe poor are the major beneficiaries. Infact, the contribution of irrigation toemployment is greater than even highyielding varieties. Studies show that thereis an increase in number of days workrequired per ha with irrigation comparedwith rainfed condition ranging from 60percent (Datiwada canal) to more than150 percent (Ferozpur, Punjab) (WorldBank, 2005).

The increase in value and incomes whichirrigation provides can be judged by twomore indicators: (a) The ultimate impactof irrigation on reduction of povertydepends on other factors such as thestructures of agriculture production, ruralinstitution, the consumption feed backand labour mobility. In states like Bihar,UP, and Tamil Nadu high irrigationcoexists with relatively high rates ofpoverty (Bhattarai, 2004).

Social Gains

Despite criticism that large dams benefitonly large farmers, studies show that 40

Village level, irrigationprovides moreemployment and thepoor are the majorbeneficiaries. In fact, thecontribution of irrigationto employment isgreater than even highyielding varieties

8Financing Agriculture

FACE TO FACE

percent of the beneficiaries of majorirrigation systems are small and marginalfarmers. Large farmers form only 12percent of the command area of themajor irrigation schemes (Joshi, 1997).In addition, the increased income oflabourers who are not direct beneficiariesof the irrigation system is also substantial.

Besides, the increased number ofworking days, the wage rate alsoincreases when there is provision ofirrigation. These are great benefits for thelandless that migrate every year to urbanareas to get employment during the non-monsoon period leading tofragmentation of families. Studies showthat villages with intensive year-roundirrigation attract landless population fromthe surrounding villages who then settledown permanently (Chambers, 1988).Distressed and seasonal migration has anegative effect on education as parentsdo not lead a stable life. Studies showthat after irrigation when people stay inone village, they start sending theirchildren to school. Groundwater-basedirrigation largely has the same benefitsas surface irrigation. However,groundwater brings greater benefits forsmall and marginal farmers.

projects. This aimed to address the issueof under-utilisation of potential. Thisincluded setting up of a broad based AreaDevelopment Authority up for everymajor irrigation project to undertake thework of comprehensive areadevelopment. Based on thisrecommendation, the Governmentinitiated a Centrally-SponsoredCommand Area DevelopmentProgramme (CADP).

CADP was an integrated programmethat orchestrated all the activities crucialfor increasing agricultural production inthe command areas to ensure betterutilisation of the created irrigationpotential. It was a dynamic process ofharmonising land, water and crop by amulti-disciplinary team looked after by

Continuingpopulation growthand the predictedimpacts of climatechange, including

shifts in precipitationand glacier melt,make the water

challenge graver

Irrigation Potential

In 1972, the Irrigation Commissionrecommended the systematicdevelopment of commands in irrigation

COVER STORY

In areas of shallow water levels (1-6metres head) axial flow or mixed flowpumps are used to lift water. Wherewater levels are at 6-40 metres heador on river sides, mostly radial flowpumps are used. For deep bore wells,submersible or jet or compressor pumpsare used depending on head anddischarge requirements and availabilityof water in the bore well (yield). Whilethe rich farmer banks on costly systemssuch as electric and diesel pumps to extract groundwater for irrigating their largeacres of land, the small and marginal farmer has no option other than using thetedious traditional water lifting devices, such as tenda, dhekuli, sena, tar and donto irrigate their smallholdings.

Pump Industry

India has about 6 million diesel irrigation pumps and each year some two hundredthousand (2 lakhs) new pumps enter the market. The first electric motor in Indiawas manufactured in Coimbatore in 1930 and thereafter the motor pump industryexpanded rapidly there. Today 60 percent of India’s requirements of domesticand agricultural pump sets are made in Coimbatore. Besides Coimbatore,Ahmedabad, Baroda, Kolkata and Dewas are the other places where agriculturalpump industry is located. Similarly Rajkot, Agra and Kolhapur are famous for oilengines and Rajkot alone accounts for 50 percent of engine production.

Irrigation Equipments

9Financing Agriculture

a number of departments in the statesunder the overall control of theCommand Area Development Authority.

Shrinking Water Base

Monsoons supply more than 75 percentof India’s annual precipitation over aperiod of less than three months, makingstorage and transport capabilities critical.Approximately 80 percent of India’swater is used in agriculture. Continuingpopulation growth and the predictedimpacts of climate change, includingshifts in precipitation and glacier melt,make the water challenge graver.

India houses 14 percent of the world’spopulation but has only 4 percent of thetotal average annual river run-off.Estimates reveal that by 2020, India’sdemand for water will exceed all sourcesof supply. At the same time, 70 percentof India’s irrigation needs and 80 percentof domestic water supplies come fromgroundwater. This has loweredgroundwater tables and depletedaquifers and is posing grave threats tosustainability.

Water Use Efficiency

With depleting water tables and waterrelated conflicts rising; water useefficiency is becoming a criticalparameter in irrigation management.Low water charges realization has

resulted in poor finances that in turnhamper operation and maintenance ofwater infrastructure. Adoption of watersaving technologies such as MicroIrrigation Systems: Sprinkler and DripIrrigation hold promise for increasedwater use efficiency. While the overallefficiency of surface irrigation is 35percent, the same with drip irrigation is80 to 90 percent.

Recognising the inherent potential inthese systems the Government hasextended a subsidy of 50 percent forimplementation of micro irrigationsystems. The Government targets 17million hectares under micro Irrigation bythe end of the 11th Five Year Plan periodand annual water savings are about 59billion cubic metres. Other water-useefficiency methods to promote watersaving farming systems are System ofRice Intensification, Aerobic ricecultivation, Precision farming, Mulchingand Zero tillage.

The Micro Irrigation System market inIndia is valued at Rs 17 billion in 2009.All water efficient irrigation systems aregenerally called Micro Irrigation Systems.The main drivers of micro irrigation arefactors such as scarcity of water, increasingdemand of crop, greater emphasis onhorticulture crop and less use of fertilizers.But the high initial cost of micro irrigationSystem can be a challenge.

The merit of drip irrigation technology isthat it frees the farmer from thelimitations of rain fed farming throughout the year with higher croppingintensity and priority farming. It buffersthe poor communities against thestresses and shocks due to environmentalchanges. Drip Irrigation is usedsuccessfully among sericulture farmers insouth India, watershed projects in southIndia, cotton farmers in Madhya Pradesh,vegetable growers in Himachal Pradesh,small farmers and landless women inMadhya Pradesh and Rajasthan.

Transition

To conclude, India’s irrigation map is infor a transition; the priority is moving tosustainable irrigation management andoptimum water use efficiency. Since,2007 the sector has got a new impetus;innovative methods of irrigation aregetting a big push; hike in budget outlaysas well as better allocations in the FiveYear Plans including 11th Plan periodherald a new beginning.

The Zayed Future Energy Prize, a globalannual award to recogniseachievements in the renewable energyindustry was bagged by an Indianrecently—Amitabha Sadangi, ofInternational Development EnterprisesIndia (IDEI). He was honoured for thesuccessful deployment of low-costirrigation technology to Indian farmers.This technology has reached over onemillion farmers and resulted in dieselsavings of 533 million litres and areduction in carbon emissions of 1.8million tonnes. The Zayed FutureEnergy Prize jury, selected AmitabhaSadangi as a finalist due to thewidespread benefits his technology hasprovided across India, while promotingenvironmental conservation. Overall,5 million people have benefited fromthe increased income security andenvironmental well-being.

COVER STORY

Award for IrrigationTechnology

*The writer is Editor of FinancingAgriculture

10Financing Agriculture

IRRIGATION

Water is one of the mostimportant natural resourcesand vital for all living

organisms, major ecosystems and theirsustainable development. India is anagrarian country and depends a greatdeal on water for production of food andeconomic development. India’s ruralpopulation consumes water mainly fortwo purposes— domestic use includingdrinking, sanitation etc and for irrigation.

These two aspects have a direct bearingon the conservation of water and itsmanagement. As a finite resource, itsover exploitation is fraught with risk andmay lead to water- stressed conditions.The present scenario on water resourcesis critical; especially the status of groundwater exploration and its availability. Therural areas are most vulnerable tochanges in water resources availabilityand are least capable of adapting theirlivelihood to the changes. One shouldnot forget that in India conservation of

water and management of resourceswere well understood and described wayback in Varhat Samhita (550 A.D); wellorganised water pricing system existedin 400 B.C. and construction methodsand materials of dams, tanks andspillways were mentioned in ancientbooks that reveal the significance ofwater and its management.

OutlookAs per the estimates of Central GroundWater Board, 15 states in India may facesevere shortage of ground water if wecontinue to exploit it indiscriminately. It isincreasingly being felt by the governmentthat the needs of the rural people withregard to drinking water and irrigationcannot be fulfilled without launchingdemand-responsible, community-led andparticipatory schemes. The prevailingwater situation can prove to be a blessingin disguise if it can prod us into adoptingan alternative development strategy thatis suited to our genius and requirement,

and which is protective to people, plants,animals and the environment. In this paperan attempt has been made to study thewater management strategies in respectof performance, problems, prospects andits impact on rural masses in India.

The sources of water can broadly beclassified into two i.e. surface flows andground water sources. The surface waterand ground water resources of thecountry play a major role in agriculture,hydropower generation, livestockproduction, industrial activities, forestry,fisheries, navigation, recreationalactivities etc.

India accounts for 16 percent of theworld human population and 30 percentof the cattle and the country is endowedwith just 4 percent of water resources.Estimates indicate that surface andground water availability is around 1,869billion cubic metres (BCM). Of this, 40percent is not available for use due togeological and topographical reasons.

Domestic Demand for WaterOutstripping SupplyBy Mohammad Awais and Naheen Haider Zaidi *

WATER MANAGEMENT: PROBLEMS AND PROSPECTS

11Financing Agriculture

Around 4000 BCM of fresh water isavailable due to precipitation in the formof rain and snow, most of which returnsto the seas via rivers.

Ground Water

About 92 percent ground waterextracted is used in the agricultural sector,5 and 3 percent respectively for industrialand domestic rectors. In India, per capitaaverage annual fresh water availabilityhas reduced from 5,177 BMC in 1951to about 1,869 BCM in 2001 andestimated to further more down to 1,341BCM in 2025 and 1,140 BCM in 2050.This is certainly going to be a cause ofconcern for all of us.

Water covers about three-fourth of theearth’s surface and nearly 97.3 percentof earth’s water is in oceans and seas.Freshwater constitutes only very smallfraction (2.7 percent). Of this freshwater,75.2 percent lies in frozen form in thePolar Regions and 22.6 percent as groundwater. That means very little portion of

an important source of water fordrinking, irrigation, industrial uses etc.

Soaring Demand

As per the recent estimates made by theGovt. of India (2006) on water demandby a) Standing Sub-Committee of theMinistry of Water Resources (MoWR)and b) the National Commission forIntegrated Water Resources Develop-ment (NCIWRD), their estimates aremade till the year 2050. Both of themhave triggered warning bells on theintensity of the problem. For estimatesby MoWR indicate that, by year 2050,India needs to increase by 5 times morewater supplies to industries and 16 timesmore for energy production, while itsdrinking water demand will double andirrigation demand will rise by 50 percent.

World Water Day

The United Nations General Assemblyhas designated 22 March of every yearas the World Day for water. This WorldDay for Water was to be observedstarting in 1993, in conformity with therecommendations of UN conference onEnvironment and Development. The goalis to raise awareness of the world watercrisis and their goal of reducing by halfthe percentage of people who lack accessto safe (clean) drinking water and basicsanitation. To address the water-relatedissues and thereby launch a massiveawareness programme all over thecountry, the Govt. of India declared year2007 as “Water Year”. In 2008, worldwater day coincided with theInternational year of sanitation to spuraction on a crisis affecting more than oneout of three people on the plet. In 2009,the theme for world water day was“Shared water-Shared opportunities”.

freshwater is effectively available forconsumption. India receives annualprecipitation of about 4000 Km3,including snowfall. Out of this, monsoonrainfall is of the order of 3000 Km3.

The main water resources in India includerivers, canals, wells and tanks. Apart fromthe water available in the various riversof the country, the groundwater is also

The main water resources in India include rivers,canals, wells and tanks. Apart from the water

available in the various rivers of the country, thegroundwater is also an important source of water

for drinking, irrigation, industrial uses etc.

IRRIGATION

Table-1. Water Requirement for Various Sectors (in BCM)

Source: Govt. of India, 2006

Sector Standing Sub-Committees of MoWR NCIWRD

Year 2010 2025 2050 2010 2025 2050

Irrigation 688 910 1072 557 611 807

Drinking water 56 73 102 43 62 111

Industry 12 23 63 37 67 81

Energy 5 15 130 19 33 70

Others 52 72 80 54 70 111

Total 813 1093 1447 710 843 1180

12Financing Agriculture

Planning Needed

As per the international norms, if per-capita water availability is less than 1700m3 per year then the country iscategorised as water stressed and if it isless than 1000 m3 per capita per yearthen the country is classified as waterscarce. In India per capita surface wateravailability in the years 1991 and 2001were 2309 and 1902 m3 and these areprojected to reduce to 1401 and 1191m3 by the years 2025 and 2050respectively. Hence, there is a need forproper planning, development andmanagement of the greatest assets of thecountry, viz. water and land resources forraising the standards of living of themillions of people, particularly in the ruralareas.

Rural Water Supply

Rural India has more than 700 millionpeople residing in about 1.42 millionhabitations spread over 15 diverseecological regions. Providing drinkingwater to such a large population is anenormous challenge. The challengesbecome more acute as India ischaracterised by non-uniformity in levelsof awareness, socio-economicdevelopment, education, livelihood etc.Water is the key to development andsustenance for all communities. Underconditions of increasing stress on thisessential renewable but scarce naturalresource, efficient management of wateris emerging as a core issue.

Bharat Nirman

Drinking water supply is one of the sixcomponents of Bharat Nirman, which hasbeen conceived as a plan to beimplemented in four years, from 2005-06 to 2008-09 for building ruralinfrastructure. This will facilitatepreparation of a road map for achievingthe goal set out under Bharat Nirman forrural drinking water supply by 2008-09.Under Bharat Nirman rural drinking watercomponent, impressive achievementshave been made. Year-wise achievementsare as follows:

• In 2005-06, against the target of56,270 habitations to be covered,97,215 habitations have beencovered.

• In 2006-07, against the target tocover 73,120 habitations, 1,07,350habitation have been covered.

• As per the information received fromStates/UTs, during 2007-08, 11,457un-covered and 75,201 slipped-backhabitations have been covered and94,130 quality-affected habitationshave been reported to be addressed.Thus, in 2007-08, against the targetto cover 155,499 habitations, 180,788 habitations have been covered.

• During 2008-09, all the remaininghabitations, i.e. 18,049 uncoveredand 87,279 slipped-back habitationsare proposed to be covered. Inaddition, 1,12,958 quality-affectedhabitations would be addressed.Thus, during 2008-09, in all2,18,286 habitations are proposed tobe covered.

• Under Bharat Nirman for rural watersupply, it was envisaged that during4 years, Rs. 25,300 crore as Centralshare would be required.Accordingly, Rs. 4098 crore in 2005-06, Rs. 4,560 crore in 2006-07 andRs. 6,441.69 crore in 2007-08 hasbeen utilized.

Strategy

In 2008-09, budgetary provision of Rs.7,300 crore has been made for ruraldrinking water out of which, Rs.5,213.37 crore (71.42 percent) has beenutilized. Rs. 100 crore additional fundshave been provided for safe drinkingwater in rural schools by installingstandalone water purification systems.

Under this innovative scheme followingstrategies have been developed toimplement this scheme.

• Supplementing with new schemes forthe habitations served by outlivedschemes.

• Rejuvenation of the outlived schemeswhich are functioning below theirrated capacity.

• Providing the regional schemes fromalternate safe sources by extendingnew pipelines.

• Providing rainwater-harvestingstructures.

• Reviving the traditional sources.

• Utilising low cost technology formitigation of quality affectedhabitations.

• Providing water supply from alternatesources for courage of habitationswith no safe source.

Water Policy

The National Water Policy (1987 and2002) adopted by the Indian NationalWater Resources Council recognises thatwater is scarce and precious resource andthere by outlines the broad principles thatgovern the management of the country’swater resources. The first National WaterPolicy was adopted in September 1987.However, very little has been achievedin the fulfillment of the objectives laiddown in the first policy. Hence, there was

IRRIGATION

13Financing Agriculture

SPECIAL ARTICLEa need to revise the National Water Policyof 1987 and new policy was thusadopted in 2002 with a few moreprovisions. According to National WaterPolicy, in the planning and operation ofsystems, water allocation priorities shouldbe broadly as 1) Drinking water 2)Irrigation, 3) Hydropower, 4) Ecology, 5)Agro-industries, and Non agriculturalindustries, and 6) Navigation. However,the priorities could be modified or addedif warranted by the area/region specificconsiderations.

The National Water Policy 2002 hasassigned the highest priority to drinkingwater. However, it is important to notethat despite five decades of planning andover a decade of ‘Drinking WaterMissions’ there are large numbers of ‘nosource’ villages i.e., those with noidentified source of safe drinking water.Interestingly, although the targets forcovering such ‘no source’ villages arerepeatedly achieved, their numbersgrow, which in turn mean that somecovered villages are lapsing back into theuncovered category, and that newervillages are being added to this class.

India needs to revamp its model ofdrinking water provision. The countryneeds to tap assured sources and linkthem within the river basin, if required.Since, provision of drinking water is primeconcern, both states and centralgovernments and all stakeholders wouldsupport such venture. All this wouldenable to provision of adequate safedrinking water for all in the country.

Water Management

In view of the existing status of waterresources and their increasing demandfor meeting the requirements of therapidly growing population as well as theproblems that are likely to arise in future,a holistic, a well planned long termstrategy is needed for sustainable waterresources management in India. Thewater resources management practicesmay be based on the increasing the watersupply and managing the water demandunder the stressed water availabilityconditions. Data monitoring, processing,storage, retrieval and disseminationconstitute the very important aspects ofthe water resources management.

Watershed Management

For an equitable and sustainablemanagement of shared water resources,flexible, holistic approach of IntegratedWater Resources Management (IWRM)is required, which can cater tohydrological variations in time and spaceand changes in socio-economic needsalong with societal values. Watershedmanagement involves management ofland, water, energy and greeneryintegrating all the relevant scientificapproaches appropriate to socio-economic background for thedevelopment of watershed.

The main theme behind the watershedmanagement is to minimise the wasteof rain water, which flows into the oceansat the cost of socio-economic andecological conditions of the nations. Local

communities play a central role in theplanning, implementation and funding ofactivities within participatory watersheddevelopment programmes. In theseinitiatives, people use their traditionalknowledge, available resources,imagination and creativity to developwatershed and implement community-central programme.

Currently, many programmes, campaignsand projects are underway in differentparts of India to spread mass awarenessand mobilise the general population inmanaging water resources. There are fewsuccessful stories about watershedprojects. For instance, Sukhomajri inHaryana and Ralegaon Sindhi Project inMaharashtra have improved socio-economic conditions considerably in arelatively shorter time.

Community Participation

Community participation and equitabledistribution of benefits are the reasonsbehind their success and sustainability.Rajendra Singh of Tarun Bharat Sangh inRajasthan could replenish a Dead Riverthrough successful implementation ofwatershed concept for which he wasawarded Roman Magasaysay award.Anna Hazare in Maharashtra is alsofamous for his success in waterharvesting. Despite some of the abovesuccess stories, so far there has been noappreciable improvement on watershedresources utilisation at national level.Undoubtedly, coordinated watersheddevelopment programmes need to beencouraged and awareness aboutbenefits of these programmes must becreated among the people.

Rain Water

Rainwater harvesting is the process tocapture and store rainfall for its efficientutilisation and conservation to control itsrun-off, evaporation and seepage. Someof the benefits of rainwater harvestingare:

• It increases water availability

• It checks the declining water table

• It is environmentally friendly

• It improves the ground waterthrough dilution, mainly fluoride,nitrate and salinity, and

• It prevents soil erosion and flooding,especially in urban areas.

There is need to recharge aquifers and

IRRIGATION

14Financing Agriculture

conserve rainwater through waterharvesting structures. Harvestingrainwater not only reduces the possibilityof flooding, but also decreases thecommunity’s dependence on groundwater for domestic uses. The harvestedrainwater is conveyed to agriculturalfields through underground pipelines bygravity, thus there is no need of electricor diesel engines. It is ideal solution ofsolving water problem in area havinginadequate water resources.

In this method, the rain from rooftop isfed into tank through a pipe for meetingdomestic needs. The building should bedesigned for this purpose and roof topshould be clean and free from dustypesticides or corrosive materials etc. Thewater should go through a pipe into acommunity sump tank, which should bepurified before supply. Harvesting ofrooftop rainwater could meet over 60percent of domestic water needs. Thepotential for rooftop rainwater harvestinghas been estimated to be 1 Km3/yr.

Recycling and Reuse

Recycling means internal use of water bythe original user prior to discharge. Whilereuse refers to wastewater that isdischarged from municipalities (75percent), industries and irrigation arewithdrawn by users other thandischargers. After treatment, reclaimedwaters are diverted for irrigation. It isclearly evident in major cities where thewater scarcity is acute; the municipalsewage water is utilised for irrigatingvegetable crops.

Water used for domestic purposes(washing, cleaning and bathing etc.)should be collected, cleaned and recycledfor non-drinking domestic and industrialpurposes. Nearby holy places andtemples the water used for bathing andwashing in tanks and ponds should bechannelised towards agricultural fields inadjacent areas. It is said that in the cityof Franfurt, Germany, every drop ofwater is recycled eight times.

The total live storage capacity ofcompleted projects in India is about 174km3. A large flood storage space inreservoirs is required for a successfulflood management programme. Floodmanagement also calls for communityparticipation. Farmers, professionalbodies, industries and voluntaryorganizations have to be aware aboutflood management.

People’s participation in preparedness,flood fighting and disaster response isrequired. Media like radio, T.V.,Newspapers can also play an importantrole in flood management. As India sharesriver systems with six neighboringcountries, viz. Nepal. China, Bhutan.Pakistan, Bangladesh and Myanmarbilateral cooperation for floodmanagement is necessary for India andthe concerned country. The governmentof India has taken some initiatives in thisregard however, more active participationis required.

Groundwater Management

To protect the aquifers fromoverexploitation, an effectivegroundwater management policyoriented towards promotion of efficiency,equity and sustainability is required.Agricultural holdings in India are highlyfragmented and the rural populationdensity is large. The exploitation ofgroundwater resources should beregulated so as not to exceed therecharging possibilities, as well as toensure social equity. The detrimentalenvironmental consequences of over-exploitation of ground water need to beeffec-tively prevented by the Central andState Governments. Overexploitation ofgroundwater should be avoided, es-pecially near the coasts to prevent ingress

of seawater into freshwater aquifers.Clearly, a joint management approachcombining government administrationwith active people participation is apromising solution

In critically overexploited areas, bore-welldrilling should be regulated till the watertable attains the desired elevation.Artificial recharge measures need to beurgently implemented in these areas.Amongst the various recharge techniques,percolation tanks are least expensive interms of initial construction costs. Manysuch tanks already exist but a vast majorityof these structures have silted up. In suchcases, cleaning of the bed of the tank willmake them reusable. Promotion ofparticipatory action in rehabilitating tanksfor recharging would go a long way inaugmenting groundwater supply. Due todeclining water table, the cost ofextraction of groundwater has beenincreasing over time and wells often godry. This poses serious financial burden onfarmers.

Hence, special programmes need to bedesigned to support these farmers.Finally, the role of government will haveto switch from that of a controller ofgroundwater development to that of afacilitator of equitable and sustainabledevelopment. Scientists say the hard-rockaquifers have too little storage to justify

IRRIGATION

15Financing Agriculture

the prolific growth in re-chargestructures; people say a rechargestructure is worthwhile if their wellsprovide even 1000 m3 of life-savingirrigation/ha in times of delayed rain.According to a study by T. Shah, thefollowing workable solution formanagement of groundwater resources:

• Banning private wells is futile; crowdthem out by improving public watersupply.

• Regulating final users is impossible,facilitate mediating agencies toemerge, and regulate them.

• Pricing agricultural groundwater useis infeasible instead, use energypricing and supply to manageagricultural groundwater draft.

• No alternative to improved supplyside management: better rain-watercapture and recharge, importedsurface water in lieu of groundwaterpumping.

• Grow the economy take pressure offland, and formalize the water sector.

Water Quality

Rural drinking water supply is to a largeextent dependent on ground water.Though ground water is less susceptibleto pollution as compared to surfacewater, the nature of quality problem inground water is of two types (i) it isinherent in the form of contaminationcaused by the very nature of geologicalformation, viz. excess fluoride, arsenic,

brackishness, iron, etc. (ii) Ground waterpollution caused by human intervention(anthropogenic) viz. nitrates.

Nearly 15 percent of the rural watersupply comes from surface water sources.Major quality problem for surface wateris seasonal turbidity. Water also suffersfrom bacteriological contamination,reasons being anthropogenic. The reasonsfor chemical and bacteriologicalcontamination are: poor hygienicconditions around the water sources,improper disposal of sewage and industrialwaste water, callous disposal of solidwaste, indiscriminate use of chemicalfertilizes having high quantity of Nitratesused in the agricultural sector, pollutionfrom industrial effluents (untreated), over-exploitation leading to qualitydegradation, pollution of the source dueto ignorance of the people, overpopulation and lack of public awareness.

Factors in Water Crisis

The overdraw of ground water in thecountry has led to alarming decline inground water level in some areas andconsequent stress on ground waterresources resulting in a great threat tothe sustainability of ground watersources. There are many factorsresponsible for ground water sourcesbecoming defunct and dry, viz-

• Competing demand of ground waterfor irrigation, industrial and otherpurposes,

• Excessive drawing of ground waterwithout considering the recharge,

• No or low electricity tariff foragricultural and industrial use,

• Lack of scientific impact andmanagement of ground water,

• Lack of awareness among massesabout the need of ground waterrecharge,

• Misuse of Precious water treating itas a free and everlasting commodity,

• Lack of sustainability principleapplication in withdrawal of groundwater etc.

Measures to Overcome WaterCrisis

The following actions have to be initiatedon priority basis:

1) Integration of measures for theprotection and conservation ofpotential sources of water supply,including the inventorying of waterresources utilisation; protection ofmountains and slopes and riverbanks; and other relevantdevelopment and conservationactivities.

2) Wherever feasible, artificial rechargeand rain water harvesting have to beencouraged instead of looking onlyfor new and distant sources of watersupply or tapping vast depletinggroundwater.

3) Renovation and utilization of tanksand other local water sources are tobe considered as priority task.

4) Integrated watershed developmentprogramme should be given priorityfor soil and water conservation,arresting degradation of catchmentareas and restoring ecologicalbalance of the area.

5) New management approaches-empowering people for equitablesharing of water, creating a politicalwill and good governance,developing and sharing knowledge,and technology to improve waterresources management.

6) Flood and drought management,including risk analysis andenvironmental and social impactassessment.

7) A number of reservoir constructionprojects continuing over the long

Nearly 15 percent of the rural watersupply comes from surface water

sources. Major quality problem forsurface water is seasonal turbidity.

Water also suffers from bacteriologicalcontamination, reasons being

anthropogenic

IRRIGATION

16Financing Agriculture

Source: www.ddws.nic.in, www.cseindia.org

Table 2: States affected by various water quality problems

Parameter

Fluoride

Arsenic

Iron

Nitrate

Salinity

Heavy Metals

PersistentOrganicPollutants

Pesticides

Maximumpermissible limit

1.5 mg/l

0.05 mg/l

1 mg/l

100m/l

2000mg/l

Cadmium -0.01 mg/lZinc-15mg/lMercury-0.001mg/l

None

Absent

Health impact

• Immediate symptoms include digestivedisorders, skin diseases, dental fluorosis·Fluoride in larger quantities (20-80 mg/day) taken over a period of 10-20 yearsresults in crippling and skeletal fluorosiswhich is severe bone damage

• Immediate symptoms of acutepoisoning typically include vomiting,oesophageal and abdominal pain, andbloody ‘rice water’ diarrhea.·Long-tem exposure to arsenic causescancer of the skin, lungs, urinarybladder, and kidney. There can also beskin changes such as lesions,pigmentation changes and thickening(hyperkeratosis)

• A dose of 1500 mg/l has a poisoningeffect on a child as it can damage bloodtissues

• Digestive disorders, skin diseases anddental problems

• Causes Methamoglobinemia (Blue Babydisease) where the skin of infantsbecomes blue due to decreasedefficiency of haemoglobin to combinewith oxygen. It may also increase riskof cancer.

• Objectionable taste to water• May affect osmotic flow and movement

of fluids

Damage to nervous system, kidney, andother metabolic disruptions

High blood pressure, hormonaldysfunction, and growth retardation.

Weakened immunity, abnormalmultiplication of Cells leading to tumourformation they contain chlorides that causereproductive and endocrinal damage.

Affected states

Andhra Pradesh, Assam, Bihar,Chattisgarh, Gujarat, Haryana,Jharkhand, Karnataka, Kerala,Madhya Pradesh, Maharashtra,Orissa, Punjab, Rajasthan, TamilNadu, Tripura, Uttar Pradesh, WestBengal

Assam, Bihar, Chattisgarh,Jharkhand, Tripura, West Bengal,Uttar Pradesh

Arunachal Pradesh, Assam, Bihar,Chattisgarh, Jharkhand, Jammu andKashmir, Karnataka, Kerala,Manipur, Meghalaya, Mizoram,Madhya Pradesh, Maharashtra,Nagaland, Orissa, Punjab,Rajasthan, Sikkim, Tripura, TamilNadu, Uttar Pradesh, West Bengal,A&N Islands, Pondicherry

Bihar, Gujarat, Karnataka, Gujarat,Haryana, Kerala, Madhya Pradesh,Maharashtra, Punjab, Rajasthan,Tamil Nadu, Uttar Pradesh

Adhra Pradesh, Chattisgarh,Gujarat, Haryana, Kerala, MadhyaPradesh, Maharashtra, Orissa,Punjab, Rajasthan, Tamil Nadu,Uttar Pradesh, West Bengal,Pondicherry

Gujarat, Andhra Pradesh, Delhi,Haryana, Kerala

Delhi, Himachal Pradesh, Jharkhand,West Bengal

IRRIGATION

17Financing Agriculture

project must be completed on prioritybasis. Rivers, lakes and wetlands haveto be cleaned quickly.

8) Mobilisation of water to waterstressed areas particularly in arid andsemi arid regions and ensuringdrought proofing.

9) Due importance should be given tolocal water planning, with the basicaim of making each rural areamanaging its own water needs as faras possible through water harvest,conservation measures andwatershed development.

10)There is need for optimum use oflocal sources of water even in canalirrigated area in the interest ofefficiency of water use, extension ofirrigated lands, prevention of waterlogging and increased productivity.

Irrigation

India has the second largest irrigated areain the world, but due to the rapidexpansion of irrigation with its emphasison new construction, irrigationperformance and the sector’s increasingmanagement needs have not receivedadequate attention. Irrigationproductivity is low. The non-optimaldistribution of water results in low yieldsand cropping intensity and reducedopportunities for diversifying agricultureas do deteriorating infrastructure, limitedresearch on irrigation technology,insufficient piloting of innovations. Thesustainability of irrigation investment isput in doubt by a decline in themaintenance of infrastructure and in thequality of construction. Rehabilitationrequirements represent an increasingpart of construction investment and

environmental problems are mounting.Emphasis has therefore been placed onimproving irrigation performance.

The value addition by ground waterirrigation has been enormous inagriculture. In several regions it has richlycontributed to food security. The FoodInsecurity Atlas of Rural India revealedthat overexploitation of groundwater hasreached danger levels in Punjab, Haryanaand Tamil Nadu. The Punjab-Haryanaregion could lose its production potentialin a few decades if current patterns ofgroundwater extraction and pollution,soil salinisation and rice-wheatmonoculture persisted. Being a cheapresource, it has been exploited by thefarmers quite largely.

Over exploitation of ground waterconsequently leads to ground waterdepletion and reduction in water qualityas well. Large-scale exploitation ofground water has been leading to highrate of well failure and loss ofinvestments in well irrigation. Floodingthe fields over and above therequirement of the crop has become acommon practice in many places. Oneof the foremost and deep-rooted causesfor this ominous problem is government’ssubsidy or no charge for electricity.Uncontrolled depletion of groundwatermay well put 25 percent of India’sharvest at risk.

Water quality is another major issue.Although in their upper reaches mostrivers are of good quality, the importanceof water use for cities, agriculture andindustries, and the lack of wastewatertreatment plants in the middle and lowerreaches of almost all rivers cause a majordegradation of surface water quality. The

sources of water pollution are fromindustrial effluents, poorly treatedsewage, and runoff of agriculturalchemicals combined with unsatisfactoryhousehold and community sanitaryconditions. Among these, agriculturemakes a crucial contribution to thepollution of ground and surface water bynutrients and pesticides.

As a consequence of leaching, nitrate andphosphate concentrations in ground waterhave been rising constantly over pastdecades. Rising nitrate concentration inground water as a result of agriculturalpractices severely affect water supplysystem. It is not only agricultural practice,with its application of manure and fertilizerthat is responsible for nitrate leaching fromthe soil to ground water but also airbornedepositions.

Ground water quality is also beingaffected by wastewater infiltrating intothe sub-soil. Due to the ingress of salinewater from coastal regions and pollutedwater in other areas, water has becomeunusable. The quality of land and watermust be sustained in the face ofmounting pressure to degrade theseresources through waterlogging,salinisation, groundwater mining, andwater pollution.

Water forms the backbone for all thefuture endeavours to achieve the visionof food security. The projected foodrequirement in 2050 demands apronounced role for research,development and training in the waterand agriculture sector. Capacity buildingthrough technological upgradation andknowledge dissemination will play apivotal role in translating the vision intoreality.

ConclusionSince water scarcity is a significantproblem, every drop of water should bejudiciously conserved and its recklesswastage eliminated. Human interventionis vital for halting wastage and harnessingthe surplus water to the benefit of water-stressed regions. Unless water problemis adequately addressed with sufficientplanning and foresight, the existenceliving beings will face a grave threat inthe time to come.

IRRIGATION

*The writers are Research Scholars at theDept of Agricultural Economics and Deptof Geography respectively in AligarhMuslim University, Uttar Pradesh

18Financing Agriculture

AGRI BUSINESS

Rural Retailing in India is actuallynon-existent. On what basis dowe go about planning a rural retail

venture? But then, haven’t all of us heardabout the story of the FootwearCompany Executive who visited Africaand announced that there is a greatmarket potential for because people overthere do not wear anything over theirfeet! This optimism drove us at ITCtowards planning our Rural RetailingVenture in 2004.

Market Size

But how big is it? Is it sizeable enough?What are the problems in entering Rural

RURAL RETAILING IN INDIA

Lessons from ITC’s ChoupalSaagar ExperienceBy T. Seshu Kumar *

Retail Business? These were some of theissues plaguing us before we set up ourfirst Rural Retail Store at Sehore nearBhopal. The initial news about Rural RetailPotential are heartening. The absolute sizeof a Rural market is larger than Urbanmarket in many product categories.

The total size of the rural market forFMCG products is Rs 41550.00 ascompared to Rs 37130 crores in urbanareas. Rural Market share for ConsumerDurables Market is 59 percent of the total.An analysis of the rural market shares forabout 35 FMCG & Consumer Durablesproduct shows that Rural Market share ishigher in about 20 of them.

The first layer is thee-Choupal wherefarmers have access toInternet at a walkingdistance, which issupported by WebPortal in locallanguages operatedby a farmer selectedfrom the village

Choupal Saagar with its Customer Friendly Display

19Financing Agriculture

AGRI BUSINESS

18 million credit-plus-debit cardsissued in urban – Rs 64000 croresdisbursed under KCC.

• Out of 20 million rediffmail signups60 percent are from small towns.

An analysis of the Market Potentialwithin 25 Kms catchment for a rurallocation based in MP revealed that thereare about 4,00,000 people / 67,000households living in this catchment andthere is about Rs100 crores of businesswhich happens within the 25 kmcatchment. Assuming that a new storecan target 5 percent market share out ofthis, a store has potential to do about 5crores business in a rural area.

Once we decided that the rural marketis large enough to set up retail stores ,the next question to answer is “Willcustomers travel distances to buy at aRural stores”?

Unlike Urban India, rural customers aresparsely distributed across a large area.So the rural consumers would have totravel long distances to reach the store.Are they willing to travel distances?

A study on their current buying patternshowed us that they indeed travel to buytheir daily wares. More than 40 percentof the villagers buy their groceries fromCity/Town and more than 70 percent buyconsumer durables, Agri Inputs andApparel from nearest city/town.Following are the figures on where theconsumers buy their different needs.

Distance travelled for buying products isalso not a matter of worry: More than70 percent travel more than 5 kms forbuying Consumer Durables, AgriculturalInputs and Apparel whereas about 43

percent travel more than 5 kms forbuying Groceries. The economic policythinking of the government which haddecided to spend on Rural Roadssubstantially over the next decade wouldonly help in making our Superstores moreaccessible to the customers.

But there are two big issues to tackle:

1. Customer Mindset: Local Retailershave a very low credibility amongrural customers thanks to therampant availability of fake and lookalike products which are soldthroughout Rural India. The rangeavailable at the local retail stores isalso low which pushes the customersto go to the towns to buy theirrequirements.

2. Low Modal Incomes: The secondand more important problem is thelow modal income of rural customers– unless there is a business modelwhich helps in increasing the incomeof the customers also – the businesswill not succeed.

The ITC Model

ITC – IBD has developed a model thatattempts to attack both the above issues.This consists of creating a two-layeredinfrastructure:

The first layer is the e-Choupal wherefarmers have access to Internet at awalking distance, which is supported byWeb Portal in local languages operatedby a farmer selected from the village. Thisinfrastructure provides information tofarming community on:

• Prices of crops across differentmandies and ITC buying price

Product Category Rural Market Share

B&W Tv 81.11

Radio 80.89

Bicycle 77.83

Wrist Watch(mechanical/ 75Quartz)

Sewing Machine 73.51

Fan (Table & ceiling) 60

Cassette Recorder 67.76

Washing Cake 66.88

Washing Powder 57.85

Cooking Oil 65.92

Vanaspati 59.22

Tea 59.85

Toilet Soap 58.43

Cigarettes 57.9

Footwear(casual, leather & 56sports)

Pressure Cooker 52.08

Hair Oil/cream 51.89

Mobike 51.12

Nail Polish 47.85

Moped 47.31

Toothpaste 46.88

Electric Iron 45.66

Packaged Biscuits 43.6

Scooter 37.5

Color TV 36.68

Mixer / Grinder 33.25

Shampoo 32.69

Health Beverage 31.02

Refrigerator 28.19

Washing Machine 16.99

VCR/VCP 8.47

Let us look at the rural market share inservices:

• In 2001/02, LIC sold 55 percent ofits policies in rural India

• Out of 2 million BSNL mobileconnections, 50 percent are in RuralIndia.

• Billing per Mobile in small towns inAP is higher than in Hyderabad.

• The 24 million Kisan Credit Cards(KCC) issued in rural India exceeded

Source: India Demographics Report 2002 byNCAER

20Financing Agriculture

• Crop specific farming best practices

• Weather Information

• Crop related Question and Answersby expert panel.

The e-choupal is a resource of unbiasedinformation which comes free of cost tothe villager and thus builds trust amonglocal villagers.

tranparency and trust, ensure higherincome to the farmer and makes goodquality products and services available atcompetitive prices.

The promise of Choupal Sagar isencapsulated in its punchline “JarurateinAnek, Jagah Ek”.

Choupal Sagar is a one-stop physicalinfrastructure for farmers to

• Restaurant• Banking and Insurance.

The same strategy extends tohypermarket merchandising that haseverything under one roof - from FMCGproducts to apparel, footwear, consumerdurables to agricultural pumps, fertilizers,seeds, pesticides and Fuel.

Choupal Saagar Experience

ITC had set up 24 Choupal Saagars overthe last 6 years since the first ChoupalSaagar opened in August 2004. Anaverage Choupal Saagar has about 300-500 customers visiting Choupal Saagarsduring the Kharif and Rabi buyingseasons when commodities arepurchased from the farmers. The buyingseason is spread from March –Mayduring Rabi Harvest and October toDecember during Kharif season. Beyondthe buying season , about 150 -200customers visit Choupal Saagarseveryday for purchasing their day to dayrequirements of groceries, householdarticles, apparel, footwear and evenpurchases of Consumer Durables for localfestivals and marriages.

Challenges in Rural Retailing:

There are three main challenges in RuralRetailing:

a) Diverse Customer Base: While it istrue that India is a land of manylanguages, religions and cultures it isexperienced even more when one travelsin Rural India.

The Second layer is physical infrastructurecalled Choupal Sagar which consists of aBuying Centre where the farmers can getright price for their produce and aHypermarket where they can buy goodsat competitive prices apart from a wholelot of essential services.

Together the “e-Choupal and ChoupalSagar” infrastructure establish

• Sell their Produce/ Output to ITC Ltd.• Hypermarket to sell quality products

sourced from manufacturers atcompetitive prices.

• Fuel Station.• Farmer Training centre for best

practices in farming.• Medical facilities – Doctor and a basic

diagnostic laboratory

ITC had set up 24Choupal Saagars over

the last 6 years since thefirst Choupal Saagar

opened in August 2004.An average Choupal

Saagar has about 300 -500 customers visiting

Choupal Saagars duringthe Kharif and Rabi

buying seasons whencommodities are

purchased from thefarmers

AGRI BUSINESS

21Financing Agriculture

b) Smaller Wallet size: While thecustomers have a lower capability tospend, they still aspire to purchase thesame items/ brands that are purchasedby their city bred friends and relatives.This creates a contradiction for theretailers – they should supply high qualitybranded merchandise equivalent to theprices of local products produced withoutthe promise of consistent quality.

c) Media Dark Customers: While theexposure of customers to different mediasuch as Newspaper and TV had beenincreasing, the ability of these media toinfluence Customers ConsumptionPatterns is relatively low as compared toword of mouth and below the linemarketing activities.

ITC, under its experience identifieddifferent solutions to these challenges:

1) Flexible, Fast Supply Chain: Thediversity in consumer base and theirtastes makes it impossible to predictthe requirement of a consumer. Theprediction becomes even morecomplex with the ever changingnature of Indian Monsoons and theagri-commodity prices which makea sea difference in the income of afarmer. A flexible, fast supply chainwhich is not based on prediction offuture trends but based on supplyingquickly once the trend is identified isthe answer to this challenge.

2) High Quality, AffordableMerchandise: ITC had createdseveral firsts in the quality and priceof merchandise being sold at ChoupalSaagars. Be it Cotton Shirts selling atRs 129, Plastic Chairs at Rs 199 orReebok Shoes under Rs 1000, ITChad partnered with several leadingcompanies and exporters tosupplying high quality products atprices that are affordable to thecustomer.

3) Reach the Customers at theirdoorstep: ITC had found thatstandard communication tools suchas mass media are either veryexpensive or cost ineffective in RuralMarketing. Hence ITC had created itsown method of reaching out to ruralcustomers through interactivegames, competitions and melas.

Choupal Mahotsav is a mela which is oneof its kind in the rural India.

Choupal Mahotsav

Choupal Mahotsav is a three day melatargeted towards farmers within 25 kmcatchment of the Choupal Saagar. ITChad partnered with ImpactCommunications, Delhi to launch thismega event in Uttar Pradesh during themonths of March and April 2010. This 3day event was conducted at all 8locations in this state namely Hathras,Chandouli, Hardoi, Budayun, Bahraich,Gonda, Jagdishpur & Pilibit. During these3 days, farmers and their families wereprovided opportunities to gaininformation, shop and entertainthemselves at the Choupal Saagars.

Health camps, Food stalls and Servicecamps were set for the benefit ofshoppers and farmers. Sessions onagriculture/farming were handled byexperts for enriching the farmingcommunity. For the benefit of all familymembers/age groups, events like magicshow, puppet show, folk show andgames were lined up. Major brands likeSuperia, Sunfeast, TVS motors, BharatPetroleum, JCB, Tata Motors, ACCcement, Eicher tractors, Tata Tea, Moserbaer are some of the esteemedcompanies which participated in theMahotsav. More than 10000 ruralconsumers from 200 catchment villagesvisited each Choupal Saagar during this3 day extravaganza.

Conclusion: Affordable producer range,customer friendly layout and innovativemarketing programmes like ChoupalMahotsav have made ITC ChoupalSaagars truly a front runner in Rural RetailBusiness. However, as Robert Frost said“there are miles to go before we sleep,and miles to go before we sleep…..”

Choupal Saagar – External View

Choupal Mahotsav

Entertainment during Choupal Mahotsav

Childrens Entertainment duringChoupal Mahotsav

Varying cropping and irrigation Patternfrom district to district results in a matrixof varied prosperity rates in rural areasfor almost every 100 kms. The distancefrom the nearest large town and roadconnectivity also have an impact on thenon-agricultural income as well theaspirations of the consumers.

For example, consumption patterns infashion categories such as garments andfootwear in villages / towns within 50kms distance from Indore indicate higherspend per household and higher sale ofBranded Merchandise where as moreprosperous towns but farther fromIndore show lesser spend and lesser saleof branded merchandise. Theconsumption pattern also varies on thebasis of different communities that arein the local towns. Towns on theRajasthan border in MP have a differentsales pattern in fashion products due tothe migrant population from Rajasthan.

AGRI BUSINESS

The writer is Business Head, RuralRetailing, Agri Business Division,Secunderabad, ITC

22Financing Agriculture

The Regional Rural Banks (RRBs)were set up in 1975 by theGovernment of India in

collaboration with State Governmentsand the Nationalised Banks with theobjective to provide financial services tothe large underserved and unreachedrural population. Although manycooperative and commercial banks werein operation prior to this, they wereunable to cater to the savings and creditneeds of the rural poor.

The cooperative banks, in spite of havinga better geographical coverage in ruralareas, were serving mostly the rural richwhereas the commercial bank mainlyconcentrated in urban areas hence didnot target the rural poor. To bridge thegap, the government of India appointed

Narashimam Committee in 1975, whichrecommended the formation of RegionalRural Banks.

Rural Poor

Thus RRBs were established “with a viewto developing the rural economy byproviding, for the purpose ofdevelopment of agriculture, trade,commerce, industry and other productiveactivities in the rural areas, credit andother facilities, particularly to small andmarginal farmers, agricultural labourers,artisans and small entrepreneurs, and formatters connected therewith andincidental thereto” (RRB Act, 1976).

The Central Government, StateGovernments and the Sponsor Bankshold the equity of RRBs in the ratio of

Role of Gramin Banks in financingRural Subsistent FarmersThe success of Marathwada Gramin BankBy S.K. Deshpande and A.M. Degaonkar *

50:15:35 respectively. In the first 15years, the expansion of RRB peaked to196 with 14,473 branches, of whichmore than 80 per cent branches wereestablished in rural areas. It was expectedthat these banks will become viable inseven to eight years of operations, sincetheir inception. However, by the earlynineties many of the RRBs becameincreasingly unviable resulting in nofurther expansion and with an increasedneed for restructuring after almost adecade of debate from 2005.

Need for Awareness

General observations regarding theawareness level on different scheme,farmers are aware about the importantsaving scheme and their salient features.

AGRI CREDIT

22Financing Agriculture

23Financing Agriculture

SPECIAL ARTICLE

According to them, the ‘Farmers Club’ in the village has madelittle impact on people to make use of the bank facilities.Similarly, Recurring Deposit scheme has less response mainlyfor two reasons. One, the income flow is not adequate andregular in villages. Secondly, lack of publicity and promotionalactivity by the banks. Hence constant persuasion about theproduct is most important particularly in rural areas.

Indirect Financing

Devraja (2003) studied indirect financing by RRBs in Karnataka.A sample of three Regional Rural Banks namely Cauvery GraminBank, Vishverswaraiah Gramin Bank and Kalappaturu GraminBank operating in the Southern Karnataka has been selectedto analyse the opinion of management regarding loan. Majorityof the borrowers (64 per cent) did not prefer loans throughprimary co – operative societies. Similarly majority of theborrowers (92 per cent) and managers (57 per cent) of theRRBs disfavored the grant of loans through Farmer’s ServiceSocieties

Hence in view of this, study on opinion of officials and farmersregarding the financing through Marathwada Gramin Bank(MGB)—a RRB were under taken with following objectives.

1. To analyse the opinion of officials of the Bank regardingthe financing.

2. To analyse the opinion of farmers under jurisdictionregarding the financing.

Cluster Analysis

Cluster analysis is a formal multivariate statistical procedure,which is often useful in all the social sciences. The method ofmaximum similarity measures of cluster analysis was used toanalyse the opinion scores given by officials and borrowers ofMarathwada Gramin Bank. Opinion scores of the officials andborrowers were obtained on fifteen variables. A correlationmatrix of 15 x 15 was developed for identifying maximumsimilarity values of variables or indicators. The indicators whichhad the similarity values greater than or equal to X + (0.425S.D.) were considered as high aggregate cluster. The indicatorwhich had similarity values in between less than X + (0.425S.D.) and greater than X - (0.425 S.D.) were considered as

medium aggregate cluster. The indicator, which had similarityvalues less than X - (0.425 S.D.) was considered as lowaggregate cluster.

Standard deviation (S.D.) = {(X - Mean (X)2}1/2

n1/2

Where, X = Similarity values correlation values.

X = arithmetic mean of the similarity values

n = Number of similarity value

Results

A) Position of Bank Officials on Financing: From table 1 itwas observed that on the basis of preference the opinion ofofficials were grouped into high, medium and low aggregateclusters. In regard to high aggregate clusters, similarity measureswere restricting greater than or equal to 0.435. In this cluster,the deposit by borrower and advances per branch with similaritymeasure of 0.575 followed by percent rise in deposit andpercent rise in advance with similarity value of 0.443. It impliedthat opinion of officials was more on deposit by borrower andadvance per branch in high aggregate cluster. Hence, this clusteris named as highly preferred dimension.

Similarly, medium aggregate cluster was restricting less than0.435 and greater than or equal to 0.373. In this cluster opinionof officials on interest paid by borrower and borrowers capacityto repay the loan with similarity measure of 0.429 followed byshare capital of bank with similarity measure of 0.428 followedby behavior of bank borrower and loan to priority sectorfollowed by borrower outstanding growth with similaritymeasure of 0.390. It implied that, opinion of officials was moreon interest paid by borrower and borrower capacity to repaythe loan in medium aggregate cluster. Hence this cluster isnamed as medium preferred dimension.

It was also observed from the table that low aggregate clusterwas restricting the similarity value less than 0.373. In this clusteropinion of officials on advance to agriculture sector withsimilarity measure 0.370 followed by advance to co-operativesocieties with similarity value of 0.353 followed by preferring

AGRI CREDIT

24Financing Agriculture

Table 2: Aggregate clusters of farmers with respect to financing

Aggregate cluster Variable Indicators Similaritycode measurenumbers

High ( e=0.4672) 7, 8 Implementation of crop 0.602insurance, Housing loanfacility for farmer.

12, 13 Joint liability group for 0.586tenant farmer, Schemefor Jatropha plantation.

4, 11 Education about timely 0.571repayment of loan,Joint facility for vehicle.

Medium (< 0.4672 10 Loan facility for other 0.507and e=0.3506) complimentary agriculture

business.

Low ( <0.3506) 6 Timely disbursement 0.323of agriculture loan.

9 Loan facility for sanitation. 0.322

3 Easy approach for 0.308advancing other agriculture loan.

14, 15 Loaning for personal loans, 0.259Financial assistance for Self Help Group.

1,2 Relation of bank officials 0.200With farmer, Easy approachfor advancing loan

Arithmetic mean (X) = 0.4089Standard Deviation (S.D.) = 0.467

borrowing at interest rate with similaritymeasure of 0.286. Hence this cluster canbe known as low preferred dimension.

Opinion of Farmers on Financing: Fromtable 2 it was observed that on the basisof preference the opinion of borrowerswere grouped into high, medium and lowaggregate clusters. In regard to highaggregate clusters, similarity measureswere restricting greater than or equal to0.467. In this cluster, the implementationof crop insurance, housing loan facilityfor other complimentary agriculturebusiness with similarity measure of 0.602followed by joint liability group for tenantfarmers and scheme for Jatrophaplantation with similarity value of 0.586followed by education about timelyrepayment of loan and loan facility forvehicles with similarity measure of 0.571followed by implementing Kisan CreditScheme with similarity measure of 0.508.It implied that opinion of borrowers wasmore on implementation of cropinsurance and housing loan facility forfarmer in high aggregate cluster. Hence,this cluster is named as highly preferreddimension.

Similarly, medium aggregate cluster wasrestricting less than 0.467 and greaterthan or equal to 0.351. In this clusteropinion of borrowers on loan facility forother complimentary agriculture businesswith similarity measure of 0.409 wasmore in medium aggregate cluster.Hence this cluster is named as mediumpreferred dimension.

It was also observed from the table thatlow aggregate cluster was restricting thesimilarity value less than 0.351. In thiscluster opinion of borrowers on timelydisbursement of agricultural loan withsimilarity measure 0.323 followed byloan facility for sanitation with similarityvalue of 0.322 followed by loaning forpersonal loans and financial assistance forSelf Help Group with similarity measureof 0.259 followed by relation of bankofficials with farmer and easy approachfor advancing loan. Hence this cluster canbe known as low preferred dimension.

AGRI CREDIT

Table 1: Aggregate clusters of bank officials with respect to financing

Aggregate cluster Variable Indicators Similaritycode MeasuresNumbers (X)

High ( e=0.4352) 2, 5, Deposit by borrower, 0.575Advance per branch.

3, 4 Percent rise in deposit, 0.443Percent rise in advance.

Medium (< 0.4352 8, 11, Interest paid by borrower, 0.429 and e= 0.3728) Borrower’s capacity to repay the loan.

10 Share capital of bank. 0.428

1, 15 Behavior of bank borrower, 0.425Advance per branch.

14 Borrowers’ outstanding growth. 0.390

Low ( <0.379) 6 Advances to agriculture sector. 0.370

7 Advances to agriculture sector. 0.353

9 Preferring borrowing at interest rate. 0.342

12, 13 loss faced by bank, 0.286Industrial borrowers’ relation.

Arithmetic mean (X) =0.4040

Standard Deviation (SD) =0.0734

*The writers are from Post GraduateInstitute of Agribusiness Management,Latur, Maharashtra

25Financing Agriculture

“An organic farm, properlyspeaking, is not one thatuses certain methods and

substances and avoids others; it is a farmwhose structure is formed in imitationof the structure of a natural system thathas the integrity, the independence andthe benign dependence of an organism”wrote Wendell Berry in “The Gift of GoodLand”

Since 1990, the market for organicproducts has been growing at a rapidpace to reach US$46 billion in 2007.Thisdemand has driven a similar increase inorganically managed farmland andpeople It relies on ecological processes,biodiversity and cycles adapted to localconditions, rather than the use of inputswith adverse effects. Organic agriculture

ORGANIC FARMING

Expanding Spread andGlobal Trends

combines tradition, innovation andscience to benefit the sharedenvironment and promote fairrelationships and a good quality of lifefor all involved.

History

The organic movement began in the1930s and 1940s as a reaction toagriculture’s growing reliance onsynthetic fertilizers. Sir Albert Howard iswidely considered to be the father oforganic farming. Further work was doneby J.I.Rodale in the United States, LayEve Balfour in the United Kingdom, andmany others across the world.

Artificial fertilizers were created in the18th century, initially with super-phosphates and then ammonia derived

fertilizers using the Haber-Bosch processdeveloped during World War I. Thesewere cheap, powerful, and easy totransport. Similar advances occurred inchemical pesticides in the 1940s leadingto the decade being called ‘pesticide era.’

In the developing world, many farms,according to traditional methods whichare comparable to organic farming butare not certified. In other cases farmersin the developing world have convertedfor economic reason. As a proportion oftotal global agricultural output, organicoutput remains small, but it has beengrowing rapidly in many countries,notably in Europe.

Soil Management

Plants need nitrogen, phosphorus, and

By A.V. Tak & V.B. Tak *

ORGANIC AGRICULTURE

26Financing Agriculture

potassium, as well as micronutrients andsymbiotic relationships with fungi andother organisms to flourish, but gettingenough nitrogen, named particularlysynchronization so that plants getenough nitrogen at the right time (whenplants need it most), is likely the greatestchallenge for organic farmers. Croprotation and green manure (“covercrops”) help to provide nitrogen throughlegumes (more precisely, the Fabaceaefamily) which fix nitrogen from theatmosphere through symbiosis used forinsect and disease control, can alsoincrease soil nutrients, but thecompetition between the legume andthe three crops can be problematic andwider spacing between crop rows isrequired.

Crop residues can be ploughed back intothe soil, and different plants leavedifferent amounts of nitrogen, potentiallyaiding synchronization. Organic farmersalso use animal manure (which must becomposted), certain processed fertilizerssuch as seed meal and various mineralpowders such as rock phosphate andgreensand, a naturally occurring form ofpotash which provides potassium.Altogether these methods help to controlerosion. In some cases pH may need tobe amended. Natural pH amendmentsinclude lime and sulfur, but in the U.S

some synthetic compounds such as ironsulfate, aluminum sulfate, magnesiumsulfate, and soluble boron products areallowed in organic farming.

Mixed farms with both livestock andcrops can operate as lye farms, wherebythe land gathers fertility through growingnitrogen-fixing forage grasses such aswhite clover of alfalfa and grows cashcrops of cereal when fertility isestablished. Farms without livestock(“stockless”) may find it more difficultto maintain fertility, and may rely moreon external inputs such as importedmanure as well as grain legumes andgreen manures, although grain legumesmeaty fix limited nitrogen because theyare harvested. Horticultural farmsgrowing fruits and vegetables whichoperate in protected conditions are ofteneven more reliant upon external inputs.

Weed Control

After nutrient supply, weed control is thesecond priority for farmers. Techniquesfor controlling weeds have varying levelsof effectiveness and include handweeding, mulch, corn gluten meal.Natural reemergence herbicide, flame,garlic and clove oil, borax, organic acid,polarization (which involves speakingclear plastic across the ground in hotweather for 4-6 weeks), vinegar, and

various other homemade remedies arealso tried. One recent innovation in ricefarming is to introduce ducks and fish towet paddy fields, which eat both weedsand insects.

Organisms other than weeds whichcause problems include arthropods (e.ginsects, mites) and nematodes. Fungi andbacteria can cause disease. Insect pestsare a common problem, and insecticides,both non-organic and organic, arecontroversial due to their environmentaland health effects. One way to manageinsects is to ignore them and focus onplant health, since plants can survive theloss of about a third of leaf area beforesuffering severe growth consequences.

Avoiding Insecticides

To avoid using insecticides, one can selectnaturally resistant plants, put bagsaround the plants, remove dying materialsuch as leaves, fruit and diseased plants,covering plants with a solid barrier (“rowcover”), hosing, encouraging andreleasing beneficial organisms andbeneficial insects, planting companionplants and polycultures, various traps,sticky cards (which can also be used toassess insect prevalence), and seasonextension. Biological pest control usesnatural predators to control pests.Recommended beneficial insects include

Plants need nitrogen,phosphorus, andpotassium, as well asmicronutrients andsymbiotic relationshipswith fungi and otherorganisms to flourish,but getting enoughnitrogen, namedparticularlysynchronization so thatplants get enoughnitrogen at the righttime (when plants needit most), is likely thegreatest challenge fororganic farmers

ORGANIC AGRICULTURE

27Financing Agriculture

SPECIAL ARTICLEminute pirate bugs, big-eyed bugs, andto a lesser extent ladybugs (which tendto fly away), all of which eat a wide rangeof pests.

Several of pesticides approved fororganic use have been green pesticidessuch as spin sad and neem. Generally,but not necessarily, organic pesticides aresafer and are more environment- friendlythan synthetic pesticides. The mainorganic insecticides used in the U.S areBt (a bacterial toxin) and pyrethrum. Lesstoxic but still effective organic insecticidesinclude neem, spinosad, soaps, garlic,and citrus oil, Capsaicin (repellent),Bacillus papillae, Bavaria bassinet, andboric acid.

Certification

Standards regulate production methodsand in some cases final output for organicagriculture. Standards may be voluntaryor legislated. In the 1970s organicproducers could be voluntarily certifiedby private associations. In the 1980s,governments began to produce organicproduction guidelines. Beginning in the1990s, a trend toward legislation ofstandards began, most notably with the1991 EU-Eco-regulation developed forEuropean Union which set standards for12countries, and a 1993 UK programme.The EU programme was followed by aJapan programme in 2001, and 2002 theUnited States created the NationalOrganic Programme (NOP).

Under USDA organic standards, manuremust be subjected to proper hemophiliccomposting and allowed to reach asterilising temperature. If raw animalmanure is used, 120 days must passbefore the crop is harvested if the finalproduct comes into direct contact withthe soil for products which do not comeinto direct contact with soil, 90 days mustpass prior to harvest

Economics

The economics of organic agricultureencompasses the entire process andeffects of organic farming in terms ofhuman society, including social costs,opportunity costs, unintendedconsequences, information asymmetries,as economies of scale. Although the scopeof economics is broad, agriculturaleconomics tends to focus on maximizingyields and efficiency at the farm level.Mainstream economics takes ananthropocentric approach to the value ofthe natural world biodiversity, forexample, is considered beneficial only tothe detent that it is valued by people andincreases profits. Some governments suchas the European Union subsidize organicfarming, in large part because thesecountries believe in the external benefitsof reduced water use, reduced watercontamination by pesticides and nutrientsof organic farming, reduced soil erosion.

Reduced carbon emissions, increasedbiodiversity, and assorted other benefits.

Organic farming is labour and knowledge-intensive whereas conventional farmingis capital-intensive, requiring more energyand manufactured inputs. Organicfarmers in California have cited marketingas their greatest obstacle.

Distribution

The markets for organic products arestrongest in North America and Europe,which in 2001 was estimated to be US$6and US$8 billion respectively in the totalUS$20 billion market. However, as of2007 organic farmland is distributed allacross the globe. Australasia has 39percent of the total organic farmlandwith Australia’s 11.8 million hectares, but97 percent of this land is sprawlingrangeland (2007), which results in totalsales of approximately 5 percent of USsales; Europe has 23 percent of totalorganic farmland (6.9 million hectares),followed by Latin America with 19percent (508 million hectares). Asia has9.5 percent while North America has 7.2percent. Africa has a mere 3 percent.

Besides Australia, the countries with themost organic area are Argentina (3.1million hectares) China (2.3millionhectares), and the United States (1.6million hectares). Much of Argentina’sorganic farmland is pasture, like that ofAustralia. Italy, Spain, Germany, Brazil,Uruguay, and the UK follow the UnitedStates in terms of the amount of landmanaged organically.

Productivity

A 2006 study suggests that convertedorganic farms have lower pre-harvestyields than their conventionalcounterparts in developed countries (92percent and that organic farms havehigher pre-harvest yields than their low-intensity counterparts in developingcountries (132%). The researcherattributes this to a relative lack ofexpensive fertilizers and pesticides in thedeveloping world compared to theintensive, subsidy-driven farming of thedeveloped world. Nonetheless, theresearcher purposely avoids making theclaim that organic methods routinelyoutperform green-revolution(conventional) methods. This studyincorporated a 1990 review of 205 cropcomparisons which found that organiccrops had 91 percent of conventionalyields. A major US survey published in2001, analysed from 150 growing

ORGANIC AGRICULTURE

28Financing Agriculture

seasons for various crops concluded thatorganic yields were 95-100 percent ofconventional yields.

Impact

Organic methods often require morelabour and provide rural jobs butincreasing costs to urban consumers.Agriculture in general imposes externalcosts upon society through pesticides,nutrient runoff, excessive water usage,and assorted other problems. As organicmethods minimise some of these factors,organic farming is believed to imposefewer external costs upon society.

A 2000 assessment of agriculture in theUK determined total external costs for1996 of 2343 million British pounds of208 per hectare. A 2005 analyses ofthese costs in the USA concluded thatcropland impulses approximately US$5to US$16 billion dollars, while livestockproduction imposes US$714 million.

Both studies concluded that more shouldbe done to internalize external costs, andneither included subsidies in theiranalyses, but noted that subsidies alsoinfluence the cost of agriculture tosociety.

Quality

Organic food is widely believed by thelay public to be healthier thanconventional food, although theresearches inconclusive. Animals fedorganic diets appear to have slightlybetter health and reproductiveperformance, but similar tests in humanshave not been performed. In somevegetables and cereals there is a lowerconcentration of protein, but it is ofhigher-quality, Nutrients appear to besimilar with the exception of a trendtowards slightly higher vitamin C inorganic food.

Only tentative conclusions can be drawnof the relative safety of organic food.Organic produce is likely to have lessagrochemical residues, but these residuesare generally below the acceptable dailyintake and their health impact isquestionable. Organic fold also appearsto have nitrate concentrations but thehealth impact of nitrates is debated. Bothorganic and conventional food isexpected to have similar concentrationsdoff persistent organic pollutants andheavy metals. Data is limited on naturalplant pesticides and their health effects,

as well as the relative risks from bacterialpathogens.

Concerns have been raised that thehigher expense of organic food (rangingfrom 45 to 200 percent) could limit therecommended consumption of 5 servingsper day of vegetables and fruits, whichare known to improve health and reducecancer regardless of whether they areorganic or conventional.

Two studies have found that children fedorganic diets experienced significantlylower organ phosphorus pesticideexposure than children fed conventionaldiets. Although the researchers did notcollect health outcome data in this study,

they concluded “it is intuitive to assumethat children whose diets contest oforganic food items would have a lowerprobability of neurologic health risks”.

A 2007 study found that consumption oforganic milk is associated with a decreasein risk for eczema, although nocomparable benefit was found for organicfruits, vegetables or meat. Extensivescientific research is being carried out inSwitzerland at over 200 farms todetermine differences in the quality oforganic food products compare4d toconventional in addition to other tests.The FiBL institute has been investigatingthe differences at over 200 farms.

ORGANIC AGRICULTURE

29Financing Agriculture

It states that “organic products stand outas having higher levels of secondary plantcompounds and vitamin C. In the caseof milk and meat, the fatty acid profile isoften better from a nutritional pointy ofview. As far as carbohydrates andminerals are concerned, organic productsare no deferent from conventionalproducts. However, in regard toundesirables such as nitrate and pesticideresidues, organic products have a clearadvantage. A 12 million EU-fundedinvestigation into the difference betweenorganic and ordinary farming publishedin 2007 found that organic fills havemore nutritional value. A recent studyfound that organically grown producehas double the flavonoids, an importantantioxidant. A 2007 study found thatorganically grown kiwifruit had moreantioxidants than conventional kiwifruit.

Avoids GM Products

A key characteristic of organic farmingis rejection of genetically engineeredproducts, including plants and animals.On October 19, 1998, participants atIFOAM’S 12th Scientific Conferenceissued the Mar del Plata Declaration,where more than 600 delegates fromover 60 countries voted unanimously toexclude the use of genetically modified

organisms in food production andagriculture. From this point, it becamewidely recognized that GMOs arecategorically excluded from organicfarming. Although opposition to the useof any transgenic technologies in organicfarming is strong, agricultural researchersLuis Herrera-Estrrella and Ariel Alvarez-Morales continue to advocate integrationof transgenic technologies into organicfarming as the optimal means tosustainable agriculture, particularly in thedeveloping world.

Biodiversity

A wide range of organisms benefit fromorganic farming, but it is unclear whetherorganic methods confer greater benefitsthan integrated agric environmentalconventional programmes. Nearly allnon-crop, naturally occurring speciesobserved in comparative farm landpractice studies show a preference inorganic farming both by population andrichness. Spanning all associated species,there is an average of 30 percent moreon organic farms versus conventionalfarming methods. Birds, butterflies, soilmicrobes, beetles, earthworms, spiders,vegetation, and mammals are particularlyaffected. Organic crops use little onherbicides and pesticides and thus

biodiversity fitness and populationdensity are benefited. Many weedspecies attract beneficial insects thatimprove soil qualities and forage on weedregarded as one way to minimize erosion.However, a recent study by the USDA’sAgricultural research Service has foundthat manure applications in organicfarming are better at building up the soilthan no-till despite tillage.

Resists Climate Change

Anthony Melissa argues that organicagriculture with its emphasis on closednutrient cycles, biodiversity, and effectivesoil management has the capacity tomitigate and even reverse the effects ofclimate change. According to the RodaleInstitute, which has been comparingorganic agricultural systems andconventional systems since 1981, organicagriculture also can be used to mitigateglobal warming by decreasing fossil fuelemissions and sequestering carbon in thesoil. The elimination of synthetic nitrogenin organic systems decreases fossil fuelconsumption by 33 percent (LaSalle) andcarbon sequestration takes CO2 out ofthe atmosphere by putting it in the soilin the form of organic matter which idoften lost in conventionally managedsoils. Carbon sequestration occurs atespecially high levels in organic no tillmanaged soil according to the RidaleInstitute.

Sales and Marketing

Organic farmers often report thatmarketing and distribution are hard.Most of organic sales are concentratedin developed nations. These products arewhat economists call good kin as theyrely on uncertain certification. As foodprices rise, organic products mayexperience a decrease in quantitydemanded. A 2008 survey by WSLStrategic Retail found that interest inorganic products had dropped since2006, and that 42 percent of Americanspolled do not trust organic produce. TheHartman Group reports that 69 percentof Americans claim to occasionally buyorganic products, down from 73 percentin 2005. The Hartman Group says thatpeople may be substituting local producefor organic produce.

ORGANIC AGRICULTURE

*The writers teach at M.A.U Parbhani inMaharashtra

30Financing Agriculture

IMPACT

The climate is changing. The earthis hotting up; and there is scientificconsensus that it is happening, and

human-induced. With global warming onthe increase and species and theirhabitats on the decrease, chances forecosystems to adapt naturally arediminishing. Many are agreed thatclimate change may be one of thegreatest threats facing the planet. Recentyears show increasing temperatures invarious regions, and/or increasingextremities in weather patterns.

Scientists use “global warming” in aprecise way, to mean “a tendency for theglobe to warm over a given period”.There is a great deal of scientific studyfocused on climate change and themajority of scientists agree that theaverage global temperature is increasing.The temperature of the globe hasfluctuated since the very beginnings ofour planet. The real problem is not justthe fact that it is warming, but the rateat which it is warming.

Hot Decade

Global temperatures started risingradically in the last 12-year periodbetween 1997 and 2008. The rate atwhich the planet is warming is possiblythe single biggest challenge to ever facehumanity. There are quite a few tracegases, such as; Argon, Carbon Dioxide,Neon, Helium, Methane, Hydrogen,Nitrous Oxide and Ozone. These gasesare often called ‘green house gases’because during the day the earth soaksup heat, and these gases act like agreenhouse trapping in the heat.

The proportion of greenhouse gases hasincreased significantly since the IndustrialRevolution. Humans began burning fossil

fuels, (particularly coal) in a big way, todrive steam engines for industry, andgenerate electricity. When fossil fuels areburnt or combusted, carbon dioxide,methane and nitrous dioxide are givenoff as gases. In addition to escalating coaluse after the Industrial Revolution, camethe widespread use of another fossil fuel;petroleum for transport.

At the beginning of the 20th century,annual global oil output was about 150million barrels of oil, now, that amountis extracted globally in just two days.Burning fossil fuels releases billions oftonnes of carbon dioxide that has beenlocked away in the Earth for millions of

years. Humans are adding billions oftonnes of carbon dioxide to theatmosphere each year.

Not only is the climate beginning tochange but this is the first factor in adownward spiral of events. As a resultof the higher temperatures, the sea levelsthroughout the world are rising. As thetemperatures become warmer andwarmer the glaciers are beginning to meltmore and more in the Arctic and thencausing the sea levels to rise. Statisticsare showing that the ocean levels willrise by at least 3 feet in the future andthis is enough to wipe out many of thesubtropical islands of the world.

GLOBAL WARMINGChallenges to Sustainable Development

By D. Muthamizh Vendan Murugavel *

“Preserve Forests and Plant more Trees”

Burning fossil fuels releases billions of tonnes ofcarbon dioxide that has been locked away in the

Earth for millions of years

31Financing Agriculture

IMPACT

Global Warming

The spurt in global warming is causingsea levels to rise and also change in theamount and pattern of precipitation,including expansion of subtropicaldeserts. The continuing retreat ofglaciers, permafrost and sea ice isexpected, with the Arctic region beingparticularly affected. The other regionsalso likely to be effected by shrinkage ofthe Amazon rain forest and Borealforests, increases in the intensity ofextreme weather events like Tsunami andHurricanes, species extinctions andchanges in agricultural yields.

Adverse Results

The impacts of global warming are likelyto hit developing countries hardest.Global warming threatens availability offresh water, food security andproductivity of natural resources. Water-borne and vector-borne diseases pose aspecial threat to regions with inadequatehealth infrastructures. Coastal zonescould be severely damaged by erosionand sea-level rise, while areas prone todesertification will experienceintensification of that problem. Tropicalmonsoons and cyclones could becomemore intense, threatening Asia’s cropproduction, biodiversity and humanhealth. Latin America, with its highconcentrations of biodiversity anddependence on natural resources, facessimilar threats. Low-lying regionseverywhere are threatened withinundation by sea-level rise.

Crucial Facts about GlobalWarming

• The world’s population is currentlyincreasing at the rate of about80,000,000 per year (about 1.2 %).

• The current world population is6,781,000,000 (September 1, 2009).

• The global fleet of motor vehicles isestimated at 830,000,000 (2006).

• The global fleet of motor vehicles hasbeen recently growing at the rate of16,000,000 per year.

• Motor vehicles (cars, trucks, buses,and scooters) account for 80% of alltransport-related energy use.

• The concentration of carbon dioxidein the atmosphere, which was at 290

About 75 percent ofthe annual increase in

atmospheric carbondioxide is due to the

burning of fossil fuels

ppm in the year 1900, rose to 316ppm in 1959, or at an average 0.44ppm per year.

• Measurements of the concentrationof carbon dioxide since 1959 (316ppm) have revealed an increase to387 ppm in 2009, or at an average1.42 ppm per year.

• The concentration of carbon dioxidehas increased an average of about 1.8ppm per year over the past twodecades.

• The concentration of carbon dioxideincreased 2.87 ppm in 1997-98,more than in any other year ofrecord.

• The year 1998 was the warmest ofrecord. The year 2002 was thesecond warmest (to that date). Theyear 2003 was the third warmest (tothat date). The year 2004 was thefourth warmest (to that date). Theyear 2005 equaled 1998 as thewarmest of record. The year 2007equaled 1998 as the second warmestof record. The ten warmest yearshave occurred in the twelve-yearperiod 1997-2008.

• About 75 percent of the annualincrease in atmospheric carbondioxide is due to the burning of fossilfuels.

• The remaining 25 percent isattributed to anthropogenic changesin land use, which have the effect ofreducing the net uptake of carbondioxide.

• Anthropogenic changes in land useoccur when forests are converted torangelands, rangelands toagriculture, and agriculture to urbanareas.

• Other patterns of land degradation-deforestation, overgrazing,overcultivation, desertification, andsalinisation-reduce the net uptake ofcarbon dioxide, indirectlycontributing, however slightly, toglobal warming.

Most of the global warming statistics arefocused on the period up to year 2100.However, global warming is expected tocontinue beyond year 2100, even if theemissions stop, the global warming willcontinue to increase because of the large

heat capacity of the oceans and the longlifetime of carbon dioxide (co2) in theatmosphere.

Sustainable Development

The idea of sustainable developmentgrew from numerous environmentalmovements in earlier decades. Summitssuch as the Earth Summit in Rio, Brazil,1992, were major international meetingsto bring sustainable development to themainstream. However, the record onmoving towards sustainability so farappears to have been quite poor. Theissues of sustainable development havebecome relevant today not only indeveloping countries but also indeveloped or advanced countries wherethe imbalance in natural environment isconsciously felt due to extraordinaryemission of CO2 which has impact onclimate. The climate change is causingunpredictable changes in weatherconditions. Some of such events havedevastating impact on human habitat.This is experienced by frequency ofcyclone, flooding and natural calamitieson different parts of the world.

Successful sustainable growth andexpansion involves a wide rangingknowledge of guiding principles andissues over and above an objectiveunderstanding of scientific and economiccertainty. We all need to focus andparticipate in various educationalprograms in order to convey awarenessand knowledge. We need to take aproactive approach with the

environment. Essential requirement hereis a clear conceptual frame work topromote sustainable development in waythat predictable adverse effect aremitigated and unknown futurechallenges are met with and convertedinto opportunities for removing poverty.

Industrialised countries must provideleadership by adopting policies to reducegreenhouse gas emissions, developneeded technology, and provide new andadditional resources to help developingcountries achieve sustainabledevelopment while managing their ownemissions.

Conclusion

Life cannot exist without green housegases like carbon dioxide, water vapour,methane etc, but they should be existingin permissible quantities only. Theproblem of global warming can bestopped when Government, industriesand people cut contributing abundantamount of green house gases which trapsmore heat in the atmosphere thusincreasing the temperature. Awarenessamong people about this mostdangerous issue is very much needed.More than all, many trees should beplanted as they absorb carbon dioxideand also existing forests should be saved.

IMPACT

*The writer is Assistant Professor, PG &Research Department of Commerce,Gobi Arts & Science College, Gobi,Tamilnadu

32Financing Agriculture

DAIRY SECTOR

The random sample survey study onthe 50 dairy farmers from eightvillages of Shirpur Tehsil of Dhule

District of Maharashtra (India) wasundertaken to estimate the cost ofproduction of milk in the area of study.The total cost of milk production percow/buffalo was Rs. 113.87 in which thevariable cost was 83.76 percent (Rs.95.38) and remaining Rs.16.24 percent(Rs. 18.49) was fixed cost. In variablecost, the cost of feed stuff was 73.39percent (Rs. 70). Labour cost was 15.73percent (Rs. 15.00), the cost of medicaltreatment was 2.62 percent (Rs. 2.50)and interest on working capital was 8.26percent (7.88). Finally it was found thatthe cost of milk was Rs. 9.10 per liter inthe study area.

Dairy farming is an important source ofincome and more remunerative incomparison to crop production in India.

By Vijay Gorakh Patil *

Milk production in India is predominantlythe domain of small farmers in mixedfarming system. Scientific dairymanagement helps the farmer tochannelise his limited resources tomaximise returns from his dairy farm.

The importance of dairying lies not onlyin products but also it brings aboutsignificant changes in socio-economicstructure of the rural economy. TheNational Commission on Agriculture(1976) has observed dairying as anadditional enterprise for improving thestatus of rural masses especially weakersections consisting of small medium andlandless labourers. It is therefore,essential to examine the production costof milk.

Modus Operandi

In this research, the investigator studiedthe production cost of milk at farmer levelin Shirpur Tehsil of Dhule District inMaharashtra. The investigator selected50 dairy farmers from eight villages fromShirpur Tehsil District Dhule. In thequestionnaire the questions related to the

A Case Study from MaharashtraCOST OF MILK PRODUCTION

33Financing Agriculture

34Financing Agriculture

fixed cost and variable cost were statedand distributed to the dairy farmers tocollect primary data. The collected datawas analysed using the statistical toolpercentage and conclusions were drawn.

Data Collection

The largest section of Indian populationis engaged in agriculture. However, theearnings from agriculture as anoccupation may not fully meet the needsof an individual, as the pressure on landholding is mounting day by day becauseof the high growth of population. So, asubsidiary source of income is necessaryto deal with the situation, so that our

cost structure of milk production in theopen to the benefit of the dairy farmersthanks to which they can decide at whatprice the milk should be sold. Theinvestigator also paid focus on what thefarmers should understand in terms ofreducing input cost and increase theprofits in dairy farming.

The findings of the study would help tounderstand the cost of production of milkamong the dairy farmers of Shirpur Tehsiland in turn help them to minimise theinput cost in growing high yielding foddercrops. The study is also intended tominimise the input cost in terms ofmedical expenses by maintaininghygienic conditions.

Primary data was collected from therandomly selected farmers from eightvillages of Shirpur Tehsil. A structuralinterview schedule, consisting of relevantquestions related to the objectives of thestudy was prepared. Precaution wastaken to keep the language simple so asto get desired responses from therespondents. The interview schedule wasdeveloped in Marathi (local language) forbetter understanding. It containedquestions related to the cost of milkproduction, cost of feed etc.

Pre-testing

Then the Interview schedule was pre-tested for accuracy, simplicity andpracticability with a group of 10 dairyfarmers in village Dahiwad. Consideringthe experience of pre- testing, relatedquestions were put together to ensure

Dairying is recognized asthe best alternative toprovide employment tothe rural people toimprove their livingconditions. Dairyenterprises provide readycash in hand to ruralhouseholds to meet theirdaily requirements

farmers can achieve enough foodsecurity. Majority of Indian farmers haveadopted animal husbandry as a subsidiaryoccupation. Dairying is recognized as thebest alternative to provide employmentto the rural people to improve their livingconditions. Dairy enterprises provideready cash in hand to rural householdsto meet their daily requirements.Therefore, it was essential to bring the

DAIRY SECTOR

S.N. Particulars Milk Production Percentage toCost (Rs.) Total

1 Fixed Cost 16.24

a) Depreciation on cattle shed 1.66 08.98

b) Depreciation on Livestock 8.33 45.05

c) Depreciation on Misc. Expenses 1.00 05.40

d) Interest on Fixed Cost 7.50 40.57

Total Fixed Cost 18.49 100.00

2 Variable Cost 83.76

a) Cost of feed stuff 70.00 73.39

b) Labour Cost 15.00 15.73

c) Cost of treatment 02.50 2.62

d) Interest on working capital 07.88 8.26

Total of Variable Cost 95.38 100.00

Total Cost of Production 113.87 -

Value of dung 10.00 -

Net Cost of Production 103.87 -

Milk Production Per day ( Lit) 12.5 -

Per Liter Cost of Production 9.10 -

Cost of milk productionTable No.1

35Financing Agriculture

consistency in response. The language ofa few questions was modified for easein understanding and eliciting accurateresponse, for which sufficient number ofcopies of interview schedule wereprepared for collection of data. Theprimary data was collected personallyfrom the sample respondent by adoptingpersonal interview method. Therespondents were contacted at their timeon farm as per their convenience. Therapport was established by explainingthem the objective of study.

Tabulation

The data was analysed on the basis ofspecific objectives of the study andhypothesis formulated for the study. Thedata in the primary table were used forthe categorisation of parametersaccording to the objective of the study,preparation of secondary table and theapplication of statistical tools.

The statistical tools used in the presentresearch study were Arithmetic mean,percentage.

Result and Discussion

Research methodology of this study ispresented in the following subheads.

Main Costs of Production

a) Fixed Cost b) Variable Cost.

Fixed cost, includes i) Depreciation onshed ii) Depreciation on Live Stock iii)Depreciation on miscellaneous items andiv) Interest on fixed capital. Variable costincludes. i) Cost of feed stuff ii) Labour

cost iii) Cost of treatment and iv) Intereston working capital. The cost of milkproduction was Rs. 9.10 per liter in thestudy area.

The total cost of milk production per farmwas Rs. 113.87 in which the variable costwas 83.76 percent (Rs. 95.38) andremaining 16.24 percent (Rs. 18.49) wasfixed cost. In variable cost, cost of feedstuff was 73.39 percent (Rs.70), Labourcost was 15.73 percent (Rs. 15.00), thecost of treatment was 2.62 percent (Rs.2.50) and interest on working capital was8.26 percent (Rs. 7.88). From abovediscussion it is concluded the cost oflabour and cost of feed stuff was themain component in the production ofmilk in the study area.

The Cost of milk production was 9.10per liter in the study area. The total costof milk production per farm was Rs.113.87 in which the variable cost was83.76 percentage (Rs. 95.38) andremaining 16.24 percentage (Rs.18.49)was fixed cost.

Conclusion

The variable cost was the maincomponent of the cost of production. Invariable costs, the cost of feed stuff andthe cost of labour are the maincomponents in the study area. Thereforethe efforts should be made so thatfarmers spare some of their land in thecultivation of the fodder and propermanagement of labour.

Implications

The study analysed the cost of milkproduction which will help the dairyfarmers to minimise the variable cost andto increase the profit. The investigationmade it clear that low price is the majorproblem affecting the farmers. So it willhelp dairy farmers to produce such aquality of milk which will be given highprice. The study would be helpful to thedairy farmers for employmentgeneration. The findings of the studywould be helpful to the dairy farmers inmaking decision “At what cost the milkshould be sold?” The findings of thestudy would also be helpful to dairy inreducing input costs.

DAIRY SECTOR

*The writer is a Ph. D. Research Fellowat YCMOU, Nasik

36Financing Agriculture

By Dr. S. Lakshmanan *

Introduction

In the wake of Globalisation,Liberalisation and Privatisation (GLP) ofIndian economy, Indian agriculture hasbeen moving way from traditional boundagriculture to crop diversification andcommercialization. Marginal and smalllandholders prefer to cultivate less-investment and family-labour orientedagriculture and its allied crops.

It is partly due to considerable variationsin both the total quantity and distributionof rainfall in the recent past; anddeclining profitability in the traditionalagriculture owing to increasing cost ofproduction. Like agriculture, sericultureis also facing problems like increasing costof production and non-availability ofhired labour for cultivation of mulberryand rearing of silkworms. In spite of suchshortcomings, farmers continue to

produce bivoltine silk cocoons inSouthern parts of India.

Sericulture in Tamil Nadu

Of late, Tamil Nadu has become a modelstate for production of bivoltine silk inthe country after popularisation ofbivoltine sericulture technology in thefield under Japanese Co-operationInternational Agency (JICA). The statehas increased the quantity of bivoltinecocoon production from 0.052 lakh kgin 1999-2000 to 19.240 lakh kg in 2006-07, contributing around 24.26 per centof total silk production. Similarly, for thesame period, the average bivoltinecocoon yield/100 dfls increased from35.230 kg to 60.410 kg, showing 72 percent yield increase.

The impact of JICA project showed thatfarmers could rear bivoltine in the Indian

Economic Gains of BivoltineCocoon Production

Tamil Nadu hasbecome a model state

for production ofbivoltine silk in the

country afterpopularisation of

bivoltine sericulturetechnology in the field

under JapaneseCo-operation

International Agency(JICA)

SERICULTURE

37Financing Agriculture

conditions. The technologies developedunder the JICA project are suitable andsustainable for promotion of bivoltine inIndia.

Technologies

The farmers have become competentenough to adopt the new technologiessuch as high yielding mulberry varieties(V1 and S36) and bivoltine silkwormhybrids (CSR2 x CSR4; CSR4x CSR5) andare able to produce quality silk of 2A-4Agrade silk.

Although cultivation of high-incomeoriented crops, such as sugarcane,turmeric and banana are major crops inErode district of Tamil Nadu, bivoltinesericulture has become one amongimportant commercial crops in the districtafter implementation of JICA project inthe region. The cultivation of mulberryand silkworm rearing offers periodicalincome and assures full-time familylabour employment throughout the year.(Balasarswathi et al., 2006 andLakshmanan et al., 1998 and 2007)

In Tamil Nadu, Erode district has beenconsidered as having highly potential forproduction of bivoltine cocoons. Asincreasing cost of inputs is a majorlimitation for the agricultural crops as wellas sericulture, it has become necessaryto find out the cost of production andreturn in sericulture as compared to otherimportant commercial crops. This studyassumes greater significance as there areno empirical studies conducted at thefarmer’s level on cost of production andreturns of bivoltine sericulture with othercompeting agricultural crops afterimplementation of JICA project in TamilNadu.

Study Region

Gobichettipalayam taluk of Erode districtin Tamil Nadu has been selected for thepresent study. This taluk has beenconsidered as a major bivoltine cocoon-producing center in the district. The studywas conducted in four villages. From eachvillage 15 farmers, were selectedrandomly. Thus, the study constituted atotal sample size of 60 farmers. All theselected farmers reared bivoltinesilkworms as well as cultivatedagricultural crops, such as sugarcane,turmeric and banana. A simple tabularmethod was used to find out cost of

(Rs./acre)

Sl.No Particulars Sericulture Sugarcane Turmeric Banana

1 Human labour 27343.62 11454.64 5818.61 4512.05

2 Animal power 1999.66 1372.86 1446.38 1450.75

3 Machine power - 371.25 1522.50 278.60

4 Farm yard manure 5253.26 5440.34 7213.01 6990.76

5 Seed 5777.54 8750.00 6800.75 6300. 50

6 Chemical fertilizer 4407.20 2178.94 2941.31 5750.40

7 Irrigation 3803.26 3145.70 4230.69 4286.76

8 Plant protection 5228.40* 1523.45 3890.50 2890.45

9 Land tax 180.00 125.00 175.00 167.75

10 Marketing 1455.75 3268.00 960.75 2780.60

11 Others 7535.52** - - -

12 Interest on workingcapital @ 8% p.a. 4435.89 3010.41 2799.96 2832.69

Total cost 67420.10 40640.59 37799.46 38241.31

Sl.No Particulars Sericulture Sugarcane Turmeric Banana

1 Yield (t/acre) 0.926 52.500 2.38 10.21

2 Returns (Rs/acre) 120703.92 55021.42 53551.78 80710.05

3 Net-profits(Rs/acre) 53283.91 14390.83 15752.32 42468.74

4 Input- output ratio 1.78 1.35 1.42 2.11

cultivation and returns in sericulture andother agricultural crops. The results arepresented per acre/year. The study refersto agricultural period 2005-06.

Economics of BivoltineSericulture

The empirical findings on cost ofproduction of bivoltine cocoon arepresented in Table 1. The total cost ofcocoon production per acre/year workedout to Rs.67420.10 of which, the costof human labour alone to the extent ofRs.27,343.62. Next to human labour, thecritical inputs (farmyard manure, fertilizerand irrigation) together sharedRs.13,463.72. It was also observedduring the field study that the availabilityof hired labour force has become a scarceresource for sericulture activities in theregion due to intensive cultivation ofother agricultural crops; and frequentlabour migration to near by towns forseeking higher wages employment. Inspite of such problems, farmer ’scontinued to rear silkworm rearing dueutilization of family labour and engaging

hired labour during fifth stage, mountingand cocoon harvesting.

Unlike other agricultural crops, cocoonproduction could be round the yearactivity. On an average, 6 crops can beharvested under irrigated condition duringone year. In other words, for every twomonths, earnings can be realised throughsericulture. The gross income obtainedfrom sericulture was Rs.120703.92 (seeTable 2) and input- output ratio was 1.78.

Sugarcane Cultivation

Unlike sericulture, cultivation ofsugarcane is an annual crop. The dataon cost of cultivation shows that samplefarmers, incurred an average ofRs.40640.59 per acre/year. Among costof different inputs used, labour cost wasRs.11,454.64, followed by critical inputsRs.10,764.98 and other expensesRs.18,420.97 of total cost of production.Although cost of labour was high insugarcane cultivation, its magnitude waslow when compared to sericulture. Itmeans that labour intensity was low insugarcane cultivation.

SERICULTURE

Table 1. Cost of cultivation of cocoon and other agricultural crops

Note: * Includes disinfections material used in silkworm rearing ** Refers to fixed cost of rearing house and appliances used

Table 2. Yields and returns in sericulture and other agricultural crops

In terms of gross returns, sugarcanecultivators realized Rs.55021.42 per/acre, which was less as compared tosericulture. The input-output ratio wasalso less (1.35) for sugarcane. Thisimplies that sericulture occupationgenerates higher income than sugarcanecultivation in the study region.

Turmeric Cultivation

Turmeric cultivation is another importantcommercial crop in theGobichettipalayam region of Erodedistrict. Field observations revealed thatthe availability of water sources fromBhavani Sagar Reservoir encouragedfarmers to cultivate turmeric on a largescale. The total cost of cultivation onturmeric was Rs.37799.46, of which costof labour, critical inputs and others wereRs.5818.61, Rs.14,385.01 andRs.17,595.84 respectively. The highestamount was incurred to critical inputs,which was more than labour cost.

The estimates on income and input-output ratio for turmeric wereRs.53551.78 and 1.42. Generally, returnsfrom turmeric cultivation would behigher than other crops, but due tofrequent changes of turmeric prices inthe market, the returns also vary. As aresult of that income earned in turmericwas less as compared to sericulture andsugarcane crops during the study period.

Banana Cultivation

Banana was cultivated on large scaleunder assured irrigated condition. Thetotal costs incurred for banana wereRs.38241.31 per acre/year. It was very

from banana was Rs 80710.05/acre/year. The input and output ratio was 2.11.This was higher side than sericulture,sugarcane and turmeric. It is because ofthe fact that cultivation of banana cropwas a far more productive venture thanother crops in the study region.

Conclusions

Mulberry sericulture has been foundquite profitable in several aspects. It hasprovided higher net-returns per acre/year than sugarcane, turmeric andbanana cultivation. Bivoltine sericultureproduced higher input-output ratio ascompared to other crops except bananain the study region. Therefore, sericulturecan be encouraged to cultivate on largescale in the study regions. Efforts are tobe made by Department of Sericulture(DOS) to popularize high yieldingmulberry technologies and cost reductionimproved rearing practices to adoptfarmers to increase productivity andincome in bivoltine sericulture in thestudy region.

less as compared to sericulture but onpar with sugarcane and turmericcultivation. The cost analysis shows thatlabour cost was Rs.4512.05, indicatingcultivation of banana is less-labourintensive than sericulture. Like sugarcaneand turmeric crops, the cost of criticalinputs together contributed higher side(Rs.17,027.92) than other inputs. Thiswas also higher as compared tosericulture, sugarcane and turmericcultivation. The total income obtained

Mulberry sericulture has been found quiteprofitable in several aspects. It has provided highernet-returns per acre/year than sugarcane, turmeric

and banana cultivation

SERICULTURE

* Scientist, Training Division, CentralSericultural Research and TrainingInstitute, Sriramapura, Mysore 570 008,Karnataka

38Financing Agriculture

OBITUARY

This is to share with you with greatpain that our former boardmember Mr. J S Tomar passed

away on 1st July 2010 in Delhi. Thesector’s relationship with him startedwhen he was working in the capacityof General Manager with Oriental Bankof Commerce (OBC). Way back in1995, when commercial banks werehesitant to enter the microfinanceterritory, in OBC, he led replication ofGrameen model of rural banking inUttarakhand and later in Rajasthan.

During his banking tenure, recognisingthe pioneering work done by Mr. Tomarin microfinance, the Reserve Bank ofIndia appointed him as an Officer onSpecial Duty in charge of a micro-creditcell. While working there, Mr. Tomarconverted the recommendations of theNational Microfinance Task Force of1999 (headed by Mr. Nanda) into aseries of RBI circulars. This opened thedoor for banks lending to MFIs under

the priority sector. We all know howcentral that has been to the growth ofthe sector. He was also the adviser inmicrofinance matters to AFCL.

Late Mr. Tomar had been a great supportfor the microfinance sector while he waswith the bank. Apart from serving in theboard of Sa-Dhan, his contribution willbe remembered as a member of thevarious subgroups within Sa-Dhan. Afterretiring from OBC, Mr Tomar, joined asCEO of Cashpor Group of Companies.

JS Tomar—Demise of a DoyenTribute to Mr. Tomar for his unparalleled contribution to agricultural creditBy Jayshree Vyas*

He contributed immensely to thegrowth and stabilisation of Cashpor,along with its visionary Chairman DavidGibbons. After serving five years asCEO, he stepped down very gracefully,and continued to provide support toCashpor as an active independentBoard member.

Tomar was a regular contributor toleading financial dailies i.e. EconomicTimes, Financial Express, Business line,Observer etc and authored a few bookson Land Reform, Rural Developmentand agrarian policies.

Our hearts go out to his family, friendsand to all of us who have been taughtand inspired by him. He will be dearlymissed, but there is no doubt that hisspirit and example will live on. We atSa-Dhan join our friends and colleaguesin the microfinance sector in mourningthe unexpected passing of Mr. J S Tomar.

(*The writer is Chair of Sa-Dhan)

40Financing Agriculture

AGRI NEWSThe Government of India has launcheda portal, www.efreshindia.com, to bringfarmers, Agri exporters and customers ona single platform. Launching the portalon 11 August, Union Minister for FoodProcessing Industries Subodh Kant Sahaihoped that the portal would empowerIndian farmers to global connectivity asthey will get precise information aboutthe produce and the suppliers in theirown language.

The Minister urged the portal operatorsto take this facility to the Panchayats asthe farmer functions through Panchayatsonly. Sahai also suggested that the portalshould contain information regarding theconnectivity of the farmer to the marketand the cold chain available to him.

The portal, seeks to empower Indianagriculture based on a food chainconcept. It is farmer friendly and farmercentric. It creates connectivity betweenthe suppliers and the buyers through

Portal for Agri Exporters Launched

trading platform. The portal will helpfarmers to increase income throughhigher agricultural productivity. It willspecially focus on north eastern states.

The portal now available in English andHindi will soon have versions in Marathi,Telugu, Gujarati, Kannada, Tamil andBangla.

India-Argentina SignPact on AgricultureIndia and Argentina on 2 August signeda joint agreement agreeing to developtechnical and professional cooperationin the agricultural sector and foster thetrade of plants and animal productsbetween the two nations. Argentina’sAgriculture, Livestock and FisheriesMinister Julian Andres Dominguez andIndia’s Agriculture Minister SharadPawar signed a joint agreementrecognising the benefits of cooperationin the field of agriculture and the alliedsectors, including the agro-industrialsector, towards economic and socialdevelopment of the two countries.Dominguez also invited Pawar to visitArgentina.

Rubber Board to promote MechanisationThe Rubber Board has introduced ascheme to promote farm mechanizationin the rubber small holding sector tocontain the shortage of labour forces.Under the scheme, financial assistancewould be given to Rubber Producers’Societies (RPSs), Rubber Self Help Groups(SHGs) and Companies promoted byRubber Board for purchasing weed-cutting machine. The amount ofassistance would be 50 per cent of theactual cost of the equipment limited to amaximum of Rs 14,500. The assistancewould be for the purchase of a maximumof three machines by each company inthe RPS sector and two by each RPS/SHGduring the 11th Plan period, an officialpress release said.

41Financing Agriculture

AGRI NEWSMobiles Helping Farmers to Gain Income

A study by New Delhi based think tankICRIER in a study revealed that farminformation-enabled mobile telephony ishaving a beneficial impact on smallfarmers. The study on Socio-economicImpact of Mobile Phones on IndianAgriculture stated that despite erraticservices and irrelevant information, smallfarmers from Maharashtra (incomebetween Rs 12-17,000/month) reportedthe highest use of their phones to accessinformation, leading to diverse benefits.

These included yield improvements, pricerealisation and better adjustment ofsupply to market demand. They could alsoafford more personalised services andsuperior text messages. In contrast,benefits were limited only to improvementin yields among low income farmers ofUP and Rajasthan. Awareness on therange of customer support service

provided in these states was low,restricting two-way communication.

Significant improvements in supportinginfrastructure and capacity buildingamongst farmers are critical.

Small and marginal farmers, who are thevast majority of 127.3 million cultivatorsin India, are often unable to consistentlyaccess information that could increaseyields and lead to better prices for crops.A 2005 NSSO survey found that only 40percent of farmer households accessedinformation about agricultural techniquesand inputs. Small farmers prioritisedweather, plant protection (disease/pestcontrol), seed information and marketprices as the most important issues.

Close to 90 percent of UP and Rajasthanfarmers studied ranked seed informationas the highest priority while over 70percent cited market prices as mostimportant.

The world’s largest farmers cooperativeIFFCO has announced that it isnegotiating with two global players forsetting up an integrated dairy in itsupcoming food-processing SEZ atNellore.

IFFCO is also in talks with a Russiancompany for setting up a fertiliser plantthere, Managing Director U S Awasthisaid. “We are negotiating with a firm inthe US and New Zealand for setting upan integrated dairy in our farm-basedfood processing SEZ (special economiczone) in Nellore,” Awasthi informed.

The proposed dairy envisages aninvestment of Rs 1,000 crore. Besidesequity partner, the overseas firm wouldalso be a management partner in the

IFFCO eyeing overseas tie-up for its Nellore dairy project

venture, he said, but marketing will bedone by IFFCO.

The venture would have around 6,000livestock, which will be imported to begin

with “however, later we will develop alocal cross-breed,” Awasthi said. IFFCOis also scouting for a partner to set up afertiliser plant in Russia.