Last month the non-bank finance company (NBFC) of Netafim Irrigation India got about Rs 420 cr in equity and long-term debt funding. This will enable it to lend about Rs 2,000 cr, its CEO Prabhat Chaturvedi said. Israel’s Netafim is a pioneer in drip and sprinkler or micro-irrigation systems, though in India Jalgaon-based Jain Irrigation took the lead. Governments provide micro-irrigation installations practically free to smallholder farmers (those owning less than five acres). In Karnataka, they get a subsidy of 90 percent, shared unequally by centre and the state.
Micro-irrigation companies have driven their business by installing the equipment first and then collecting the subsidy from the government on behalf of farmers. Some stretched themselves so much they got into a working capital crunch. A few years ago, the government disallowed private banks and non-banks from financing subsidised micro-irrigations systems. That leaves NBFCs like Netafim’s NAFA with business only from those farmers who are so convinced that micro-irrigation will reduce their cost and enhance profits that they are prepared to bear the entire cost. These are mostly horticulture farmers or those who have assured buyback of their produce. For cane farmers in Maharashtra, the sugar mills stand guarantee. They pay the lenders from the cane receivables of farmers, who, consequently, don’t have to offer their land as collateral. Maharashtra being water scarce has made micro-irrigation mandatory for cane farms.
The government has been promoting micro-irrigation through the ‘Per Drop More Crop’ scheme. This year, it has allocated Rs 4,000 cr for it in the budget. Last year, the same amount was allocated but spending was Rs 2,500 cr. Chaturvedi says if private banks and non-banks were allowed to lend for subsidised micro-irrigation installations the outcome would have been better. (But lenders had turned risk-averse last year as farmers were unable to sell their produce due to Covid-19 restrictions. Chaturvedi admits to an increase in micro-irrigation loan defaults at his own company).
Micro-irrigation installations used to be promoted one or a few farmers at a time. That’s inefficient and time-consuming. Karnataka is one of the pioneers of micro-irrigation. It began in 1991-92. Till November 2020, it had covered 7.16 lakh hectares. Community-based combined lift and drip irrigation projects can cover wide swathes of land and make scare water available to a large number of farmers in a short time. Since governments pay most of the capital cost, it makes economic sense as well. Karnataka is implementing six such projects. The one across the River Krishna in Bagalkot district’s Hungund taluk is touted as the world’s largest. It covers 60,000 acres and 14,000 farmers across 22 villages. The project was awarded to Netafim and Jain Irrigation and was commissioned in 2017.
The videos uploaded on Youtube by the two companies claim huge savings in water, fertiliser and energy and substantial increase in crop yields. They speak glowingly of farmers prospering by growing cash crops and preferring to stay back rather than migrating to cities.
A note on the project uploaded on the website of the water resources ministry says though it cost Rs 750 cr – 25 percent more than a comparable and conventional canal irrigation scheme, there is a 90 percent increase in area irrigated. The cost per hectare is Rs 3.13 cr versus Rs 2.5 cr for a conventional project.
There are environmental benefits too: no water logging or increase in salinity; less wastage of land to canals and distributaries. Since there is pressured supply, water is evenly distributed across fields and within fields ensuring uniform plant growth and yields. Dissolved fertilisers are conveyed directly to the root zone. A decrease in humidity means lower incidence of pests and diseases and growth of malarial mosquitoes.
The entire irrigation project is a closed-loop system. Water is lifted from a reservoir and pumped into a sump. It is filtered for silt and debris. It is wireless controlled with instrumentation that regulates supply based on feedback from pressure and flow sensors. The entire area is divided into zones of about 1,200 acres and further into 10 subzones each to which water is supplied in shifts, the maximum being up to 72 minutes a day at a rate calibrated for kharif and rabi seasons. Water user associations are supposed to collect the maintenance charges – Rs 1,000 per acre.
But what’s the ground reality? Ravi Sajjanar, 31, the founder of Hunagunda Horticulture Farmer Producer Company, says he is “very disappointed.” He owns 50 acres and supplies chilly on contract to ITC and Olam. His organisation has 1,000 members, he says, who own 3,640 acres across 18 villages in the footprint area. Some of the farmers have got 40 percent of the promised supply, he says, some not even that. Farmers who invested in adapting crops to the new irrigation system lost money, he says.
Rafiq Mulla, 40, of Sulebhavi village in Hungund taluk said he never got “correct” water even once. The pipelines are broken and not repaired. The trenches that were dug to lay the pipes were not covered. There is no assured supply in August and September when they most need water. Mulla grows pigeonpea (tur) and chilly.
Abdul Khader Jeelani, 33 and Mahantesh Patil, 45, also of Sulebhavi had the same complaints. “The project is not a success,” Patil said.
Company executives – V L Nikam, Jain Irrigation’s VP (Projects) for Karnataka and Girish Deshpande, who looks after six projects in Karnataka for Netafim – have their own sob story. They say farmers have not been able to switch mindset from rainfed irrigation to micro-irrigation. They don’t have the patience to abide by the supply schedules. Some farmers tap the mains illegally to draw extra water, which reduces the pressure in the system and deprives others. There is no ownership because the equipment was provided free. Even user charges are not collected. The laterals or pipes in the fields are damaged during land preparation for sowing and farmers blame the companies as they have the responsibility for operations and maintenance for five years. The drip pipes have to be protected from rodents, but farmers don’t follow advice. The companies say they have engaged security services at enormous cost to prevent vandalism but it has not helped. Complaints lodged with the police at not acted upon under political pressure. Farmers are yet to receive compensation from the government for land acquired for the pump house and other common utilities – so they bar access to them. There is enough water in the reservoir, they say. Farmers need to abide by the discipline that community-based projects require to benefit from them.
The executives say they are applying the Ramthal learning to projects under execution. Making farmers aware is critical for project success, they say. They have engaged external agencies like NGOs and government horticulture and agriculture departments. Farmers are being trained in cultivation of profitable cash crops with the appropriate package of agronomic practices.
The Ramthal experience reminds one of India’s programme to end open defecation where it was found that mere construction of toilets on a big scale would not end the practice. Behavioural change is needed.
(Photo courtesy of the World Bank)