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1. Background Of Sustainable Sugarcane Initiative

Sugarcane is an important crop in India. In Uttar Pradesh, Maharashtra and Tamil Nadu, sugarcane plays a major role in these states’ economy. Sugarcane is grown by 35 million farmers. While another 50 million depends on employment generated by the 571 sugar factories and other industries using sugar (1ICRISAT, 2009).

In the agriculture sector, during 2006-07, sugarcane’s share was about 7% of the total value of agriculture output and occupies about 2.6% of India’s Gross Cropped Area (GCA) (2Directorate of sugarcane development, 2013). At present, India ranks second in the world, after Brazil, in terms of area (4.1 m ha) and sugarcane production (355 million tonnes in the year 2007). Despite its long tradition and large area in India, in terms of productivity, sugarcane yields are unimpressive, especially where the crop is irrigated. The average productivity of sugarcane is low with certain regions reporting yields as low as 40 t/ha only. Not only is the cane yield low, the sugar yield - typically at less than 10% of cane weight - is also less than satisfactory. The Australian sugar industry for instance is regularly typified by sugar yields of around 14%, while yields of up to 25 tonnes of sugar per hectare have been reported in Hawaii.

2. Challenges in Sugarcane Farming

Sugarcane cultivation and the sugar industry in India are facing serious challenges due to various internal and external factors. The major challenges with sugarcane farmers (3Chand, Pawar, Krishna, 2016) are:

  • Non-availability of easy credit facilities

  • High labour costs

  • Payments not done on time

Apart from this, water availability is unpredictable. The concern is not only the quantity of water required but also the lack of proper water management practices. Due to this, water is either wasted or sometimes not available at the right time. Unpredictable climatic aberrations, improper cultivation practices, negligence in plant protection measures, imbalanced nutrient management and other practices like mono cropping often result in low productivity, fetching a low price in the market. In the future, these challenges will become even more complex with climate change inducing direct and indirect effects on crops, water, pests and diseases, and volatility in the international market (ICRISAT, 2009).

 

3. Sustainable Sugarcane Initiative (SSI)

3.1Brief Overview of SSI

SSI is a method of sugarcane production which involves using less seeds, less water and optimum utilisation of fertilisers and land to achieve more yields. Driven by farmers, SSI is an alternate to conventional seed, water and space intensive sugarcane cultivation.

The major principles that govern SSI are

  • Raising nursery using single budded chips

  •  Transplanting young seedlings (25-35 days old).

  • Maintaining wide spacing (5X2 feet) in the main field

  • Providing sufficient moisture and avoiding inundation of water.

  • Encouraging organic method of nutrient and plant protection measures

  • Practicing intercropping for effective utilisation of land. (ICRISAT, 2009).

3.2 Comparison between Conventional Farming and SSI

SSI follows improved cultivation practices. Instead of planting a large number of seeds/setts directly on fields, SSI recommends to grow buds in the nursery and thereafter, transplant plant young seedlings (25-35 days old) on the field. Due to this practice, the better growth of plants is ensured. Increased spacing (5 ft between rows) enhances the scope of intercropping and also plant obtains abundant sunlight, moisture and nutrients. It results into a large number of tillers, almost two times than the conventional method. Selection of healthy seedling, nurturing them in nursery and availability of sufficient nutrient and water in SSI makes plant healthy and reduces mortality of plants across various stages from transplantation to full grown plant. The below table illustrates the differences between conventional farming and SSI.

Table 1: Difference in Cultivation Practices between Conventional Farming and SSI

Aspect                                    Conventional                                         SSI

Seeds/Setts

48,000 buds (16,000 three budded setts/acre)

5000 buds (5000 single budded chips/acre)

Nursery preparation

No

Yes

Measures to maintain uniformity among plants

No Grading

Grading is done during nursery

Planting

Direct planting of setts in the main

field

Transplanting of 25-35 days old young seedlings raised in a nursery

Spacing

1.5 to 2.5 ft between rows

5 ft between rows

Water requirement

More (flooding of field)

Less (maintenance of moisture in the furrows)

Mortality rate among plants

High

Low

No. of tillers per plant

Less (10-15)

More (20-25)

No. of millable canes achieved per clump

4-5

9-10

Accessibility to air and sunlight

Low

High

Scope for intercrop

Less

More

4. Case Example: Pilot done under Umbrella Programme for Natural Resource Management (UPNRM)

UPNRM is a joint venture of 4 National Bank for Agriculture and Rural Development (NABARD), 5 GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) and 6 KfW (Kreditanstalt für Wiederaufbau) which extend the loan with need based grant to Non-Governmental Organisations (NGOs), Community Based Organisations (CBOs), Producer Organisations (POs), banks, private companies etc for promoting natural resource based livelihoods and enterprises across India. GIZ being a technical agency provides technical support to NABARD and implementing agencies/channel partners. KfW provides soft loan and grant as accompanying measure to NABARD. NABARD extend finance to channel partners and oversees the entire programme through its regional offices and regional coordination units. So far, 320 projects have been sanctioned across 22 states and one Union Territory (UT) with investments of over Rs. 600 crores.

Under UPNRM, SSI is one of the most successful business models. Shri Datta Shetkari Sahakari Sakhar Karkhana Ltd (SDSSSKL) – a sugar cooperative in Kolhapur, Maharashtra received fund from NABARD under UPNRM. Further, SDSSSKL on lended the loan to its member farmers for taking up SSI along with drip systems. The sugar cooperative used the grant assistance to promote SSI cultivation among the farmers. It repays the loan to NABARD from the cane sold to them by the member farmers.

5. Proposed Institutional Models for Mainstreaming SSI

High economic returns, as described in table 2 (Cost and Benefit Analysis- Conventional Cane Cultivation and SSI Cultivation), of SSI, makes it financially viable for institutional funding, especially from banks. Low rate of mortality of plants in SSI as compared to conventional sugarcane farming reduces the probability of bank loan turning non-performing assets (NPAs). It is therefore recommended to upscale SSI in major sugarcane growing states of India such as UP, Maharashtra, Karnataka, Tamil Nadu etc. The top ten sugarcane growing states are mentioned in the below map.

As a strategy to mainstream SSI with formal financing mechanism, two institutional models are proposed herewith with an objective to enhance investments in the domain of SSI.

 

 

6. Way Forward

The adoption of SSI by financial institution such as banks will increase investment in natural resource sector. This will lead to higher uptake of credit in agriculture sector and thus will help them in meeting the targets of Priority Sector Lending (PSL). The economics of SSI shows high profits which will make banks credit portfolio healthy with minimum chances of NPA.

NABARD through its various funding lines (PODF, NABKISAN, UPNRM) can support SSI as a model project. Increase in income of sugarcane farmers by SSI practices will contribute to the mandate of Government of India (GoI) regarding doubling of farmers’ income by 2022.

Access to finance for SSI through institutional models will not only enhance farmers’ economic status but it will also increase water and input use efficiency in agriculture at a wider level.

Farm Model of SSI in Sugarcane (1 acre)

SI.

No.

Particulars / Years

Amount in Rs

 

I Year

II Year

III Year

IV Year

V Year

I

POST DEVELOPMENT

1

Post Development Cost

 

 

 

 

 

a

Cost of Drip System + Accessories

50000

 

 

 

 

b

Cost of Cultivation Estimated / Acre

67653

74418

81860

90046

99051

2

Total Post Development Cost

117653

74418

81860

90046

99051

3

Post Development Yield and Income

 

 

 

 

 

a

Yield of sugarcane

65

65

65

65

65

b

Income from cane

162500

162500

162500

162500

162500

4

Total Post Development Income

162500

162500

162500

162500

162500

5

Net Post Development Income

44847

88082

80640

72454

63449

 

II                                                               Pre Development

1

Pre Development Cost

 

 

 

 

 

a

Cost of cultivation

62400

68640

75504

83054

91360

2

Total Pre Development Cost

62400

68640

75504

83054

91360

3

Pre Development Yield and Income

 

 

 

 

 

a

Yield of sugarcane

50

50

50

50

50

b

Income

125000

125000

125000

125000

125000

4

Total Pre Development Income

125000

125000

125000

125000

125000

5

Net Pre Development Income (4-2)

62600

56360

49496

41946

33640

III

Incremental Income(I 5-II 5)

-17753

31722

31144

30508

29809

 

Financial Analysis for Micro Irrigation Unit (Drip)

SI. No.

Particulars

I Year

II Year

III Year

IV Year

V Year

1

Capital Cost

50000

0

0

0

0

2

Recurring Cost

67653

74418

81860

90046

99051

3

Total Cost

117653

74418

81860

90046

99051

4

Total Benefits

162500

162500

162500

162500

162500

5

Net benefits

44847

88082

80640

72454

63449

6

Incremental Benefits

30508

29809

31144

30508

29809

6.1

Discounting Factor@15%

0.57

0.50

0.66

0.57

0.50

6.2

NPV of Incremental Benefits

17443

14820

20478

17443

14820

7

Discounting Factor

15%

8

NPW of costs

313132

9

NPW of benefits

544725

10

BCR

1.74

 

Assumptions

Sensitivity

Analysis

The cane gate price of sugarcane is considered to be constant as Rs 2500/ Quintals during period of analysis.

The cost of production is assumed to increase at the rate of 10% per annum (YoY)

The income from intercropping is not accounted for to represent generic case where inter- cropping is still limited by the farmers mostly due to labour issues and also depends on the adequacy of rainfall during the season

 

 

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