VII

Towards Sustainable, Productive and Profitable Agriculture

Ashok Gulati and Gayathri Mohan

An Inconvenient Truth

With a population of 1.3 billion today, which is likely to overtake that of China by 2024, India has more than 17 per cent of world’s population.¹ In comparison, India has about 2 per cent of world’s overall area, about 11 per cent of arable land, and 4 per cent of global freshwater supplies. Given that an average household in India still spends about 45.5 per cent of its expenditure on food,² and with per capita incomes likely to rise by about 6 per cent per annum in the coming decade or so, demand pressures for food, feed and fibre are going to rise rapidly. With increasing urbanization and industrialization, pressures on land and water are going to increase even more.

Given these challenges, there is need to increase continuously land and water productivities for sustainable and productive agriculture. Unfortunately, the focus of policymakers and scientists has been largely on land productivity, and issues concerning water productivity are often relegated to the background. But water would be a bigger binding constraint than land in India’s agriculture and overall development. In a global ranking of water availability, India is already categorized as a water-stressed country with per capita annual availability of less than 1700 cubic meters (cu. m).³ In 2011, India’s per capita water availability stood at 1544 cu. m and it is continuously falling over time (CWC, 2013, 2015).⁴ Water needs to be used more judiciously through better technologies and farming practices and its pricing should also reflect its scarcity. Only then can one hope to have a sustainable agriculture that is both productive and profitable.

Agriculture and Water

Almost 78 per cent of freshwater supplies in India are used for irrigation in agriculture.⁵ The typical method of irrigation in India is ‘flood irrigation’, i.e. flooding the field, be it through pumping of groundwater or using canal waters. The water-use efficiency under ‘flood irrigation’ hovers around 65 per cent, i.e. roughly 35 per cent of water applied for irrigation either evaporates, leaches through or goes to waste. And in case of canal waters, there is an added conveyance loss of about 30–35 per cent, which makes the water-use efficiency of canal waters as low as one-third. Thus, crops based on canal irrigation use only one-third of water supplied from the dams. These methods of irrigation need overhauling if India has to make best use of its scarce water resources for sustainable agriculture.

Currently, India has roughly 47 per cent of its cropped area irrigated, while the rest is rain fed.⁶ If India has to raise agricultural productivity and bring stability in farm production, it must increase its irrigation cover and use water supplies more productively. In this context, it is interesting to note the recent slogans that Prime Minister Narendra Modi has rightly given, ‘har khet ko pani’ (water to every field), and ‘more crop, per drop’. The slogans are matched by increased funding for water in the last two Union budgets, be it for major or medium irrigation schemes through the Long Term Irrigation Fund (Rs 40,000 crore) with NABARD, the Micro Irrigation Fund (Rs 5000 crore) or the Pradhan Mantri Krishi Sinchayee Yojana.⁷ All these are steps in the right direction to augment water supplies and promote better use of water.

The ultimate irrigation potential in the country is about 139.9 million hectares (m ha) at current levels of technology. If rivers are interlinked, it can go even up to 175 m ha.⁸ This needs to be seen in the backdrop of the current Gross Cropped Area (GCA),⁹ which is around 195–200 m ha, and the current irrigated area at about 90 m ha.

The issue of sustainable agriculture against the backdrop of water supplies and irrigation methods can be seen clearly by focusing on two crops: rice and sugarcane. Both crops are water guzzlers. One kilogram of rice grown in states like Punjab and Haryana needs almost 5000 litres of water; and a kg of sugar produced in Maharashtra needs about 2000 litres of water. In Punjab, the water table has been depleting at the rate of 70 cm per year during 2008–12¹⁰ primarily due to paddy cultivation, which shows how Punjab is heading towards unsustainable agriculture. And in Maharashtra, sugarcane, which occupies only 4 per cent of the cropped area of the state, takes away almost two-thirds of irrigation water, leading to extreme inequality in the distribution of water and a cause of much distress in certain pockets.

Paddy Cultivation in Punjab: How Far Is It Sustainable?

Punjab, the seat of the green revolution success, has the highest gross irrigated area ratio in India. Almost 98.5 per cent of its GCA is irrigated (2013–14) with around 80 per cent irrigation from ground water. The data from the Central Ground Water Board (CGWB) reveals that of 138 blocks in Punjab, 110 are over-exploited. Ironically, almost 36 per cent of Punjab’s GCA is under paddy, which requires more than 200 cm of water for irrigation, much of which has to be sourced from underground.¹¹ As the water table is receding at an alarming rate, tube wells are being dug deeper for drawing water from even 300–400 feet at several places. That raises the pumping costs, but electricity is supplied at a highly subsidized price, with the marginal cost almost zero. With almost the entire paddy under irrigated cover, Punjab has the highest paddy yields in the country with more than 70 per cent of the produce procured by the Central government for feeding a large Public Distribution System (PDS).¹² Thus, Punjab with its largest contribution of wheat and rice to the central pool has been ‘feeding the country’s poor’. But it is at a huge cost to the state’s ecology, especially due to paddy cultivation. During the kharif season, Punjab becomes a large lake of paddy fields, spreading malaria, and at the time of harvest, paddy straw is burnt in the fields causing clouds of smoke all over. These social costs are not captured in any robust analysis of sustainable agriculture practices in Punjab.

Although West Bengal, Uttar Pradesh and Punjab were the top three states in terms of area and production of rice in 2015–16, compared in terms of productivity/ha, Punjab stands first and Uttar Pradesh and West Bengal are at the fifth and the fourth positions respectively.¹³ Some of the key reasons for lower productivity in these states are their relatively low irrigation cover, low fertilizer usage and low procurement of rice. As a result of highest productivity of rice on per ha basis,¹⁴ and robust procurement system, the profitability of farmers in rice cultivation over their paid out costs (cost A2) is the highest in Punjab (Figure 2). High profits keep farmers locked in paddy cultivation despite high social costs—the depleting water table, the burning of paddy straw, etc.

Figure 2: Profitability in Paddy Cultivation over Paid Out Costs (Cost A2) across Major Paddy Growing States (Triennium Average Ending 2014–15)

Source: Commission for Agriculture Costs and Prices (CACP), 2017–18.¹⁵

From the sustainability point of view, one needs to analyse the issues differently for a better understanding of the problems, especially water-related ones. First, land productivity across states should be compared only for irrigated rice to make it comparable among states. Such a comparison shows Tamil Nadu topping the list (Figure 3a). Second, and most importantly, one should estimate rice productivity per unit of irrigation water, say per lakh litres of irrigation water. Such an analysis can throw greater light on the issue of sustainable agriculture. The results of this analysis are stunning. Punjab, instead of being at the top, slips to the bottom amongst major rice-growing states. Paddy in Punjab, from this view point, is certainly not a wise choice. West Bengal can produce almost 42 kg of rice from one lakh litres of irrigated water, while Punjab can produce only 19 kg from the same quantity of water. More precisely, Punjab consumes almost two times more water than West Bengal and almost three times more water than Bihar for producing the same amount of rice (Figure 3b). Bihar has the highest productivity of rice per unit of irrigation water (56 kg of rice per lakh litre of irrigation water). This is commendable. But unfortunately, states with high productivity rankings on per unit of water basis (Bihar, Assam, and West Bengal) do not have an efficient procurement system for rice and their farmers often face prices for paddy way below the corresponding minimum support prices (MSPs) obtained by farmers from Punjab. The net result of such a policy environment is that their profitability remains much lower.

Figure 3: Comparison of Irrigated Land Productivity and Irrigation Water Productivity of Rice across the States (2013–14)

Source: National Sample Survey Office (NSSO), 2013–14; Authors’ calculation using data from CACP, 2013–14.¹⁶

In the light of this new analysis, is Punjab suitable for cultivating rice? Should one promote rice there despite having its highest land productivity but lowest water productivity? The answer is definitely no.

But how does one shift Punjab towards sustainable agriculture? The government as well as the farmers know that paddy cultivation is not good for the future generations as the water table is depleting fast. But it is the high profitability that acts as a deterrent. The state’s farmers are ready to switch to other crops provided the profitability is not less than that of paddy.

As a first step, Punjab passed the Punjab Preservation of Subsoil Water Act, 2009.¹⁷ The Act is directed towards delayed sowing and transplanting of the paddy crop with a view to saving the depleting water table. But it has not been able to turn Punjab away from paddy or even arrest the depleting water table. More focused steps are necessary for a significant turnround. The first should be to reorient the policy of free electricity for agriculture and shift towards Direct Benefit Transfer (DBT), i.e. putting that much money directly into the accounts of the farmers. It can be tweaked so that large farmers get a bit less than small farmers on a per ha basis. The pricing of electricity can be on a full cost recovery basis with metered power. This will encourage farmers to save power bills and that will help indirectly to save groundwater without impacting the profitability of paddy farmers.

The next best step could be to adopt efficient irrigation methods to reduce water loss. There is no need to keep paddy fields flooded all the time. One can irrigate paddy every three or four days so that standing water is fully used before the next round of the irrigation. This itself can save almost one-fourth of the irrigation water and electricity use. Pilot studies are being carried out to understand the feasibility of drip irrigation technology in rice cultivation. Drip manufacturers carrying out the pilot studies with state agricultural universities claim from recorded data that it saves irrigation water by 66 per cent, reduces electricity consumption by 52 per cent and increase yield by 50 per cent.¹⁸

The Johl Committee had recommended crop diversification in Punjab way back in 1986. A recent study on Punjab by the Indian Council for Research on International Economic Relations (ICRIER)¹⁹ also suggests diversification away from paddy to maize (corn), livestock, and fruits and vegetables. Maize uses one-fifth of the water needed for paddy irrigation and can save 80 per cent of the power subsidy of the state on a per ha basis when farmers shift from paddy to maize. The saving can be used to promote maize-based value chains, such as incentivizing feed mills,²⁰ silage units, and starch factories²¹ based on corn. But farmers must be assured of at least the same profitability as in paddy, if not more. For this, if necessary, the state government must intervene in maize markets for some time, in the greater interest of protecting the state’s depleting water table. The way forward is to identify blocks where the water table is worst affected, and encourage farmers to grow maize and procure it, if needed, and discourage procurement of paddy in those blocks. Punjab currently has less than 3 per cent area under fruits and vegetables compared to 8 per cent across the country. It can encourage farmers towards fruits and vegetables duly supported by cold chains and processing units. The process has to be demand driven, i.e. first identify the markets and then usher in change in the production systems. Only then can Punjab farmers raise their incomes and make agriculture sustainable and productive.

Sugarcane in Maharashtra and the Issue of Sustainable Agriculture

Sugarcane in Maharashtra is an interesting case of an unsustainable cropping pattern. Maharashtra has only 19 per cent of its GCA under irrigation.²² The water-guzzling sugarcane crop, which occupies only 4 per cent of the GCA, alone consumes almost two-thirds of the irrigation water in the state. This irony became more critical when the trend continued even in the midst of an acute water scarcity when parts of the state, especially Latur district of Marathwada region, were quenching its thirst using water shuttled through life-saver trains called ‘Jaldoot express’. Thus, it becomes imperative to understand the sustainability of growing sugarcane in Maharashtra.

Marathwada is in the sugarcane-growing belt of Maharashtra with almost 23 per cent share of the state’s sugarcane area.²³ The sugarcane crop consumes almost three times more irrigation water than cotton, the major crop of the state. Latur district, one of the worst water scarcity affected regions in the 2014–15 and 2015–16 drought, recorded the highest share of sugarcane area (20 per cent in 2015–16) in the Marathwada region.

In the countrywide scenario of sugarcane, Uttar Pradesh (UP) ranks first in terms of area (44 per cent) and production (38 per cent), followed by Maharashtra, with a share of 19 per cent in area and 22 per cent in sugarcane production.²⁴ The other major sugarcane states are Andhra Pradesh (AP), Karnataka, Tamil Nadu (TN) and Bihar. The land productivity (production per unit area) of sugarcane across these states is displayed in Figure 4. Among these states, Tamil Nadu has the highest land productivity (103 t/ha). Uttar Pradesh (61 t/ha) and Bihar (52 t/ha) are far below Karnataka (89 t/ha), Maharashtra (80 t/ha) and AP (76 t/ha). These values, however, indicate that the traditional sugarcane-growing subtropical belt comprising UP and Bihar is less suitable for cultivation of the crop, whereas the tropical belt comprising AP, Maharashtra, Tamil Nadu and Karnataka are more productive producers of the water-guzzler crop. Incidentally, the recovery ratio of sugar from sugarcane is also higher in AP, Maharashtra and Karnataka compared with Uttar Pradesh and Bihar. All these justify a thriving sugar industry in the tropical belts. But such a conclusion would be biased if one does not look at the water balance in the state, and also adjusts for the duration of the crop.

The results of sugarcane productivity per cubic metre (cu. m) of irrigation water (as estimated earlier for rice, per lakh litres) across major sugarcane-growing states reveal a very different and interesting picture. Wide variation exists in the duration of crop and sugar recovery rates across these states. For example, the average duration of the crop in Uttar Pradesh is around 9.6 months while in Maharashtra it is 13.5 months (Appendix 2). The number of standard irrigation requirements for the sugarcane crop per hectare in Maharashtra, AP, Karnataka and Tamil Nadu are about 26, 27, 34, 40 respectively while those in Uttar Pradesh (7.6) and Bihar (5) are much less.²⁵ Maharashtra has the highest sugar recovery rate of 11.3 per cent while Bihar and Tamil Nadu are at 9 per cent each. The different rates reflect the variation when sugar productivity (sugar being the final product of sugarcane) and efficiency per unit area is compared. The land productivity of sugarcane across the states without adjusting for these parameters is thus not comparable. Hence, there is a need to adjust the production per unit area with respect to duration, water intake and recovery rate to enable any meaningful comparison. In Figure 4, the normalized land productivity of sugarcane across states after adjusting with crop duration is given along with the unadjusted land productivity for comparison.

Further, in Figure 4, the irrigation water productivity of sugarcane across the states is displayed and compared with the land productivity and adjusted land productivity of sugarcane across states. The irrigation water productivity, which is the land productivity after adjusting for water intake, shows that Bihar and Uttar Pradesh have almost 2.5 to 4 times more productivity than Maharashtra, AP, Tamil Nadu and Karnataka with respect to irrigation water applied. Among the states, Bihar has the highest irrigation water productivity (13.9 kg/cu. m) while the lowest is observed for Tamil Nadu and Karnataka (3.5 kg/cu. m) and this ranking is seen to be in exact contradiction to the land productivity values of the states.

The sugar productivity after adjusting the land productivity of sugarcane by crop duration, water intake and recovery rate shows that Bihar (1.25 kg/cu. m) and Uttar Pradesh (1.00 kg/cu. m) are at par and more efficient than Maharashtra, Andhra Pradesh, Tamil Nadu and Karnataka (where productivity is less than one-third that of the sub-tropical states). Thus, for production of 1 kg of sugar three to four times more irrigation water need to be applied in the subtropical belts of Tamil Nadu, Karnataka, Andhra Pradesh and Maharashtra when compared to the tropical belts of Uttar Pradesh and Bihar (Figure 5).

Thus, it is established that the traditional subtropical sugarcane belt is more efficient in terms of sugarcane and sugar productivity than its tropical counterpart, when time duration of the crop and recovery rates are adjusted and productivity is calculated on per unit of irrigation water requirement.

Figure 4: Comparison of Sugarcane Land Productivity, Normalized Land Productivity and Irrigation Water Productivity across the Major Sugarcane-Growing States

Figure 5: Irrigation Water Productivity of Sugar and Irrigation Water Applied for Production of 1 kg of Sugar (TE 2014-15)

Source: Authors’ calculation using data given in CACP (2015–16) and Directorate of Economics and Statistics.²⁶

The profitability of sugarcane across the states before and after adjusting for the crop duration also reveals similar results. Before adjusting the crop duration, the profitability was found to be highest for Maharashtra while per month profitability was found to be highest for Tamil Nadu followed by UP. Maharashtra was in the third position.²⁷ Thus the adjusted profitability shows that growing sugarcane in UP, bestowed with irrigation (77 per cent of GCA, 2013–14),²⁸ is more profitable compared with Maharashtra (Figure 6).

Maharashtra has prospered with sugarcane cultivation and has good infrastructure in terms of processing industries, research and development institutions. The farmers and the economy as a whole have not warmed up to the idea of changing the cropping pattern, which requires exploring options for better water management practices like the micro-irrigation technology. Compared with conventional surface irrigation methods with low water-use efficiency of 30–65 per cent, the drip irrigation system exhibits almost 90 per cent efficiency, by bringing down water loss during application. The drip technology in sugarcane can save water by around 28 per cent over flood irrigation method (considering application efficiency alone) which is what is required for irrigating approximately one hectare of cotton crop. Thus, the water saved by using drip irrigation technology can be used for bringing additional land under irrigation for other principal crops of the region resulting in a multiplier effect in increasing farmer incomes.

Figure 6: Profitability and Adjusted Profitability of Sugarcane across Major Sugarcane-Growing States in India (TE 2013–14)

Source: Authors’ calculation based on data from CACP (2016–17).²⁹

The adoption of the drip irrigation system is found to be economically feasible in the majority of cases even in the absence of subsidy. However, owing to the high initial investment cost associated with the installation of the technology, subsidies become imperative for its adoption by small and marginal farmers. So far, only 22 per cent of sugarcane area has been brought under the drip irrigation system.³⁰ Recently, the chief minister of Maharashtra announced that most of the area under sugarcane must be put under drip irrigation by 2019 to save water for other crops as well as for drinking purposes in water-scarce regions like Marathwada.³¹ The Maharashtra government aims to bring an additional 3.05 lakh hectare of the sugarcane crop under drip irrigation in the next two years through a pilot project that is to be implemented with loans from NABARD, and based on the results, make drip irrigation mandatory for the remaining area after 2019.

At around Rs 85,400 per hectare cost of installation of the drip system, a total of Rs 6832 crore will be required to bring 0.8 million hectare of sugarcane area under the drip irrigation system in Maharashtra. During 2017–18 the revised budget allocation for Maharashtra under the micro-irrigation scheme was only Rs 380 crore³² (only 5.56 per cent of the total cost to be incurred). Thus, the overall funding in micro-irrigation through budget allocation or floating micro-irrigation bonds is essential to promote investment in drip irrigation.

In order to achieve agriculture sustainability, profitability and productivity, judicious use of water through appropriate water-pricing policies and adoption of precision irrigation technology like micro-irrigation is imperative.