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

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)