IIMA Organic Farming Intro
IIMA Organic Farming Intro
IIMA Organic Farming Intro
y
j
-
x
j
0, j = 1, 2 . . . N,
, 0 (2)
Where the notation change from u and v to and reflects the transformation, this
form is known as the multiplier form of the linear programming problem.
Using the duality in linear programming, one can derive an equivalent envelopment
form of this problem:
Min , "
Subject to y
i
+ Y 0,
#$ X 0,
0 (3)
Where is a scalar and is N x 1 vector of constants. This envelopment form
involves fewer constraints than the multiplier form (K+M < N+1), and hence is
generally the preferred form to solve. The value of obtained will be the efficiency
score for the ith DMU. It will satisfy 1, with a value of 1 indicating a point on the
frontier and hence a technically efficient DMU, according to the Farrell (1957)
definition. Note that the linear programming problem must be solved N times, once
for each DMU in the sample. A value of is then obtained from each DMU.
The CRS assumption is only appropriate when all DMUs are operating at an optimal
scale. Imperfect competition, constraints on finance, etc, may cause a DMU to be not
operating at optimal scale. The use of the CRS specification when not all DMUs are
operating at the optimal scale will result in measures of TE which are confounded by
Scale efficiencies (SE). The use of the VRS specification will permit the calculation of
TE devoid of these SE effects. The CRS linear programming can be easily modified
to account for VRS by adding the convexity constraint: N1
=1 to (3) to provide:
109
Min , "
Subject to y
i
+ Y 0,
#$ X 0,
N1
=1
0 (4)
Where N1 is an N x 1 vector of ones, this approach forms a convex hull of
intersecting planes which envelope the data points more tightly than the CRS conical
hull and thus provides technical efficiency scores which are greater than or equal to
those obtained using the CRS model.
Many studies have decomposed the TE scores obtained from a CRS DEA into two
components, one due to scale inefficiency and one due to pure technical efficiency.
If there is a difference in the two TE scores for a particular DMU, then this indicates
that the DMU has scale inefficiency, and that the scale inefficiency can be calculated
from the differences between the VRS TE score and the CRS TE score.
CRS TE = VRS TE x SE (5)
If one has price information and is willing to consider a behavioural objective, such
as cost minimization and revenue maximization, then one can measure both
technical and allocative efficiencies. The cost minimization vector of input quantities
given the input prices is determined using:
Min
,xi*
w
i
xi
*
,
Subject to -yi + Y 0,
xi* X 0,
N1 = 1
0, (6)
Where w
i
is a vector of input prices for the i-th DMU and xi* (which is calculated by
the LP) is the cost-minimizing vector of input quantities for the i-th DMU, given the
input prices w
i
and the output levels y
i
. The total cost efficiency (CE) or economic
efficiency of the ith DMU would be calculated as
CE = w
i
xi
*
/ w
i
xi
110
That is, the ratio of minimum cost to observed cost. One can then calculate the
allocative efficiency residually as AE = CE / TE
In many studies the analysts have tended to select input-oriented models because
many DMUs have particular orders to fill (ex. production units) and hence the input
quantities appear to be the primary decision variables, this argument may not be as
strong in all industries. In some industries the DMUs may be given a fixed quantity of
resources and asked to produce as much output as possible. In this case an output
orientation would be more appropriate. Essentially one should select an orientation
according to which quantities (inputs or outputs) the managers have most control
over. Further, Coelli and Perelman (1996) concluded in their study that the choice of
orientation will have only minor influences upon the score obtained. Hence, this
study adopted only input orientation rather than output orientation because the
sample related to organic production units where output determines by inputs.
Each observation included two outputs i.e., average vermi-compost production (Y1)
per unit per annum in tons and sale of worms (Y2) per unit per annum in kg. In the
input category, four variables were included. They were raw materials qty (X1)
mainly dung in tons per annum, qty of worms used per annum (X2) in kg, units of
labor used (both hired and own) per annum (X3) and no.of months electricity (X4)
used per annum. The unit prices of four input variables were also used in the
calculation of cost-DEA functions. Under this approach, both CRS and VRS models
were applied to data with input orientation. The DEA models were estimated using
programme DEAP 2.0 (Coelli, 1996).
4.4 Sampling strategy
Keeping the issues covered in the earlier sections, the study considered both organic
input production units (sanctioned under NPOF scheme only) as well as organic
input user i.e. organic farmers for the sample. The present study used the following
steps for identification of the sample:
Step 1: The selection of sample organic input units for the study was purposively
chosen from four states, namely; Punjab, Uttar Pradesh, Gujarat and Maharashtra.
111
One of the reasons for choosing these four states was to see the comparison in
efficiency of organic input units between the Northern states (where irrigation and
fertilization application is default in states like Punjab and U.P) and Western states
(where irrigation and fertilizer application is optional in states like Maharashra and
Gujarat) of India. Moreover, study has also a limitation in choosing the sample only
from vermi-hatchery units rather than from other two types of input units (bio-
fertilizers and fruit and vegetable waste units). This is because of the highly
scattered distribution of three type units across different states of India. However,
these four states accounted for nearly 60 per cent of total sanctioned vermi-hatchery
units in India (see table 3.3). The details of sample selected for the study is
presented in table 4.1.
The two sanctioned fruit and vegetable waste units present in Uttar Pradesh and
Gujarat states were covered in the study. There are no fruit and vegetable waste
units sanctioned in Punjab and Maharashtra states. Similarly, in case of bio-fertilizer
units, one unit from each state was selected randomly from the population. But, there
is no bio-fertilizer unit sanctioned in Uttar Pradesh state. So, the total bio-fertilizer
units included in the sample was three out of the total population of ten units in four
states. Fourth bio-fertilizer unit was selected for the study from the two Maharashtra
units subsidized by NCDC (see table 3.4). But, in case of vermi-culture hatchery
units, a total sample of 40 units were chosen in clusters under four states for the
study. The criterion used for selection of sample units from each state was on their
respective weights in the population. Due to their extremely scattered nature in each
state, vermi-hatchery sample units were chosen in two to three groups/clusters in
order to minimize the travel costs and time. A well structured and pre-tested
questionnaire was administered to extract some common quantitative parameters of
each type of unit; with utmost emphasis was placed on qualitative case analysis
through interaction with the organic input units.
Apart from the quantitative analysis of primary data for efficiency measurement,
qualitative analysis of efficiency was done by in-depth case analysis of selected
units. Two fruit and vegetable waste units and four bio-fertilizer units (3 from
NABARD and one from NCDC sample) were covered comprehensively as cases.
Similarly, two vermi-hatchery units were also highlighted as cases to complement the
112
quantitative results obtained. Finally, a sum of eight cases was described separately
in this chapter 5.
Table 4.1 Details of sample units selected for the study
Type of input
unit
Punjab Uttar
Pradesh
Gujarat Maharashtra Total sample for
study
Fruit and
vegetable
waste units
- 1
(1)
1
(1)
- 2
(2)
Bio-fertilizer
units
1
(1)
- 1
(3)
1
(6)
3 + 1 NCDC unit
(12)
Vermiculture
hatchery units
6
(42)
17
(115)
13
(86)
4
(29)
40
(272)
Note: Figures in the parentheses indicates total no.of units sanctioned in that state
Step 2: A random sample of 15 organic farmers per each state (organic input users)
were drawn from study area to canvass a structured questionnaire to extract
constraints in procuring and usage of organic inputs etc. Thus, the study covered 60
organic farmers from four states. Another random sample of 15 conventional farmers
(in-organic input users) was also selected to compare the crop economics and
productivity of crops with organic cultivation in the respective study area.
4.5 Empirical results
The empirical results highlighted in this section were mainly pertains to vermi-
hatchery units sanctioned under NPOF scheme. The details of fruit and vegetable
waste units and bio-fertilizer units were represented as detailed cases in chapter 5.
All the sample vermi-hatchery units were contacted with advance intimation to
promoters and visited them along with respective officials from financial bank. The
results of primary data collected were organized in following sections:
4.5.1 Sample distribution
The details of sample districts, blocks/talukas and villages chosen for the study are
presented in table 4.2. A total of 40 sample units were selected from Gujarat,
Maharashtra, Punjab and Uttar Pradesh states purposively based on their weights in
the total units sanctioned in these four states. A sample of 13 units from Gujarat and
4 units from Maharashtra were chosen randomly which accounted for 15.1 and 13.8
113
per cent to the total number of units sanctioned in their states respectively. Similarly,
six units from Punjab and 17 units from Uttar Pradesh were identified for the study.
They accounted for 14.3 and 14.8 per cent of the total units sanctioned in these
states. In Gujarat, three sample districts namely Baroda, Ghandhinagar and
Sabarkanta were selected because location of units in clusters. Among these
districts, a large cluster of 8 units was present in Baroda district followed by
Ghandhinagar (4) and Sabarkanta (1). The selected 13 sample units were in turn
again located in 4 talukas/blocks and eight villages of the state. Savli taluka was
having the largest cluster of eight sample units. Similarly, among all villages,
Subhaelav was having maximum number of five sample units.
Table 4.2 Distribution of the sample
Strata Gujarat Maharashtra Punjab Uttar Pradesh
Sample*
13
(15.1)
4
(13.8)
6
(14.3)
17
(14.8)
Sample
Districts^
Baroda (8)
Ghandhinagar (4)
Sabarkanta (1)
Ahmednagar (3)
Sangli (1)
Ludhiana (4)
Fatehgarh Sahib(2)
Baghpath (11)
Muzaffarnagar (4)
Aligarh (2)
Sample
Talukas/
Blocks^
Savli (8)
Dehgam (3)
Prantij (1)
Ghandhinagar (1)
Sangamner (1)
Khanapur (1)
Newasa (2)
Machhiwara (4)
Basipathana (2)
Chamrawal (1)
Faizullapur (1)
Hisarda (1)
Kekhada (2)
Singhavali (1)
Sadikapur (2)
Baghpat (3)
Titawi (1)
Baghra (3)
Gaumat (2)
Sample
Villages^
Subhaelav (5)
Gothada (2)
Savli (1)
Vasanachaudary (1)
Patnakuva (1)
Ghdakan (1)
Palaiya (1)
Chandrala (1)
Dadhkurd (1)
Renavi (1)
Rastapur (2)
Rajgarh (2)
Sherpur (2)
Sirkapra (2)
Chamrawal (1)
Faizullapur (1)
Hisarda (1)
Badagon (1)
Khatta prahladpur (1)
Singhavali (1)
Sadikapur (1)
Surajpur Makhanwa (1)
Mitili (1)
Sisana (1)
Dola (1)
Lakhan (1)
Naseerpur (1)
Ladwa (1)
Naseerpur (1)
Rajpur (1)
Sujanpur (1)
Note: * - Figures in the parenthesis indicate percentage to total units sanctioned in that state
^ - Figures in the parenthesis indicate no. of units chosen
114
In case of Maharashtra, two districts were chosen for the study. They are namely
Ahmednagar and Sangli districts. A sample of three out of four selected units were
situated at Ahmednagar where as Sangli was having one unit. Overall, the sample
units were identified in three talukas/blocks and three villages of the state. Taluka
Newasa and Rastapur village both were having two units each in them.
Sample of six units in Punjab was dispersed in two districts namely Ludhiana and
Fatehgarh Sahib. Ludhiana was having more number (4) of units in Machhiwara
block when compared with Fatehgarh Sahib where two units were present in
Basipathana block. The six units were equally distributed among three villages i.e.,
Rajgarh, Sherpur and Sirkapra of the state.
Baghpath, Muzaffarnagar and Aligarh were the three districts selected under Uttar
Pradesh state for the study. A lion share of 65 per cent units was located in
Baghpath followed by Muzaffarnagar (23.5%) and Aligarh (11.5%) district. The
sample units in the state were much scattered in around 10 talukas/blocks. However,
all the selected 17 sample units were also identified from 17 villages of the state.
4.5.2 Socio-economic characteristics of sample
The socio-economic profile of sample beneficiaries is presented in table 4.3. Overall,
only three beneficiaries (7.5 per cent) out of 40 were having vermi-hatchery as their
primary occupation. All the three beneficiaries belonged to Uttar Pradesh state. A
major share (62.5 per cent) of beneficiaries expressed agriculture as major source of
income. The remaining 30 per cent of sample beneficiaries were depended on
livestock, business, service etc as the principle income avenues. The percentage
dependency on agriculture as main source of income was very high in Gujarat
followed by Punjab, U.P and Maharashtra. We can conclude that majority of the
beneficiaries were not relying on vermi-hatchery as a major income source.
Only three beneficiaries (7.5 per cent) were expressed vermi-hatchery as their
secondary source of income. Nearly, half of the sample (47.5 per cent) was
dependent on agriculture and animal husbandry sectors. A sample of 27.5 per cent
beneficiaries was earning their secondary incomes through service and business.
Seven (17.5 per cent) out of 40 sample beneficiaries were not rely on any economic
activity for their secondary occupation. Among different states, the share of
115
dependency on service/business was high in Gujarat followed by Punjab. The results
indicate that most of the farmers in the study area are not taking up vermi-hatchery
units in a commercial way.
.
On the whole, more than half (55 per cent) of the sample was studied either
intermediate or graduation. One-fourth of the beneficiaries were passed out in post-
graduation or in doctorate. Only 17.5 per cent of the borrowers were just qualified in
tenth class. A lone farmer (2.5 per cent) in the entire sample did not have education.
The illiteracy was high (7.6 per cent) in Gujarat when compared to other states. In
general, 35 per cent of the sample beneficiaries were members either in formal
(village gram panchayat or credit cooperative society or milk cooperative society or
cane growers association) or informal bodies (environmental society or educational
society). None of the sample borrower from Gujarat state was member in any
society. But, their membership was significant in the remaining three states.
Table 4.3 Socio-economic characteristics of the sample (no. of units)
Parameter Gujarat Maharashtra Punjab Uttar
Pradesh
Over all
(n=40)
Primary occupation
a. Vermi hatchery
b. Agriculture
c. Others
0
10
3
0
2
2
0
4
2
3
9
5
3
25
12
Secondary occupation
a. Vermi hatchery
b. Agriculture/ livestock
c. Service/Business
d. None
0
6
5
2
1
2
0
1
0
2
2
2
2
9
4
2
3
19
11
7
Educational qualifications
a. Illiterate
b. S.S.C
c. Intermediate/Graduate
d. Post-graduate/Doctorate
1
2
9
1
0
0
2
2
0
2
2
2
0
3
9
5
1
7
22
10
Other positions (Y/N)
a. Yes
b. No
0
13
2
2
2
4
10
7
14
26
Average family size (no.) 5.7 4.7 5.3 7.6 6.3
Average no.of family labor
work in the unit (no).
0.8 1.7 1.6 2.0 1.5
Average land holding
(acres)
19.1 102.0 49.5 9.4 27.8
Livestock (no.) 6.9 102.5 13.3 4.3 16.3
116
On an average, the size of family was 6.3 per household. The average size of the
family was the highest in U.P (7.6) followed by Gujarat, Punjab and Maharashtra.
The lowest size of family (4.7) was recorded in Maharashtra state. Overall, the
average number of family members participated in vermi-hatchery unit was 1.5 per
household. But, their participation rate was the highest in U.P (2.0) followed by
Maharashtra, Punjab and Gujarat. The lowest family participation rate was noticed in
case of Gujarat (0.8 per household). This also confirms that they were more
interested in non-farm activities rather than farm-activities.
The average size of land holding per household was 27.8 acres. This value was
much higher in Maharashtra (102 acres) because two landlords who have 200 acres
each were established vermi-hatchery units. Among the three remaining states,
Punjab was having the highest (49.5 acres) followed by Gujarat and U.P. The mean
size of livestock population per household was 16.3. It indicates that each household
was having sufficient number of buffaloes for production of vermi-compost. Similarly,
the value was very high for Maharashtra (102.5) because two landlords were having
200 animals each in their farms. The lowest number of animals (4.3) per household
was observed in U.P state.
4.5.3 Primary details of sample units
The state-wise primary details of the selected units is presented in table 4.4. On
whole, only 22 out of 40 units were functioning on the day of visit. The number of
non-functioning units were maximum (100 per cent) in case of Gujarat. The main
reasons for not functioning are: lack of demand for vermi-compost, neither JMC visit
nor subsidy release from NABARD, death of worms in high temps, heavy rains and
floods. The percentage of non-functioning units was 25 and 23.5 per cent
respectively in case of Maharahstra and U.P states. But, in case of Punjab all six
units were functioning well.
Almost all the 40 sample units were completed the establishment of units. None of
the sample unit is still under construction process. Nearly 97.5 per cent units have
finished their construction with in stipulated period of six months. A lone unit in U.P
has crossed its timeline of six months for establishment of unit. The average time
taken from sanctioning of the loan to completion of unit was 96 days. The state-wise
117
average time taken was the highest in case of Maharashtra followed by U.P, Punjab
and Gujarat. It indicates that most of structures constructed in Gujarat were taken
very less time.
Table 4.4 Primary details of sample units (no. of units)
Item Gujarat Maharashtra Punjab Uttar
Pradesh
Over all
Units functioning on day of visit
a. Functioning
b. Not functioning
0
13
3
1
6
0
13
4
22
18
Units construction
a. Completed
b. Not completed
13
0
4
0
6
0
17
0
40
0
Construction completed with in
a. Stipulated six months time
b. Not completed
13
0
4
0
6
0
16
1
39
1
Average time taken from sanctioning
to completion of unit (days)
51
165
54
126
96
Any refund of advance subsidy
a. Yes
b. Avg. amount (lakh)
8
0.50
0
N.A
0
N.A
0
N.A
8
0.50
Completion certificate given to bank
a. Yes
b. No
12
1
3
1
6
0
17
0
38
2
Joint Monitoring committee (JMC)
visited
a. Completed
b. Not completed
8
5
3
1
6
0
11
6
28
12
Final subsidy received (Rs.)
a. Yes
b. Avg. amount (lakh)
1
0.81
3
0.75
4
0.75
11
0.75
19
0.75
Average age of the unit (months)
a. Less than or equals to 12
b. Between 13-24
c. > 24
4
2
7
1
0
3
0
6
0
2
7
8
7
15
18
Encountered problems in getting
subsidy from NABARD
a. Yes
b. No
11
2
0
4
2
4
7
10
20
20
Any permission/license obtained
for marketing
a. Yes
b. No
0
13
1
3
0
6
0
17
1
39
If the farmer could not able to construction the unit with in stipulated period of six
months time or if Joint Monitoring Committee (JMC) visits and feel that the standards
118
are not up the mark of NABARD, then NABARD will recall the advance subsidy
amount from the borrower/beneficiary. Overall, 8 units out of 40 sample units repaid
their advance subsidy to NABARD because their standards of establishment of units
was not up to the mark of NABARD stipulated guidelines. All these repaid units were
located in Gujarat state only. The average amount they paid back to NABARD was
Rs.50,000 per unit. This concludes that the units constructed in Gujarat were very
poor and inefficient when compared to other state units.
When the project is nearing in completion, the promoter will inform the bank by the
way of submission of a completion certificate. This will initiate the action for JMC
visit. Almost 95.0 per cent of sample promoters have submitted their completion
certificates to banks. One each from Gujarat and Maharashtra were not submitted to
bank till date. This was due to lack of awareness among promoters as well as bank
officials. But, so far NABARD conducted JMC visits only in 70 per cent sample units.
Nearly, 30 per cent of sample units were still waiting for JMC visits and final subsidy
amounts. This indicates a huge delay in the process of subsidy release. Among the
four states, the delays were more pronounced in Gujarat (38%) and U.P (35 %)
states. Out of the 28 units (70%) who completed JMC visits, only 19 units (67.8%)
have received the final subsidy amounts. The average amount they received was
Rs.75,000 per unit. Around 32 per cent of units were still waiting for release of final
subsidy amounts by NABARD. This was another bottleneck in the scheme where lot
of time was consuming for processing.
On whole, 45 per cent of sample units were established more than two years back.
37.5 per cent of units were belonging to the age range of between 13 and 24
months. Seven units (17.5 per cent) were having less than one year old age. In total,
nearly 82.5 per cent of the sample units were established more than one year back.
Across different states, units with age more than two years were present more in U.P
followed by Gujarat and Maharashtra.
When we asked about their problems in getting the subsidy from NABARD, nearly
half of the sample promoters were expressed that they faced problems. The
proportion of the promoters faced problems were more in Gujarat (55%) followed by
U.P (35%) and Punjab (10%). A lone farmer in the entire sample was succeeded in
119
obtaining the license/certification for marketing his product. Remaining 39 promoters
(97.5%) did not have any license or permission for marketing their product. This is
another loophole in the scheme that who will certify; how to obtain, what is the cost
etc details; many of the promoters were not aware.
4.5.4 Financial details of sample units
The summary of financial information of sample units is presented in table 4.5. On an
average, 5.9 lakh per unit was the financial outlay. The outlay was the highest in
case of Maharashtra (6.3 lakh). While, this amount was same in case of Gujarat and
U.P states (5.9 lakh). But, it was the lowest in case of Punjab state (5.7 lakh). The
average promoters contribution in the total outlay was 1.6 lakh. However, this
amount was the highest in Maharasthra followed by Gujarat. The mean bankers
loan amount was 4.3 lakh per unit. The bankers loan amount was the highest in U.P
followed by Punjab states. Nevertheless, the eligible subsidy amount was uniform
across states i.e., 1.5 lakh per unit. But, the actual mean subsidy received till date
per unit was Rs.0.93 lakh only. There was a huge gap of 0.57 lakh between these
two figures. This gap was the highest in case of Gujarat (1.23 lakh) followed by U.P
(0.27 lakh) and Punjab (0.25 lakh). The difference was the lowest in Maharashtra
(0.19 lakh). The main reasons for this difference were: not obeying the NABARD
standards and requirements and a lot of delay in final subsidy release after JMC
team visited the units.
Overall, an average, the actual amount spent by promoters for establishment of each
single unit was Rs. 5.4 lakh. Among the four states, the amount spent on each unit
was the highest in Punjab (8.2 lakh) followed by Maharashtra (7.6 lakh) and U.P (5.4
lakh). The amount was the lowest in case of Gujarat (3.5 lakh) which indicates the
poor establishment of units. The average time taken from proposal submission to
approval from financial bank was 1.65 months (roughly 50 days). The time
requirement was the lowest in case of Punjab (one month) and the highest in case of
Maharashtra (1.75 month). But, the time period was more or less similar in case of
Gujarat and U.P states.
120
Table 4.5 Financial details of sample units (Rs. lakh per unit)
Item Gujarat Maharashtra Punjab Uttar
Pradesh
Over all
Total financial outlay (a + b) 5.9 6.3 5.7 5.9 5.9
Promoters contribution (a) 1.8 2.2 1.5 1.5 1.6
Bankers loan (b) 4.1 4.1 4.2 4.4 4.3
Subsidy eligible 1.5 1.5 1.5 1.5 1.5
Actual subsidy received till date 0.27 1.31 1.25 1.23 0.93
Actual amount spent 3.5 7.6 8.2 5.4 5.4
Average time taken from
proposal submission to
approval from Bank (months)
1.23 1.75 1.0 2.2 1.65
Sanctioned Bank type
a. Commercial
b. Cooperative
13
0
1
3
2
4
15
2
31
9
ROI range (%) 10-12 12.5 10.5-12 11-13.75 -
Problem faced in getting
approval from the financial
Bank
a. Yes
b. No
1
12
0
4
2
4
3
14
6
34
Nearly 78 per cent of the sample units were financed by commercial banks. Only the
remaining 22 per cent were supported by district cooperative banks. The cooperative
banks sanctioned more number of units than the commercial banks in case of
Maharashtra and Punjab states. But, in case of Gujarat (100%) and U.P (88%)
states; they were dominated by commercial banks. The range of interest rate on
bank loans was found to be the highest in U.P followed by Maharashtra. But, these
ranges were a little bit low in case of Gujarat when compared with Punjab. Only, 15
per cent of the promoters opined that they faced problems in getting approval from
the financial banks.
4.5.5 Checklist for basic components in the units
The summary of checklist for basic components in the selected vermi-compost units
is presented in table 4.6. As per the National Centre of Organic Farming (NCOF),
capital investment subsidy scheme for promoting organic inputs manual, eight basic
components were identified and checked for their availability in the sample units
during field visits. In Gujarat, out of 13 sample units, none of the unit was having all
121
the basic components. Only one unit was having seed stock, raw material and
packaging etc in the state. It reveals the very poor infrastructure and maintenance of
units in the state.
Table 4.6 Checklist for basic components in the units (no. of units)
Item Gujarat
(13)
Maharashtra
(4)
Punjab
(6)
Uttar
Pradesh (17)
Over all
(40)
Location
(0.5 -1 acre)
7 3 6 15 31
Seed stock and raw
material availability
1 3 6 10 20
Sheds (10-12 no.) 8 3 6 14 31
Concrete bed 4 3 6 12 25
Water supply 9 4 6 17 36
Store room 8 4 4 15 31
Transport system 8 2 2 8 20
Packaging 1 3 6 13 23
Over all* 0 (0.0) 2 (50.0) 2 (33.3) 3 (17.6) 7 (17.5)
* Figures in the parenthesis indicates percentage to total units sanctioned
Similarly, out of four units in Maharashtra, only two was having all eight basic
components prescribed for vermi-hatchery unit. But, three out of four units were
having many of the basic components. However, in case of Punjab, only 33.3 per
cent sample units were having all components. Transport system and storage were
the two major missing components in 66.6 and 33.3 per cent of sample units
respectively in Punjab. Only three sample units in U.P equipped with all components.
The major omitted components in U.P units were transport system followed by seed
stock and raw material. Overall, only seven units have fitted with all eight basic
components. Highest deficiency of components was observed in case of seed stock
and raw material (50%) and transport system (50%). These results clearly showed
the poor infrastructure facilities in Indian vermi-hatchery units.
4.5.6 Capacity utilization of sample units
The details of capacity utilization of sample units are presented in table 4.7.
Capacity utilization is a concept refers to the extent to which an enterprise actually
uses its installed productive capacity. Thus, it refers to the relationship between
actual output that 'is' produced with the installed equipment and the potential output
122
which 'could' be produced with it, if capacity was fully used. The details presented in
table and discussed were referring to the capacity utilization of organic input units in
the last one year.
Table 4.7 Capacity utilization of sample units (TPA)
Item Gujarat Maharashtra Punjab Uttar
Pradesh
Over all
Average installed capacity 150 150 150 150 150
Current capacity utilization 24.2 187 33 105 76.2
Capacity utilization rate (%) 16.1 124.6 22.0 70.0 50.8
Average no.of working days per
annum (days) @
319.6 365.0 325.0 337.0 332.0
Average working hours per day @ 5.1 6.7 2.3 6.3 5.3
Average recovery rate (% ) @ 48.0 52.5 33.3 39.7 42.7
Gestation period per cycle (days) @ 46.5 35 60 50 48.8
Avg no. of cycles per year (range) @ 5-7 10-15 3-5 6-8 7-9
Expected life span of unit (years) @ 8.1 12.5 10.0 10.2 10.3
@ Summarized based on their past experiences in vermi-compost production
The average installed capacity of the sample units was 150 Tons Per Annum (TPA).
Overall, the average current capacity utilization was around 76.2 TPA. The average
capacity utilization rate was only 50.8 per cent which indicates nearly half of its full
potential. Across different states, the average capacity utilization was the highest in
Maharashtra followed by U.P, Punjab and Gujarat. The actual production in
Maharashtra units was more than its installed potential. The lowest capacity
production was observed in Gujarat at the rate of 24.2 TPA. The capacity utilization
rate was one sixth of the actual potential (16.1%). The reasons behind this are lack
of demand, poor production skills and insufficient infrastructure. Even though the
units in Punjab were equipped well, their productivity was low. This is because of
lack of demand for vermi-compost. In case of U.P, the average utilization rate was
70.0 TPA. The demand is slowly picking up due to its nearness to different export
channels in Delhi.
Data are also collected on different production indicators based on their past
experiences in vermi-production. In general, the average number of working days
per annum was 332 days. The number of working days per annum was higher in
123
Maharashtra (365 days) and lower in case of Gujarat state. The number of working
days per year was on par in case of Punjab and U.P even though their capacity
utilization rates were different. This may be explained with the differences in number
of working hours per day. On an average, the number of working hours per day was
5.3 hours. This value was very high in case of Maharashtra (6.7 hours) while it was
low in case of Punjab (2.3 hours).
On the whole, the average recovery rate per unit was 42.7 per cent. Across different
states, the highest recovery rate was noticed in case of Maharashtra (52.5%)
followed by Gujarat, U.P and Punjab. The high recovery rate in Maharashtra may be
one of the reasons for its high productivity. Even though, the recovery rate was high
in Gujarat, the productivity was low because of lack of production skills and influence
of climatic parameters (high temperatures, heavy rains etc). The average gestation
period per cycle for the entire sample was 48.8 days. It is dependent on various
parameters like no.of worms per cubic meter, age of the worms, raw material type
and production season. This period was the lowest in Maharashtra due their higher
efficiency levels. It was the highest in Punjab followed by U.P and Gujarat.
Overall, the average number of cycles per annum produced by the organic inputs
was 7 to 9 cycles. This number was very low in case of Punjab because of its
highest gestation period. The number of cycles was the highest in Maharashtra due
to its low gestation period and more number of working days per year. There was
wide range of factors which could influence the number of cycles per annum per unit.
In general, the mean life expectancy of the organic input units was 10.3 years.
Among four states, the expected life of organic inputs was lower in Gujarat because
of their poor infrastructure. The sample promoters were expressed the highest
expectancy in case of Maharashtra.
4.5.7 Economics of vermi-compost production
The detailed break-up of average cost of production, yield and gross returns of
sample vermi-compost units in Gujarat and Maharashtra states is presented in table
4.8. The cost of production of vermi-compost per quintal in Gujarat was Rs.453. But,
the same was Rs.218 per quintal in case of Maharashtra state. The difference
between them was due to the low productivity and poor capacity utilization. The
124
productivity per annum was almost 8 times higher in Maharashtra when compared to
Gujarat units. The net returns per unit per annum was higher and positive
(Rs.428911) in Maharashtra while it was negative (Rs. -53076) in Gujarat. Among
different cost components, the lion share was noticed in raw materials cost. It
accounted for almost 55 per cent in the total cost of production in case of
Maharashtra where as in case of Gujarat the share was 51 per cent. The next
biggest component was labor cost (around 20 %) in Maharashtra. But, in case of
Gujarat, seed stock cost occupied 26 per cent in the total cost of production. The
reason for higher seed stock cost in Gujarat was repeated death of worms due to
higher temperatures, heavy rains and unknown diseases.
Table 4.8 Break-up of average cost of production of vermi-compost in Western
states (Rs per annum per unit)
Item Gujarat Maharashtra Average
Raw material costs 56000 224500 140250
Cost of worms 28800 10476 19638
Labor costs 10269 80000 45135
Water costs 1000 2000 1500
Packaging costs 950 12332 6641
Marketing costs 0 13000 6500
Transportation costs 0 0 0
Rents, taxes, insurance if any 0 0 0
Repairs and maintenance 815 21500 11158
Interest on working capital# 11740 43656 27698
Total costs 109574 407464 258520
Compost production (quintals) 242 1870 1056
Returns from
a. Compost sale
b. Worms sale
55418
1080
794750
41625
425084
21353
Total returns 56498 836375 446437
Net returns -53076 428911 187917
COP of vermi-compost
(per quintal)
453 218 245
# @ 12 per cent per annum
125
To acquire the average cost of production of vermi-compost in Western region, the
mean was calculated based on Gujarat and Maharashtra costs and returns. On the
whole, the average cost of production per quintal was Rs.245. The mean net returns
per unit were Rs.187917 per annum. The mean productivity per unit per annum was
1056 quintal. These results revealed that only 70 per cent of their existing capacity
was utilized.
The economics of costs of production of vermi-compost in Punjab and Uttar Pradesh
states are summarized and presented in table 4.9. The costs of production per
quintal of vermi-compost in Punjab and U.P were Rs. 433 and Rs.324 respectively.
Nearly, 34 per cent higher cost of production per quintal was observed in case of
Punjab. This was due to the low productivity and higher labor costs per unit of labor.
The productivity in U.P units was more than 3 times higher when compared to
Punjab units. The net returns per unit per annum were Rs.18253 and Rs.371366
respectively in Punjab and U.P. The net returns per unit were much higher in U.P
farms (20 times) for the same in Punjab. Amongst the different costs, cost of raw
material, seed stock and labor costs were the major items in U.P units. The cost of
raw material was around 10 per cent of the total costs in case of Punjab. It indicates
the raw material costs were much cheaper in Punjab when compared to other states.
Cost of seed stock and labor costs were occupied major shares in Punjab units.
To elicit the average cost of production of vermi-compost from Northern region, a
mean was calculated by using the costs and returns data from Punjab and U.P units.
Overall, the average cost of production per quintal in Northern region was Rs.350.
The net return per unit per annum was Rs.194809. The average productivity per
annum was 690 quintal (46%) which indicates less than 50 per cent of the existing
capacity.
The summary of comparison of costs and returns between Western and Northern
regions is presented in table 4.10. The cost of production per quintal was 42.8 per
cent higher in Northern region when compared to Western region. But the price
realization per quintal including the by product (worms) was higher (49.4 per cent) in
Northern region. It indicates that the demand for vermi-compost was high in Northern
states. The net margin per quintal was also very high (58.4 per cent) for Northern
126
region. From this table, we can conclude that the production of vermi-compost was
much profitable in Northern region when compared to Western region.
Table 4.9 Break-up of average cost of production of vermi-compost production
in Northern states (Rs per annum per unit)
Item Punjab Uttar Pradesh Average
Raw material costs 14796 96600 55698
Cost of worms 58450 96750 77600
Labor costs 50000 78660 64330
Water costs 1070 11995 6533
Packaging costs 2640 12600 7620
Marketing costs 0 345 173
Transportation costs 0 0 0
Rents, taxes, insurance if any 0 0 0
Repairs and maintenance 666 6656 3661
Interest on working capital# 15315 36433 25874
Total costs 142937 340039 241489
Compost production (quintals) 330 1050 690
Returns from
a. Compost sale
b. Worms sale
159390
1800
238350
473055
198870
237428
Total returns 161190 711405 436298
Net returns 18253 371366 194809
COP of vermi-compost
(per quintal)
433 324 350
# @ 12 per cent per annum
Table 4.10 Comparison of costs and returns between Western and Northern
regions (Rs)
Item Western
region
Northern
region
% change
Cost of production per quintal 245 350 42.8
Price realization per quintal * 423 632 49.4
Net margin per quintal 178 282 58.4
* Including the sale of worms
127
The summary of economics of vermi-compost production across different states is
presented in table 4.11. The results clearly proved that the production of vermi-
compost was a profitable venture in India. The weighted average cost production per
quintal was Rs.286 and price realization for the same was Rs.506. The weighted net
margin per quintal of vermi-compost production was Rs.220. This is a quite
significant margin in agri-business sector. Among different states, the cost of
production was the highest in Gujarat followed by Punjab, U.P and Maharashtra.
Good production skills, higher market demand and economies of scale of production
are may be the reasons for higher productivity and low cost of production in
Maharashtra. Per quintal price realization was the highest in U.P followed by Punjab,
Maharashtra and Gujarat. Proximity to Delhi Metropolitan and vermi-compost export
channels helped U.P state to realize more price. Even though, the productivity and
market demand was relatively low in Punjab, presence of green houses and
nurseries in Chandigrah facilitating to get reasonable price for vermi-compost. The
average net margin per quintal was the highest in U.P while it was the lowest and
negative value in Gujarat state. By administering proper training to promoters and
providing technical know-how in vermi-compost production would yield good results
in Gujarat state as well.
Table 4.11 Summary of economics of vermi-compost production in India (Rs)
Item Gujarat Maharashtra Punjab U.P Weighted
average
Cost of production per quintal (Rs) 453 218 433 324 286
Price realization per quintal (Rs)* 233 447 488 678 506
Net margin per quintal (Rs) -220 229 55 354 220
* Including the sale of worms
4.5.8 Efficiency of organic input firms
The frequency distribution, mean, maximum, minimum and standard deviation of
technical, allocative and economic efficiencies both under CRS and VRS models of
DEA approach for sample organic input production units is presented in table 4.12.
Both input and output quantities and their unit prices per unit per annum were
collected and used for this efficiency analysis. The estimated mean technical,
allocative and economic efficiencies under DEA-CRS model were 63.7, 50.95 and
128
32.95 per cent respectively. Similarly, values for the three efficiencies under DEA-
VRS model were 83.39, 59.42 and 50.24 per cent respectively. In terms of technical
efficiency, about 45 per cent of the sample units have more than 90 per cent
efficiency under the VRS model. Under the CRS model, only 20 per cent of the
sample units have more than 90 per cent efficiency. In case of allocative efficiency,
majority of sample units (40 per cent) fell under less than 50 per cent category under
VRS model while 47.5 per cent of the same belonged to less than 50 per cent
category under CRS assumption. The economic efficiency of most of the organic
inputs (85 per cent) under CRS model distributed under less 50 per cent category.
Correspondingly under VRS model, the largest part of sample (57.5 per cent) were
also scattered in the same class. It is concluded from the table that majority of the
sample organic units (47.5 per cent) were come under less 50 per cent technical
efficiency under CRS assumption, indicating that the organic production units were
inefficient. To supplement the above statement, the most frequent interval of
allocative and economic efficiency was 1 to 50 per cent under both CRS and VRS
assumptions. Further, it signifies that the organic production units in India were
suffering from both technically inefficiency in using resources as well as unable to
allocate inputs in the cost minimizing way.
Table 4.12 Frequency distribution of efficiency of organic input units (n=40)
Efficiency (%) CRS VRS
TE AE EE TE AE EE
1-50 47.5 47.5 85.0 12.5 40.0 57.5
51-60 5.0 17.5 2.5 2.5 7.5 10.0
61-70 5.0 10.0 0.0 5.0 20.0 10.0
71-80 12.5 7.5 5.0 10.0 2.5 2.5
81-90 10.0 10.0 2.5 25.0 20.0 10.0
91-100 20.0 7.5 5.0 45.0 10.0 10.0
Max (%) 100 100 100 100 100 100
Min (%) 25.4 12.8 8.8 44.6 16.3 13.4
Mean (%) 63.7 50.95 32.95 83.39 59.42 50.24
Standard deviation (%) 24.0 25.7 24.1 18.8 25.2 26.4
129
The average comparison of efficiencies of organic input units across states and
regions is presented in table 4.13. Among the four states, the mean technical
efficiency was the highest for Maharashtra followed by U.P, Gujarat and Punjab
under CRS model. But under VRS model, the highest technical efficiency was found
in Maharashtra followed by Gujarat, U.P and Punjab. In case of allocative efficiency
and economic efficiency, Maharashtra stood first both under CRS and VRS
assumptions. It indicates that Maharahstra units were much more efficient than any
other states. In remaining three states, the second best units were found in U.P
based on AE and EE under CRS model. However, when we compared between the
two regions, a slightly higher efficiency (TE, AE and EE) values were observed in
Northern region under CRS assumption. These results were also supporting the cost
of production calculations found in Northern region. But, this was reversed under
VRS assumption.
Table 4.13 Average efficiency of organic input units across states and regions
State (no.of units) CRS VRS
TE AE EE TE AE EE
Avg. Gujarat units (13) 0.55 0.39 0.21 0.93 0.58 0.55
Avg. Maharashtra units (4) 0.84 0.79 0.66 1.00 0.82 0.82
Avg. Western region (17) 0.62 0.48 0.32 0.95 0.63 0.61
Avg. Punjab units (6) 0.52 0.40 0.17 0.58 0.42 0.21
Avg. U.P units (17) 0.69 0.57 0.39 0.80 0.61 0.49
Avg. Northern region (23) 0.65 0.53 0.34 0.74 0.56 0.42
The scale efficiencies among organic input production units are summarized by state
wise and region wise and presented in table 4.14. The scale efficiency index among
sample varied from 32.7 per cent to 100 per cent, with a mean value of 77.7 per
cent. In terms of scale efficiency, about 20 per cent sample showed constant returns
to scale where as 7.5 per cent exhibited decreasing returns to scale. Majority of the
units (72.5 per cent) demonstrated increasing returns to scale. Among four states,
the highest scale efficiency was observed in Punjab state. The same value for U.P
130
and Maharashtra states were almost equal. Gujarat was found to be the least scale
efficient when compared between them. To complement the earlier results, the mean
scale efficiency value was also higher Northern region when compared to Western
region.
Table 4.14 Scale efficiencies in organic input units
State (n) CRS TE VRS TE SE
Avg. Gujarat units (13) 0.55 0.93 0.59
Avg. Maharashtra units (4) 0.84 1.00 0.84
Avg. Western region (17) 0.62 0.95 0.65
Avg. Punjab units (6) 0.52 0.58 0.89
Avg. U.P units (17) 0.69 0.80 0.85
Avg. Northern region (23) 0.65 0.74 0.86
The relationship between size of the unit and efficiency is summarized and
presented in table 4.15. The sample units were classified in to three types based on
their vermi-compost production per annum. Most of the sample units (65 per cent)
fell under the category of small with a production of less than 50 TPA. Six and eight
units respectively were grouped under medium and large categories. The results
clearly indicate that there is a strong positive relationship between size of the unit
and its efficiency. As the size of unit increases, all the three efficiency parameters
increased significantly in almost all cases (except in Medium VRS-AE) under both
the CRS and VRS assumptions. From this table we can conclude that the large units
were more efficient than the smaller units.
Table 4.15 Unit size and efficiency relationship
Size of the unit Distribution
of units
CRS VRS
TE AE EE TE AE EE
Small (1-50 tons) 26 0.51 0.44 0.21 0.80 0.56 0.45
Medium (51-100 tons) 6 0.81 0.54 0.45 0.82 0.55 0.46
Large (> 100 tons) 8 0.91 0.68 0.61 0.92 0.73 0.66
131
4.5.9 Factors influencing efficiency of units
The results of regression analysis to identify the factors influencing efficiency (CRS-
TE, VRS-TE and SE) have been summarized and presented in table 4.16. The three
efficiency parameters were regressed against different socio-economic characters of
the promoters and with some policy related variables (like training and subsidy).
Ordinary Least Square (OLS) method was employed for estimating regression
coefficients in the regression equation.
Review of various research studies has indicated that participation in the formal
training programs had some influence on efficiency (Begum et al., 2009). To
highlight that effect a dummy variable (trained -1, untrained -0) was used to see the
influence of training component on efficiency. Out of the total sample, only 27
(67.5%) promoters had formal training in vermi-compost production through NCOF
and other NGOs. The remaining 13 promoters (32.5%) did not have any formal
training in vermi-compost production. Similarly, researchers (Lakner, 2009) also
concluded that the farms who received environmental payments and investment aid
showed lower efficiency scores when compared to non-beneficiaries. To evaluate
the impact of subsidy on efficiency, six more private units (3 from Maharashra and
one each from remaining three states) which were not subsidized by any means
were added to the existing 40 sample units. However, the sample units (n=40) got
back-ended subsidy ranges from 0.5 lakh to 1.5 lakh per unit either through
NABARD or NCDC. For capturing these effects, a subsidy dummy was used
(subsidized-1, not-0). To perceive state wise effects, three dummies (one each for
Punjab, U.P and Gujarat) were used keeping Maharashtra as a control.
The best fit among the three regression equations was scale efficiency which
exhibited the highest R-square of 0.710. Amongst different factors, size of the unit
was positive and significant at one per cent level. Contribution of family labor was
also positive and significant at 10 per cent level. But, the age of the unit (since no.of
months its operating) showed a negative and significant relation with scale
efficiency. It indicates that the time progresses many units would become scale-
inefficient. But, the exact reasons could be due to poor infrastructure of units,
improper maintenance and lack of demand for the vermi-compost in these villages.
132
The dummy for capital incentive subsidy from NABARD exhibited negative
relationship with efficiency. It concludes that with increase in subsidy amounts, the
scale performance of organic input units are decreasing. The dummy for Punjab
state was positively statistically significant at 1 per cent level. This indicated that the
scale-efficiency difference between Punjab and Maharashtra units were significant.
However, the dummies for U.P and Gujarat were also positive but not statistically
significant.
Table 4.16 Determinants of efficiency in organic production units
Variable CRS- TE
Coefficient
VRS TE
Coefficient
SE
Coefficient
Constant 24.39
(1.321)
67.01*
(4.027)
48.37*
(2.984)
Unit size 0.721*
(5.369)
0.056
(0.357)
0.759*
(6.314)
Education 0.002
(0.020)
0.023
(0.183)
-0.016
(-0.167)
Family labor 0.283**
(2.328)
0.148
(1.045)
0.207***
(1.902)
Unit age -0.221
(-1.588)
0.127
(0.779)
-0.343*
(-2.756)
Own livestock 0.236
(1.468)
0.189
(1.006)
0.130
(0.908)
Dummy-training 0.280***
(1.905)
0.228
(1.324)
0.187
(1.420)
Dummy-subsidies -0.167
(-1.247)
0.063
(0.402)
-0.230***
(-1.921)
Dummy-Punjab state 0.050
(0.284)
- 0.536**
(-2.614)
0.466*
(2.970)
Dummy U.P state 0.133
(0.624)
-0.265
(-1.061)
0.316
(1.657)
Dummy Gujarat state 0.194
(0.810)
0.262
(0.935)
0.069
(0.324)
No of observations (n) 46 46 46
R-square 0.638 0.505 0.710
Figures in the parenthesis indicates t values
* Significant at 1 per cent level
** Significant at 5 per cent level
*** Significant at 10 per cent level
The R-square value of regression equation for CRS-technical efficiency was 0.638.
Unit size and family labor variables were positive and statistically significant at 1 and
5 per cent level respectively. The dummy for training component showed positive
relation with technical efficiency. It reveals that attending more no.of training
programs will enhance the efficiency of the units. The dummy on subsidy also
exhibited negative sign with technical efficiency but it was not statistically significant.
When the same independent variables regressed against VRS-TE, the R-square
133
value was 0.505. Only, the dummy for Punjab state showed a negative and
statistically significance at 5 per cent level.
Overall, the size of the unit and contribution of family labor have shown positive
relation with technical efficiency as well as on scale-efficiency. Training programs are
also enhancing the technical efficiency of units. The age of the unit and subsidies
discouraged the scale-efficiencies. Among the four states, the efficiency differences
were significant between the units in Punjab and Maharashtra states.
4.5.10 Checklist for quality parameters
The checklist for quality parameters (as briefly discussed in NCOF manual) of
sample vermi-compost units is presented in table 4.17. The basic qualitative
parameters of a healthy vermi-compost unit were checked for their presence in the
sample organic production units. None of the vermi-compost unit from Gujarat was
having any of the quality parameter. Three out of four units from Maharashtra have
showed all the quality parameters. Only 66.6 per cent of the sample Punjab units
were demonstrated all seven quality parameters. But, in case of U.P, 6 out of 17
units met the standards of healthy vermi-compost unit. On the whole, a fraction of
32.5 per cent of the sample units accomplished the requirements. This indicates the
negligence of the promoters in maintaining the units.
Table 4.17 Checklist for quality parameters in the units (no. of units)
Item Gujarat Maharashtra Punjab Uttar
Pradesh
Over all
Size of worms
(2 inch length and 0.5-1 gm weight)
0 3 6 9 18
One kg of worms (600-1000) 0 3 6 8 17
Maturity period (6-8 weeks) 0 3 6 9 18
No.of cycles per year (5-12) 0 3 4 11 18
Average life span of worms
(2 years)
0 3 6 8 17
Worms recovery (10 kg per
ton of compost)
0 3 6 9 18
Multiplication rate (3-7 times
in six weeks)
0 3 6 10 19
Over all 0 (0.0) 3 (75.0) 4 (66.6) 6 (35.3) 13 (32.5)
Note: Figures in the parenthesis indicates percentage to total
134
4.5.11 Loan repayment pattern of sample units
The summary of the bank loan repayment pattern of sample promoters is presented
in table 4.18. Out of the total sample, only six promoters have repaid loans
completely. Nearly, 85 per cent of the sample promoters were having unpaid loans
with banks. The average outstanding amount per unit was Rs.2.86 lakh. This amount
was the highest in Punjab followed by U.P, Maharashtra and Gujarat. Interestingly,
the outstanding amount was the lowest in Gujarat. The high repayment payment
capacity in Gujarat might be due to their higher non-farm income sources (like
business). Almost, half of the sample promoters were categorized as regular payers
by the bank authorities. In Maharashtra, all the sample promoters were rated as
regular payers.
Table 4.18 Repayment pattern of sample units (Rs. lakh per unit)
Item Gujarat Maharashtra Punjab Uttar
Pradesh
Over all
Repay the entire loan
a. Yes
b. No
2
11
0
4
0
6
4
13
6 (15.0)
34 (85.0)
Outstanding amount 1.94 2.32 4.33 3.16 2.86
Remarks from Bank
a. Regular payers
b. Irregular payers
6
7
4
0
2
4
9
8
21 (52.5)
19 (47.5)
4.5.12 Participation in training programs and sources of information
The details of training had by the promoters and different sources of information
available about new technologies for vermi-compost production are presented in
table 4.19. Overall, 67.5 per cent of promoters obtained preliminary training in vermi-
compost production. The rest of the promoters (32.5 per cent) did not take any
formal training. But, many of them might have had informal exposures through
friends and relatives. Among four states, most of the promoters (15 out of 17) from
U.P have undergone this training. The presence of National Centre of Organic
Farming, Ghaziabad with in U.P might have motivated many promoters to take this
training.
135
Table 4.19 Participation in training programs and sources of information
(n=40)
Item Gujarat Maharashtra Punjab Uttar Pradesh Over all
Had formal training
a. Yes
b. No
6
7
2
2
4
2
15
2
27 (67.5)
13 (32.5)
Production efficiency#
(scale 1-10)
7 9 7 8 8
Extent of technology#
adopted (scale 1-10)
7 9 8 8 8
Having technical
collaborations/help
a. Yes
b. No
13
0
2
2
4
2
13
4
32 (80.0)
8 (20.0)
Major source of
information
Relatives,
Friends
KVK, RCOF Friends,
ATMA
NCOF, NGOs,
Agri.Dept
-
# based on farmers self-assessment ratings but not from any quantitative analysis
In the same way, the promoters were also asked to rate (scale 1 to 10) themselves
(self-assessment ratings) based on their production efficiency and extent of
technology adopted in the units. Scale one indicates the lowest and ten shows the
highest. On the whole, the average scale for production efficiency of the total sample
was eight. They showed moderately high efficiency of the sample units than the
estimated (actual) efficiencies. Between different states, the efficiency of production
was the highest in Maharashtra followed by U.P. However, the self-assessment
ratings were equal in Gujarat and Punjab.
Similarly, the promoters were also asked to give their self-assessment ratings
(between 1 and 10) in case of extent of technology adopted in their respective vermi-
compost units. The average scale of extent of technology adoption was eight. This
value was also higher for Maharashtra and lower for Gujarat. Out of the total sample,
80 per cent of the units have technology collaborations with different governmental
and non-governmental organizations. The major sources of information for majority
of units were NCOF, RCOFs, KVKs and NGOs.
4.5.13 Problems in establishment of units
In general, most of the sample promoters did not face any problem in establishment
of vermi-compost production units. Very few promoters expressed difficulties in
Gujarat, Maharashtra and U.P states. But, none of the promoter encountered any
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trouble in Punjab. The details are listed below by state wise in the text box. Around
15.3 per cent of sample promoters in Gujarat told that they faced problems like non-
availability of worms in the vicinity, lack of sufficient quality cow dung, wild boar
attacks on the compost units and lack of proper guidance from NABARD. Two out of
four Maharashtra beneficiaries felt that they faced problems from neighboring
farmers while establishing units. A lone unit from U.P suffered from heavy rains and
delay in releasing loan amount.
State Problems in establishment
Gujarat
(15.3)*
Non-availability of worms in the vicinity
Lack of sufficient quality cow dung
Wild boar attacks on the compost units
Not proper guidance from NABARD
Maharashtra
(50.0)*
Problems from neighboring farmers
U.P
(5.8)*
Heavy rains delayed the establishment of units
Problems from bank in releasing the loan amount
* Figures in the parenthesis indicates percentage to total promoters expressed problems
4.5.14 Problems in production of vermi-compost
Around 42.5 per cent of the sample beneficiaries experienced production problems
while operating the vermi-compost units. Just like any other production process,
most of the problems were quite common in vermi-compost production process. The
frequent problem in vermi-compost production was reduction in the outturn during
the rainy season. Attack of rats and termites is a frequent problem in the production
process. The specific problem in case of Punjab state was labor shortage. It
accounts for higher share in the cost of production in Punjab. The major problem in
case of U.P was water due to electricity shortage. In case of Gujarat, dying of worms
due to fluctuations in temperature and unknown diseases is quite evident.
4.5.15 Awareness about the scheme
The summary details of awareness about NPOF scheme among the promoters is
presented in table 4.20. Nearly 16 out of 40 promoters got information about NPOF
scheme from friends/ others. NABARD and Bank officials also played a major role in
creating awareness about the scheme. The major problem among the borrowers
was development of suitable proposals for the commercial banks. About 25 out of 40
sample farmers were approached Brokers or Consultancy services for development
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of proposals. The average proposal development charges paid by the promoters
were very high in U.P state when compared to other states.
Table 4.20 Awareness about NPOF scheme (no of units)
Item Gujarat Maharashtra Punjab Uttar Pradesh
How you knew about scheme
a. Bank person
b. NABARD
c. Brokers
d. Friends/others
11
0
1
1
1
0
0
3
0
0
0
6
1
10
0
6
Who prepared the proposal
a. Own
b. Friend
c. Broker / NABCons
7
0
6
2
0
2
2
4
0
0
0
17
Proposal development
charges paid (range)
5000-7000 5000-8000 3000-5000 25000-30000
Are you aware of contents in
proposal a. Yes
b. No
8
5
4
0
6
0
6
11
Overall opinion about the scheme
a. Average
b. Good
c. Excellent
3
7
3
0
3
1
0
6
0
3
12
2
Only 60 per cent of the sample promoters were aware of the contents in the proposal
submitted to commercial banks. Overall, 28 promoters out of 40 opined that the
NPOF scheme is Good.
4.5.16 Role of training programs and subsidies
The influence of training programs on efficiency of vermi-compost units is
summarized in table 4.21. As presented in the previous sections, around 27
promoters had formal training in vermi-compost production either in NCOF or other
NGOs. The remaining 13 did not undergo any formal training. The results clearly
indicate that there are significant differences in mean capacity utilization of units
between trained and non-trained group promoters. The average cost of production
per quintal of vermi-compost for trained promoters was Rs.307 while the same for
non-trained was Rs.340. Similarly, the mean CRS and VRS technical efficiency
values were marginally higher under trained promoter units than non-trained units.
But, the mean allocative efficiency values were relatively higher in non-trained units.
However, economic efficiency of vermi-compost units showed a mix trend under
CRS and VRS production technologies. In case of scale efficiency, the results are
conspicuous and higher under trained promoter units. Overall, the results conclude
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that participation in training programs will enhances the production skills of the
promoter as well as technical efficiency of units.
Table 4.21 Role of training programs on efficiency
Item Trained (n=27) Non-trained (n=13)
Capacity utilization (TPA) 82.4 68.6
Cost of production/qtl 307.0 340.0
Mean CRS-TE
Mean CRS-AE
Mean CRS-EE
64.9
49.8
33.0
61.2
53.3
32.9
Mean VRS-TE
Mean VRS-AE
Mean VRS-EE
83.7
57.9
48.3
82.8
62.6
54.3
Scale efficiency 79.0 75.0
The impact of subsidy on efficiency of vermi-compost units is presented in table
4.22. To compare the influence of subsidy on efficiency, six more non-subsidized
vermi-compost units were included in the analysis along with sample (n=40) units.
Table 4.22 Impact of subsidy on efficiency
Item Subsidized units
(n=40)
Non-subsidized
units (n=6)
Capacity utilization (TPA) 76.2 173.6
Cost of production/qtl 286.0* 196.0
Mean CRS-TE
Mean CRS-AE
Mean CRS-EE
63.7
50.9
33.0
78.8
57.5
46.4
Mean VRS-TE
Mean VRS-AE
Mean VRS-EE
83.4
59.4
50.2
83.0
64.2
54.3
Scale efficiency 77.7 94.5
* weighted average cost of production
The mean capacity utilization of non-subsidized units was 173.6 TPA. It was much
higher than the mean sample capacity utilization (76.2 TPA). The weighted average
cost of production of vermi-compost per quintal was Rs.286 for subsidized sample
units. But, the same for non-subsidized units was Rs.196. The high scale and
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technical efficiencies in non-subsidized units are may be reasons for low cost of
production. Almost all mean efficiency values were higher in non-subsidized units
than subsidized units under both CRS and VRS production technologies. There is a
huge difference in scale efficiency values between these two groups. The results
strongly lend support that the subsidy discourages efficiency in vermi-production
units.
4.5.17 Suggestions for promoting organic input units
The suggestions for further promotion of organic input units were collected from the
respondents during field visits. They were many but encapsulated them in the
following items:
a. Prompt and timely JMC visits: The prompt and timely Joint Monitoring
Committee (JMC) visits are the need of the hour. The delay in JMC visits was
conspicuous in all the four states. Even in our sample of 40 units, 12 units so
far did not complete their JMC visits. In some cases, the JMC visits were
happening after more than two years of establishment units.
b. Quick and timely release of subsidy: Most of the sample units did not face
any problem in receiving the advanced subsidy. But, they were facing lot of
problems in getting the final subsidy. After the delay in conduct of JMCs, the
release of final subsidy was also buying lot of time. Most of promoters
suggested that the total subsidy should be transferred through banks directly
instead of NABARD (just as in case of PMRY schemes). Although the study
results proved that subsidies discouraged efficiency, NABARD has to find an
innovative way of financing them.
c. Buffaloes, training and insurance should be integral part of the scheme:
One of the major suggestions received from the promoters was; integration of
sufficient no.of buffaloes, training in vermi-compost production and insurance
for production losses if any as part of the ongoing scheme. So, the promoter
would not face any difficult in getting quality raw material as well as technical
assistance.
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d. Easy licensing and certification help is needed
Licensing and certification of vermi-compost is having the prime importance in
marketing/exporting. Many promoters were completely unaware of this
process. They even dont know where the labs are and who will certify it. Low
cost of licensing and certification would help in easy marketing and fetching
premium prices.
e. Supply of quality worms at cheaper rate
The long term sustainable production and quality of the vermi-compost will
depends upon quality of seed stock. It also influences the worms health, their
multiplication rate, no.of cycles per annum and recovery rate etc. The
availability of such seed stock should be abundant and cheaper. This was the
biggest problem in Gujarat state. Certain parts of Gujarat is also prone to
extreme temperatures in summer and floods in rainy season. Earth worms are
highly susceptible to these extreme climatic aberrations. A resistant species to
this situation is the need of the hour to revamp the vermi-compost units in
Gujarat.
f. NABARD/ State Government/ State Agricultural Department intervention
in marketing of vermi-compost
This was the second major suggestion received from the promoters in four
states. All the promoters are looking for some window of marketing support
either from NABARD or State government or state Agricultural department.
The establishment of organic input marketing channels is necessary to
encourage nascent organic farming in India. Other wise, Indian Farmers
Fertilizer Cooperative Limited (IFFCO) should take an initiative in marketing
vermi-compost just like how its market for inorganic fertilizers in India.
g. Encouragement of organic inputs usage by subsidization
The government is paying huge subsidies for inorganic fertilizers in the
country. The indiscriminate usage of these fertilizers resulted in land
degradation, nitrate losses and environmental pollution besides creating a
very unsustainable system for mankind. Keeping the long term benefits of
organic farming in mind, the government should subsidize the usage of
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organic inputs. So, it not only encourages the farmers use but also reduces
social costs.
h. Creation of market demand by promoting more awareness programs
The government has to take a proactive role in advocating and promoting the
organic farming in the country. Just like in the developed countries, the
government should initiative the process for establishment of Green markets
exclusively for organic food. The growing health awareness and
encouragement of organic farming through conversional incentive schemes
will definitely enhance the demand for organic inputs in the country.
i. Further increase in subsidy upper limit
The major problem facing by the promoters was fixation of upper limit of
subsidy. The upper limit of subsidy i.e., 1.5 lakh for 150 TPA of vermi-compost
unit was decided almost five years ago. But, due to increase in the costs of
establishment of vermi-compost unit, the upper limit on subsidy should be
increased further. It will boost the setting up of more organic production input
units by small and marginal farmers in the country.
***********************
Chapter V
Cases on organic input units
Case study is one of several ways of doing research whether it is social science
related or even socially related. It is an in-depth investigation/study of a single
individual, group, incident or community. Rather than using samples and following a
rigid protocol to examine limited number of variables, case study methods involve an
in-depth, longitudinal examination of a single instance or event: a case. They provide
a systematic way of looking at events, collecting data, analyzing information, and
reporting the results. As a result the researcher may gain a sharpened
understanding of why the instance happened as it did, and what might become
important to look at more extensively in future research. Some times, case studies
lend themselves to both generating and testing hypotheses. Thus, this chapter put
the thrust on eight cases among the three types of organic inputs. Two cases each
were chosen from fruit and vegetable waste unit and vermin-hatchery unit and four
on bio-fertilizer units (three NABARD + one NCDC sample).
Case one: Organo Phos (fruit and vegetable waste unit)
Sustainable agriculture means maintaining an agricultural growth rate to meet the
increasing demand for food without hampering the basic resources, is a step towards
sustainable development. Modernization of Indian agriculture, started with green
revolution using high yielding varieties of seeds, chemical fertilizer, pesticides,
growth agents and irrigation water, has resulted in not only soil degradation and
pollution; but also yielded an unsustainable agriculture system to man kind. Farmers
have realized the harmful effects of long-term use of chemical fertilizers and
pesticides because the crop yields are decreasing in spite of additional doses of their
application. They not only pollute the environment but also contaminate the
underground water due to leaching of nitrates. The only solution to these problems is
Organic farming.
Product development
Phosphorous is one of the most important 15 nutrients, essential for plant growth.
About 98% of Indian soils are low to marginal in availability of phosphorous.
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Researches on use of phospho-compost as a fertilizer in relation to yield of crops
have been widely investigated under different field conditions through long term field
experimentations. The results revealed that yield with phospho-compost supplying
60 kg P2O5/ha were much superior to single super phosphate applied at the same
rate. Thus, it was scientifically proved that phosphatic chemical fertilizer can
effectively and efficiently be replaced by phospho-compost. To take these benefits
forward, Mr.S.P Puri has developed a product called Organophos by using fruit and
vegetable waste products.
Company profile
It is a joint venture between M/s Spiral services and Delhi Government for a period of
30 years to manufacture organic manure form fruit and vegetable wastes (FVW). As
per the agreement, Agriculture Produce Market Committee (APMC), Azadpur, Delhi
provides 150 tons of waste material per day to the plant site. It was started with the
mission of timely supplying of good quality organic manure at affordable price and in
the same time helping to bring an organic revolution. Spiral Services is a
proprietary concern of a retired officer Cdr. S. P. Puri. He has diversified experience
in various fields and exceptional managerial qualities. He is a well educated person
having an excellent service record of 21 years of meritorious service in Indian Navy.
He was heading Nature & Waste Management (I) Pvt. Ltd. as Director and had set
up a MCD Compost plant at Bhalswa for converting 500 TPD Municipal solid waste
into compost. He was also Director of M/s Khurana Eco-friendly ventures (P) Ltd.,
which is involved in the process of reviving the Okhla compost plant of MCD for 300
TPD capacity. He was honored with an International felicitation for outstanding
contribution in the areas of National Building, Planning Development and
Environment protection by World Environment Congress in December 1997. He has
started this company i.e., Spiral services in order to make use of his ability and
experience gained. This plant has formally started its production of organophos in
July 2001. The plant is situated at almost 6 acre land just outside of Delhi city. He
spent more than Rs 160 lakh to set up this huge plant with 200 ton per day (TPD)
capacity having a big concreted yard and processing shade with machineries and
transport systems. Very good quality research and developments, strong technical
backup from the best brains of the country from all fields of agriculture has made the
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company pioneer in this field. Their state-of-the-art infrastructure, backed with
technologically advanced tools and machineries, assisted in the quality and quantity
production of eco-friendly products. But, currently the plant is now working at 36% of
its capacity due to lack of demand.
Type of Products
Bio-fertilizers, handmade papers and organic manures are three main eco-friendly
products of the company. Ensuring the quality and effectiveness in varied grades,
meeting the international quality standards, the demand of these products are
enhancing day by day.
1. Bio-fertilizers
These are products which help in increasing productivity and enhance the nutrient
availability to crop plants. Microbial bio-fertilizers, containing of living cells of
organisms like bacteria, algae, fungi alone or in combination, help in the fixation of
nitrogen, solubilization of insoluble fertilizer materials, stimulating plant growth, plant
root protection or decomposition of bio-degradable material and plant residues. The
products in this category can be classified as following:
Organo-Rhizobium
Organo-Azotobacter
Organo-Azosiprillum
Organo-PSB
Organo-Algae
2. Handmade papers
They are one of the prominent manufacturer and supplier of good quality and
finished handmade papers, having various applications, in India. They use eco-
friendly materials and advanced technology to produce handmade craft papers in
varied thickness, colors, designs and patterns as per the specifications provided.
3. Organic manure (Organo phos)
This is the main product of the company. It is very useful as base fertilizer for crops,
especially in areas where botanical beneficial bacteria is less in number or there is
imbalance of micro flora. These bacterial inoculants as it slowly but are continuously
releases nutrients to the soil. This organic fertilizer, produced by blending organic
145
materials like fruits and vegetables residues, leaves etc. It is available at hygienically
paced in HDPE bags weighing 5 Kg, 10 Kg and 50 Kg.
Raw materials and manufacturing process
Fruit & vegetable waste from the vegetable markets of Delhi is being used as the raw
material which contains all the nutrients in balanced form. They are using aerobic
microbial composting technology where they are doing controlled
fermentation/degradation, resulting in production of enriched compost with desired
specifications and devoid of toxicity. The output of this process, mixed with microbial
cultures such as Cellulolytic, Lignolytic and various useful microbes like Azotobactor,
Phosphate Solublizing Bacteria/fungi (PSB) etc. Thus, the final form of the manure
obtained namely Organo phos. Before packing, the product is tested in lab for its
organic quality such as humus content, organic carbon, nitrogen, phosphorous,
potassium and micronutrients including the population of useful bacteria, fungi and
actinomyctes present in the final organic manure. The final product, black in color, is
having 12% organic carbon according to FCO test where as 16-18% according to
NBS test. Availability of nitrogen is almost 15-20% whereas moisture content is
about 15-25%. They are maintaining pH in between 6.5 to 7.5 which is on par with
normal rate.
Unique properties and benefits
Organo phos should be used in the field before sowing or during the first or second
irrigation for getting its maximum benefits. It should be mixed with garden soil five
days before planting the seed or sapling. The nutrient contents in organo phos are
presented in the table below. The various benefits one can enjoy using the product is
depicted in the figure 5.1.
Nutrient contents
Organic Matter (%) Around 50 pH 6.5-7.5
Organic Carbon (%) 15-20 Nitrogen (%) 0.5 to2.0
Phosphorus (P O) (%) 2-5 K2O (%) 1.5 to 2.5
Calcium (%) 1-3 Magnesium (ppm) 0.5-1.0
Sulphur 1-3 Iron (%) 0.5-1.0
Zinc (ppm) 100-150 Maganese (ppm) 200-500
Copper (ppm) 20-50 C: N Ratio (20+/-5):1
Microbial population 10 -10 Enriched With AZOTOBACTOR & PSB
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Figure 5.1 Benefits about Organophos
Recommended doses
Fruit Trees
Mango, Grapes, Litchi, Ber, Guava, Apple 6 Kg / tree
Adoo, Chiku, Lemon, Amla, Loquat, Phalsa, Kiwi 4 Kg. / tree
Papaya, Karonda, Pomegranate 2 Kg. / tree
Flowers
Rose, Cornation 300 gms / Sqm.
Gladioli, Marigold, Rajnigandha 200 gms / Sqm.
Grass / Lawns 500 gms / Sqm.
Seedbed / Nursery 1 - 2 Kg / Sqm.
Pots (For Filling) 1:3 with soil
(For Maintenance) 50 - 200 gms / Pot
Ornamental plants and bushes 250 gm / plant Or 500 gms / Sqm.
Medicinal herbs/ shrubs 300 - 800 gms / Sqm.
Other crops
Type of Crops Kg. per
acre
Type of Crops Kg. per
acre
Rice, Wheat, Maize, Jowar 250 Rajma, Sarson, Sunflower 200
Tilhan / Sunflower, Bajra 200 Soya bean, Burseam 300
Sugarcane 350 Potato, Tobacco 500
Brinjal, Tomato, Gourd, Cabbage 150 Ladyfinger, Chilly 200
Cauliflower, Bitter Gourd 350 Carrot, Radish, Methi 200
Onion, Garlic 250 Sweet Potato, Chukandar 250
Tobacco 500 Tea 400
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Marketing
They are supplying their products to various important places like Presidents house,
Prime Ministers house, Himachal Pradesh Government, different embassies, many
hotels, nurseries, corporate houses, housing societies, builders and developers, farm
houses, vegetable growers, flowery culture and kitchen garden associations in and
around Delhi. But, they also encounter problems in marketing the compost. Mr.Puri
opined that the lack of demand, cost of compost and sales on credit basis are the
major bottlenecks in marketing.
Summary details about organophos unit
Sanctioned capacity 200 TPD
Installed capacity created so far 125 TPD
Current production 45 TPD
Capacity utilization rate 36 %
Financial Bank Union Bank, Azadpur, New Delhi
Status of JMC Completed
Status of final subsidy Pending
Rate of Interest 14.25 per cent
License/FCO Approved
Working days per annum 365 days
Recovery rate 22 per cent
Gestation period per cycle 4-5 weeks
Raw materials cost 2.5 per cent of gross income
Cost of production per Kg Rs.1.90
Method of marketing Direct channel
Rating for market demand Poor
Opinion about the NPOF scheme Good
Suggestions/Recommendations
Mr.Puri gave few suggestions for strengthening of fruit and vegetable waste units in
India. They are: increase the subsidy component up to 50 per cent, providing some
form of security for obtaining the loans from financial banks and implementation of
Supreme Court orders i.e., use of one bag of organic manure for every 1.5 bag of
inorganic- fertilizer use. He also requested for advertisement and publicity subsidies
148
for organic input units. He emphasized the need for more training, education and
awareness among people towards organic food. Some of the setbacks in the
production process he mentioned are influence of rains during monsoon season,
labor problems, breakdown of machineries etc.
Overall, use of organic manures like Organophos not only increases agricultural
production in case of cereals, leguminous, oil seeds crops but also raises the
productivity of sugarcane, horticulture/floriculture crops, forage grasses and
medicinal plants. It also increases soil health, protects environment from getting
polluted thus helps mankind and animals. This kind of plants should be replicated
through out the country to fight the menace of solid waste management and threat of
depleting soils due to imbalanced use of chemical fertilizers and pesticides.
Organo phos factory 5 kg packet of Organo phos
Case two: J. K. Fertilizers (fruit and vegetable waste unit)
Being a farmer the promoter of the company, closely associated with farmers and
dealers of the fertilizer across the country. They are involved in manufacturing of
organic fertilizers and providing services right from initial stage of sowing to supply of
finished products on time. Company offers a different range of organic inputs for
sustainable agriculture and horticulture crops. These products specifically address
the serious modern day concerns about environmental degradation and the threat
posed to human health as a result of chemical inputs. Their organic inputs are bio-
degradable, environment friendly, protect crops naturally and at the same time help
to increase crop yield.
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Company profile
J.K. Fertilizer is the one of the leading firms manufacturing the organic fertilizers in
the Central Gujarat. They are the manufacturer of good quality organic manures
under the brand name called Bhoomiras. The manufacturing unit is situated at
village Adas, by the side of National High way No 8A in Anand district of Gujarat (just
about 10 Km away from Anand and 3 Km away from Vasad). It was established on
23
rd
November, 2006 with an intention to manufacture of organic fertilizer with the
use of various types of fruit and vegetable waste and compost material. The main
aim and objective of the company is to fulfill customers requirement of best quality
organic fertilizer at affordable price. The main objectives of the company are:
To promote organic farming in the country by making available of the organic
inputs such as bio-fertilizer, vermin compost and fruit and vegetable waste
compost and there by better returns for produce
To increase the agriculture productivity while maintaining the soil health and
environmental safety
To reduce the total dependence on chemical fertilizer by increasing the
quantum of quality organic inputs
To convert the organic waste in to the useful plant nutrient resources
To prevent pollution and environmental degradation by proper conversion of
organic waste
Infrastructure and manufacturing
The unit is strategically located in 1.8 acres area between Anand and Vasad. It has
all the infrastructural faculties including machinery, labour, water, electricity,
transport, storage godown and raw materials availability (from Anand city). The
company made tie-ups with Anand Municipal Corporation for lifting the fruit and
vegetable wastes from market yards. The location of the unit is also known for its
agro-based products like rice waste, tobacco waste, wheat waste, poultry manure,
bone meal etc. Growing awareness among farmers is also helping the company to
get raw material for longer term sustainability of the project. The method of compost
preparation is aerobic process. They use inoculants/cultures and cow urine for quick
decomposition of waste materials. The project also obtained a No Objection
Certificate from the concerned authorities. The company is having its own research
and development centre with in the premises.
150
Type of products
The balanced application of N is a must for higher production. But, indiscriminate
use of chemical fertilizer is causing harm to the quality of land. The soil is losing its
vigor and becoming less productive. Thats why scientists are advising use of
organic manures for long term sustainability of the soil. Their environment friendly
products are produced in totally organic manner by mixing different natural input
materials in proper percentages. These products increases soil fertility makes the
soil soft and enhances plant growth. It also protects the plants from different pests
and diseases. They are selling their products under three different brand names i.e.,
Bhoomiras, Revive and Amrut. They merely differ in percentage of micronutrient
contents in them. All the products are having about 16% organic carbon, C: N ratio of
20:1 and moisture content at 15-20%. J.K Fertilizers supplies the best quality organic
inputs in to the market. All products are produced in strictly controlled process and
supervision. Testing on a regular basis helps to achieve consistency in providing
excellent quality. Specific testing regimes such as lot sample testing will be done on
regular intervals by a third party.
Different raw materials used in Bhoomiras
Sl no Raw material Available Nutrient
1 Swabin waste N, P, K and Micro nutrients
2 Bacteria Raizobium, Azitobactor, Phosphetbactor
3 Sugarcane waste N, P and K
4 Poultry manure and waste N, P, K and Micro nutrients
5 Cow dung N, P, K and Micro nutrients
6 Ash P and K
7 Castor waste N, P, K and Micro nutrients
8 Cow urine P and Mg
9 Swabin oil N, P, K and Micro nutrients
10 Bone meal Ca, P and Zn
11 Tobacco Nicotine
12 Wheat, rice, and other agro wastes N, P, K and Micro nutrients
13 Fruit and vegetable wastes N, P, K and micro nutrients
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Comparison of nutrients in Bhoomiras, cow dung and vermi-compost
Nutrient Bhoomiras Cow dung Vermin Compost
N 3% 0.5% 1.6%
P 2.5% 0.2% 0.7%
K 1.5% 0.5% 1.2%
Ca 5% 1% 0.4%
Mg 1% 0.3% 0.3%
S 0.5% 0.5% 0.3%
Fe 1600 ppm 300 ppm 100 ppm
Mn 280 ppm 250 ppm 150 ppm
Zn 250 ppm 100 ppm 150 ppm
Cu 40 ppm 20 ppm 35 ppm
B 10 ppm 5 ppm 5 ppm
Mo 3 ppm 2 ppm 2 ppm
Organic
materials
50-60% 40-60% 30-40%
PH 7 6.8 7.2
Bhoomiras recommended doses in various crops
Crop name Time of use Qty per Bigha
Wheat, Rice, Cumin, Jawar, Bazra, Maize Before planting 3 5 bags
Ground Nut, Castor, Tobacco, Swabin Before planting 3 5 bags
Banana, Sugarcane Before planting 10 bags
Flowers After planting 2 bags in every 3 months
Fruits like mango, Grapes, Chickoo, Orange Up to 1 5 years
After 8 years
2 bags
4 bags
Chili, Tomato Before planting 4 5 bags
Turmeric, Onion, Garlic, Potato, Oil seeds Before planting 4 5 bags
Cotton Before planting 2 3 bags
Unique features of Bhoomiras
Best for the soil reclamation/ improvement
It is free from weed seeds and also prevents weeds germination
It decomposes alkaline and poisonous substance from soil and keeps soil at
neutral level
Free from all the chemical ingredients, so crop yields also free from chemical
residues
It helps in multiplying the population of earthworms and bacteria in the soil
Checks soil born diseases & fungal diseases like yellowing and reddening of
plants
It contains high amount of NPK and other micronutrients
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Marketing
J. K Fertilizers believes in direct relationships between the company and its
customers. They are using both direct and indirect marketing channels for marketing
of organic inputs. Under indirect approach, marketing is done through dealers as well
as state agricultural department. But, the lion share of output is marketed through
dealers (70 per cent). Thus, they always offer competitive prices and supplies goods
to customer requirements in time. They have multi-skilled professional marketing
personnel who take care of all problems arise while using them in field. Adoption of
different strategies in marketing might be helping the company to do the business
well. Due to its high demand from market, the cent per cent installed capacity of the
unit is being in use.
Summary details about J.K Fertilizers unit
Sanctioned capacity 7500 TPA
Installed capacity created so far 7500 TPA
Current production 7500 TPA
Capacity utilization rate 100 per cent
Financial Bank Axis Bank, V.V Nagar, Anand
Status of JMC Pending
Status of final subsidy Pending
Rate of Interest 10.5 %
License/FCO Approved
Working days per annum 365 days
Recovery rate 80 per cent
Gestation period per cycle 6-8 months
Raw materials cost Rs.900 per ton
Method of marketing Direct and indirect methods
Rating for market demand Good
Opinion about the NPOF scheme Good
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Cost and returns from FVW compost unit (Rs lakh per annum)
Item Amount
Raw material costs 60.00
Culture/inoculant cost 3.60
Water charges 0.45
Labor charges 18.00
Packing cost 22.00
Marketing costs 25.00
Power charges 0.24
Transport charges 18.00
Tax and insurance etc 0.22
Repairs and maintenance 0.45
Interest on working capital 12.00
Total costs 159.96
Total production (ton) 6000^
Gross returns 198.00
Net returns 38.04
Cost of production (Rs/kg) 2.66
Benefit cost ratio 1 : 1.23
^ recovery rate @ 80 per cent
The results from the above table clearly reveal the potential for fruit and vegetable
waste compost production in Anand, Gujarat. The unit cost of production was
Rs.2.66 per kg. The net return from the unit was Rs.38.04 lakh per annum. The
company was selling the output at rate of Rs.3.3 per kg. The benefit cost ratio for the
unit was 1: 1.23. It is a significantly good margin in this sector.
Suggestions/ Recommendations
Mr. Jiten R Vachhani, promoter of the unit gave suggestions for effective
implementation of the scheme. He expressed that the development of NABARD
guidelines and subsidy calculations for establishment of fruit and vegetable unit was
done almost five years ago. But, due to the escalation in establishment costs, the
current subsidy amount of Rs.40 lakh is not sufficient for establishing a new fruit and
vegetable waste unit. So, there is a need for revision of these estimates for
encouraging more promoters. He also stressed the need for establishment of
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marketing channels and availability of market information. He opined that the easy
documentation process and more awareness programs would attract more
entrepreneurs in to this venture.
The company manufacturing the organic fertilizers best suited for echo-socio
balance and healthy food production. Honesty, quality and value added services are
the principles of JK Fertilizers which helped them to achieve faster growth in the
shorter time. Their long lasting supply relationships and use of complete line of
superior quality ingredients made Bhoomiras as special trade mark. Given the best
resources availability, aggressive investment and thoughtful risk-taking moved the
J.K. Fertilizers to the top position in Gujarat state.
IIMA study team along with the promoters Bhoomiras packets
Case three: Agriland Bio-tech (Bio-fertilizer unit)
Agriland, a company promoted by the scientists with rich experience in the field of
entomology and plant pathology is committed to scale up and commercialize
biological plant protection and plant nutrition products. Right from the inception, the
company has substantially been active in the promotion of biological products and to
be with the tradition. Agriland is striving hard to develop environmentally sound
products to keep the pace with changing farming scenario in WTO regime.
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Company profile
Agriland incorporated as the private limited company in 1994. The plant and their
office are situated at Motamotipura, in Baroda district, Gujarat. It was promoted by
technocrats with an experience over 15 years in the area of research and
development of environment friendly plant protection products. One of the
promoters, Mr. Mukesh J. Patel is a young, dynamic and enthusiastic person. After
passing M.Sc. in Agriculture with specialization in Plant pathology, he did three P.G.
Diplomas in Business Management, Export and Import Management and Marketing
Management. He participated in various national seminars, conferences, workshops,
symposia and acquired the rich experience in the field of agri-biotechnology. The
other promoter, Mr. Ramji Mangukia, is a very result oriented person. He passed
M.Sc. in Agriculture with specialization in Agricultural Entomology. He has written
various papers and scientific reports on the subject of Agricultural biotechnology and
worked earlier with Coromandel Indag Products (I) Ltd, Chennai. He also worked
with M/s Gujarat State Fertilizers Company Ltd, Baroda.
The company has been pioneer in promoting eco-friendly agricultural inputs. During
the span of last 16 years, company has launched diverse range of products. Among
them, the main products i.e., Monitor (Bio-fungicide), Yorker (Bio-nematicide) and
Biosoft (Bio-insceticide) were the first of their kind in India. Apart from these
products, the company has also launched many complimentary products which will
help farmers to boost their incomes. Basically, it is a non-pollutant company.
Moreover, it controls pollution indirectly by replacing toxic chemicals and pesticides
with bio-pesticides in crop protection. All the bio-pesticides are bio-degradable, not
harmful to flora and fauna including human beings. The company has been a leader
in helping the Department of Agriculture, Gujarat State and the Govt. of India in
standardization and registration of various biological products for legal purposes.
The company participated in various extension activities like krishi mela, farmers
training, seminars, exhibitions and shouldered the responsibility to train government
extension officials. The company has the track record in supplying its products
successfully to the Departments of Agriculture in many States like Gujarat, M.P.,
Chhatisgarh, Zharkhand, U.P and Rajasthan.
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Infrastructure and growth plans
The company has its own land of 146840 Sq. feet on which the manufacturing plant
has been constructed in 14500 sq.feet area. The company has separate
administrative, laboratory and training facilities with in the premises. They have good
transportation facility of six four wheelers and twenty two wheelers exclusively for
field and marketing activities. They also have latest computer software systems
through which the information on references and crop production practices are
maintained and updated. The company is having almost all state-of-the-art facilities
right from manufacturing of the bio-fertilizers to packaging.
The company has recently established a modern R & D centre of 6500 square feet in
the factory premises. The company is active in research and development with a
massive objective of Lab-to-Land. The company is active in the research of key
aspects of formulation and appropriate product delivery system that has direct
bearing with the substantiation of laboratory findings to the large scale field
applications especially of the products like entomopathogens, fungal antagonists,
nitrogen fixers, phosphate solubilizers and biotic stress defending organisms. The
company has an excellent investment plan in research and development of these
areas with site specific product delivery systems. Looking to the current need, the
company has framed a strategy to add still more unmatched quality products that
can be complimentary to the present range and to expand production and marketing
horizontally so as to achieve faster growth rate. The company is striving hard to
launch newer products for taking the competitive advantage for some years
simultaneously with the horizontal market expansion.
Type of products
1. Bio- pesticides
Product name Use
Monitor Trichoderma viride based biofungicide
Yorker Paecilomyces lilacinus based bionematicide
Biosoft Beauvaria bassiana based bioinsecticide for lepidoptera insects
Vertisoft Verticillium lecanii based bioinsecticide for the management of sucking pests
Vanguard Neem based botanical insecticide (Azadirachtin 300 ppm , 1500 ppm and 1500
ppm )
Horsepower Broad spectrum botanical insecticide
Sudozone Pseudomonas flourescens based product having fungicidal, nematicidal and plant
growth promotiing activities
Metasoft Metarhizium anisopliae based bioinsecticide for the control of grubs, termites and
Sucking insects
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2. Bio-fertilizers (Talc based)
Product name Use
Biofield L Sea weed extract, Humic acid, Nitrogen fixation bacteria and Phosphate
solublisation bacteria based liquid formulation for spray as complete food for
plant growth.
Biofield G Sea weed extract, Humic acid, Nitrogen fixation bacteria, Phosphate
solublisation bacteria and VAM based granular formulation for soil application.
Agriland Azoto WP Nitrogen fixation bacteria, Azotobacter chroococcum for seed treatment and
soil application.
Agriland Azoto L Nitrogen fixation bacteria, Azotobacter chroococcum for spray application.
Agriland PSM WP Phosphate solubliser bacteria Bacillus coagulans and Torulospora globossa
for seed treatment and soil application.
Agriland PSM L Phosphate solubliser bacteria Bacillus coagulans and Torulospora globossa
for spray application
Agriland KMB Powder and liquid form of Potash Mobilizers
3. Insect sex pheromones
Product name Use
NoMate
Pheromone Traps
Sex pheromones trap devices for male insects.
NoMate
Pheromone Lures
Sex pheromone lures of seven economic important pests viz. Helicoverpa
armigera, Spodoptera litura, Earias vitella, Pectinophora gossypiella, Plutella
xylostella, Leucinodes orbonalis and Scirpophaga incertulus.
NoMate Life
TimeTraps &
blocks
NoMate Life Time Traps and Lures for Fruit fly of fruit crops (Bactrocera
dorsalis/correctus/zonatus) and vegetable fruit fly (Bactrocera cucurbitae).
4. Other supporting products
Product name Use
Gibra Gibberellic acid technical
Agrisulf Wettable sulphur
Saffron Micronised liquid sulphur
Apna-80 Non-ionic Adjuvants
Spectrum Multifunctional Growth Elements for flowering and fruit setting
Marketing
The company is harnessing its full strength for promotion of various products in the
field. They have many well educated and trained staff for promotional activities. The
wide range promotional activities of company might have helped for better marketing
their products. They have very strong dealer and distributor network across the
country. They also have well established marketing linkages with many organizations
like Gujarat State Fertilizers and Chemicals, Baroda; M.P. Agro Industries
Corporation LTD, Bhopal; M.P. Marketing Co-operative Federation Ltd, Indore; Tarai
Development Corporation LTD, Uttaranchal, Mother dairy food processing LTD,
Anand; Chhatisgadh Agro Industries Corporation Ltd, Raipur; Chhatisgadh Marketing
Federation Co-operative Ltd, Raipur; Gujarat State Sugarcane Federations LTD etc.
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They also supply to the companies like Godrej Agrovet Ltd, United Phosphorus Ltd
and Mahindra Shubh Labh Ltd. Some of their promotional activities are:
On field products demonstration
Effective follow up in post demonstration period
Farmers meeting and educating them
Distribution of literature in local language
Advertisement in local TV channels
Educating dealers/traders
Attending the meeting of extension workers and making them aware of
products and their applications
Periodical visit to University scientists to keep themselves updated for newer
developments especially on applications
Sponsoring research programmes to the Universities for development of the
products in newer crops
Working actively in different crop development and plant protection
programmes undertaken by state department of agriculture and supplying
them the products as per their requirements and thereby propagating the new
concepts harmoniously with the state extension wing
Summary details about Agriland Bio-tech unit
Sanctioned capacity 150 TPA
Installed capacity created so far 150 TPA
Current production 150 TPA
Capacity utilization rate 100 per cent
Financial Bank State Bank of India, Baroda
Status of JMC Completed
Status of final subsidy Received
Rate of Interest 12.75 per cent
License/FCO Obtained
Working days per annum 300 days
Recovery rate 90-96 per cent
Gestation period per cycle 5 days (60 cycles per annum)
Raw materials cost Talc Rs.5500 per ton
Cost of production per kg Rs.75 (including all costs)
Method of marketing Through 6-7 channels
Rating for market demand Good
Opinion about the NPOF scheme Good
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Cost and returns from bio-fertilizer unit (Rs lakh per annum)
Item Amount
Raw material costs 5.62
Culture/inoculant cost 0.35
Media preparation cost 18.58
Water charges 0.21
Labor charges 0.67
Salaries for technical persons 14.40
Packing cost 15.00
Marketing costs 25.00
Power charges 1.10
Transport charges 5.00
Tax and insurance etc 3.00
Repairs and maintenance 6.00
Interest on working capital 10.00
Total costs 104.93
Total production (ton) 142.50^
Gross returns 162.50
Net returns 57.57
Cost of production (Rs/kg) 73.63
Benefit cost ratio 1: 1.54
^ recovery rate @ 95 per cent
The above results clearly lend more support for establishment of bio-fertilizer units in
the country. The average cost of production of bio-fertilizer (both liquid and power
form) was Rs.73.89 per kg/lit. The unit obtained a net margin of Rs.57.57 lakh per
annum. The benefit-cost ratio calculated for this investment was 1: 1.54. The results
summarizes that the investment under these units was highly profitable.
Suggestions/problems
Mr.Mukesh Patel has shared some of his suggestions and problems in the bio-
fertilizer production. Initially, he faced a lot of problems from Gujarat, NABARD office
because there was no technical person to understand his proposal. His company
also experienced the difficulty in delay of JMC visit. He also advised that the NCOF
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should conduct more awareness and training programs about bio-fertilizer benefits.
Similarly in case of marketing; he is facing a stiff competition from Gujarat Fertilizers
because Gujarat state government is subsidizing their products. Low awareness of
the farmers as well as slow results of bio-fertilizers is making hard to market the
products. In some cases, government field demonstrations were not allowing to test
these products.
The company has already expanded its production once in the year 2000 and further
expansion of the production is in progress so as to synchronize the supply chain in
expanded market. Since the people in developed nations are becoming reluctant to
take food with toxic residues, the demand for bio-fertilizers and bio-pesticides are
increasing phenomenally. They are also planning to export these bio-pesticides to
the countries like Australia. Registration of one of the companys product, Monitor
with the Republic of Kenya and Uganda is almost on completion and ready to export.
Innovative and diversified products, wide range promotional and marketing strategies
have helped the company to reach this stage. With the annual turnover of around 5.5
crore (includes all segments), it stands as one of most successful bio-fertilizer
company in India.
Agriland Biotech Office and Factory Different Products of Agriland Biotech
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Case four: Shri Dnyaneshwar bio-fert (Bio-fertilizer unit)
Shri Dnyaneshwar Sahakari Sakhar Karkhana Ltd is a cooperative society
established in 1973, in project affected area of Jaikwadi dam Irrigation project,
Ahmednagar District in Maharashtra. It is situated on Newasa-Shevgaon road about
11km away from Ahmednagar-Aurangabad highway. Late Marutrao Ghule Patil was
the founder chairman of the factory. It was registered under Maharashtra
Cooperative Societies Act, 1960 dated 19-10-1970. Due to the availability of dam
water the potentiality has increased for growing sugarcane in this area. Later,
growers of these talukas came together under the leadership of Mr. Patil and
established the factory.
Cooperative profile
The Cooperative society is operating in 92 villages of Newasa and 122 villages of
Shevgaon taluka, making a total of 214 villages within a radius of 60km. Initially, the
society has started with 4243 members and Rs 36.74 lakh of share capital. Today, it
has gone up to 14873 members and Rs. 1061.88 lakh of share capital. Currently, the
annual turnover of the society is to the tune of Rs 170 crore whereas the capital
assets of the society are of around Rs. 150 crore. The society is having very good
reputation in Ahmednagar district as well as in Maharashtra state. It has won several
national and international level awards like, National Productivity Award from
National Productivity Council, New Delhi in 1985-86; National Efficiency Award from
Department of Food, Government of India in 1987-88; Efficiency Award in 1988-89
from National Federation of Cooperative Sugar Factories and Reduced Overall
Recovery Award from Vasantdada Sugar Institute, Pune in 1993-94. They also got
ISO 9002 certificate in the year 2000. The land of this area is either black cotton soil
or very light soils from leveled to undulate. The main source of irrigated is from Mula
right bank canal and Jayakwadi back water. The rainfall of the area is low and
uneven ranging from 15 to 60 mm. The temperature is moderate to high ranging
from 17C to 45C which is congenial for sugarcane.
Sugar factory
The factory got first industrial license to manufacture white crystal sugar and started
its production in the year 1974-75 with 1250 TCD capacity at 6% recovery rate. They
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have increased the capacity of sugar factory upto 2000 TCD in the year 1981-82 due
to surplus production cane in that area. Later the capacity was further increased to
3000 TCD in 1991-92. In 2001-02, the capacity once was again increased to 5000
TCD. Recently in 2008-09, its capacity has increased to 6000 TCD due to
modernization. Now, the factory is expected to crush around 7000 TCD capacity in
the year 2009-10. Though, they were crushing at 10.70% recovery rate in 2008-09;
they have achieved a peak recovery rate of 12% in the year 2002-03. They paid
more than Rs.1200 per ton to farmers for buying sugarcane during the year 2008-09.
The factory is efficiently using its resources for production of wide range of by-
products. They are distillery, extra neutral and absolute alcohol production, methane
gas production and co-generation of electricity etc.
Cane development activities
The society is encouraging its members with a wide of development activities for
better productivity and quality of the cane. Among various activities, establishment of
vermi-compost and bio-fertilizer units were the major initiatives to preserve the soil
health and sustainability. The other activities are supply of nucleous seed, soil
testing, providing extension services, drip irrigation subsidies and credit facilities.
1. Vermi compost project
A vermi-compost unit with 300 MT per annum capacity is installed by the society.
They are selling the product at a very cheap rate of Rs. 1500 per ton to protect soil
structure and texture. Another compost project from press-mud and spent-wash is
also installed and the product is being sold at Rs.200 per ton.
2. Bio-fertilizer Unit
In January, 2008 the society has decided to set up a bio-fertilizer unit with an aim to
produce quality bio-fertilizers and making it available to their members at a cheaper
rate. They established the bio-fertilizer unit, with an installed capacity of 150 TPA in
the span of six months by spending almost Rs. 80 lakhs under NPOF scheme. They
got Rs. 39.86 lakh as loan from State Bank of India, Shavgaon branch and Rs 10
lakh as the advance subsidy from NABARD. The Joint Monitoring Committee has
visited the unit. They are yet to receive the second installment of the subsidy
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amount. Currently, the unit is producing 100 tons of bio-fertilizers per annum. The
average capacity utilization of the unit is 66.66 per cent.
Infrastructure and R & D
They installed almost all the necessary equipment in the bio-fertilizer unit. One R & D
laboratory was also attached with bio-fertilizer unit. Equipments like fermentor,
laminar air flow station, autoclave, boiler, air compressor, coolers, vacuum pump,
blending machines, centrifuge, reactor etc were observed in the unit. They have
enough storage space in the godown. Sophisticated weighing and packing machines
were also equipped. The unit is having its own transport vehicles for bringing the
materials as well as for distributing the finished products. They have employed more
than five skilled persons to take care of the plant. The plant is also having technical
collaboration with Agricultural Universities and research stations.
Types of products (Lignite based)
Bio-fertilizers are based on bacteria, fungus and yeast which fixes required nutrient
like nitrogen, phosphorous and potash in the soil. They are producing mainly Lignite
based quality bio-fertilizers with almost 90-95% recovery rate. The average gestation
period per cycle is 8 days and they are doing 4 cycles per month. Even though the
products are not crop specific, but still they are mainly targeting for sugarcane crop.
The bio-fertilizers production was good and meets the quality standards like average
viable cell count 10
7
per ml and no contamination up to 10
5
dilutions. The pH is
maintained within the neutral range of 6.5 - 7.5. The average moisture content is 30-
40%, at par with the standard rates. The table below summarizes their product range
of the unit:
Azotobacter Azotobacter Chroococcum, Nitrogen fixation bacteria
Asetobacter Asetobacter sp., Nitrogen fixation bacteria
Azospirilium Azospirilium sp., Nitrogen fixation bacteria
PSB Bacillus Coagulans and Torulospora Globossa, Phosphate solubliser bacteria
Rhizobium Rhizobium sp., a symbiotic Nitrogen fixing bacteria
K Mobilizer Provides K
2
O to the plant
D.C. Culture Bacteria being used for decomposing of organic materials
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Marketing
The products of bio-fertilizer unit are mainly intended to supply its member
farmers/cane growers. But due to lack of awareness, the demand for these products
is average. So far, the society is selling their products only among its members at Rs
25 per kg. No other form of marketing channel was used. Society is popularizing
these kinds of products in this area mainly to improve the soil quality.
Publicity
The Agri Gut Offices of the society provide information to the sugarcane farmers
regarding seed supply, subsidized schemes, irrigation related schemes, doses of
fertilizers, micro-nutrients, bio-fertilizer, weedicides, horticulture, cane development
schemes through different publications and field demonstrations.
Summary details about Shri Dnyaneshwar bio-fert unit
Sanctioned capacity 150 TPA
Installed capacity created so far 150 TPA
Current production 100 TPA
Capacity utilization rate 66.66 per cent
Financial Bank State Bank of India, Shavgav branch
Status of JMC Completed
Status of final subsidy Pending
Rate of Interest 13.25 per cent
License/FCO Obtained
Working days per annum 365 days
Recovery rate 90-95 per cent
Gestation period per cycle 8 days (48 cycles per annum)
Raw materials cost Lignite Rs.7000 per ton
Method of marketing Only for society members
Rating for market demand Average
Opinion about the NPOF scheme Good
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Cost and returns from bio-fertilizer unit (Rs lakh per annum)
Item Amount
Raw material costs 5.98
Culture/inoculant cost 0.10
Media preparation cost 5.60
Water charges 0.24
Labor charges 0.60
Salaries for technical persons 6.00
Packing cost 1.50
Marketing costs 0.00
Power charges 1.00
Transport charges 0.00
Tax and insurance etc 0.20
Repairs and maintenance 0.75
Total costs 21.97
Total production (ton) 100.00^
Gross returns 25.00
Net returns 3.03
Cost of production (Rs/kg) 21.97
Benefit cost ratio 1 : 1.13
^ current capacity utilization @ 66.6 per cent
The above results clearly confirm that the investment in bio-fertilizer unit is highly
profitable. The unit was started earning marginal net profits even at the capacity
utilization rate of 66.6 per cent. The Cooperative society is till now selling at a
marginal profit to only their members. But, they have not yet started the commercial
sales to outsiders of the society. The unit was currently operating at a benefit cost
ratio of 1:1.13.
Suggestions/problems
The managing team of bio-fertilizer unit expressed their problems and suggestions
about the NPOF scheme. The prime suggestion was about the timely release of
subsidy funds. The JMC has visited the unit almost six months back, but still the final
installment of the subsidy is yet to be received. They are also looking for state
government as well as Agricultural university support for marketing of the bio-
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fertilizers. The unit was also facing a problem of raw material scarcity i.e., lignite or
talc powder. They also requested the Union government to remove the VAT on the
sales of bio-fertilizers.
The society has a broad and diversified portfolio. Cooperative is very balanced in
use of all their byproducts from sugarcane. They are very good in targeting the
problems of cane growers right from the good seed to end product. The society is
also encouraging the small and weaker farmers through diversified income
generation activities like growing fruit crops, vegetables, sericulture, poly houses etc.
The management of the society has taken several initiatives like compost production,
vermi-compost sales, drip irrigation subsidies and finally supply of bio-fertilizers to
mainly protect and preserve soil and natural resources of that region. But still many
of the society members dont have good awareness about the benefits of these
initiatives. However, the momentum for usage of bio-fertilizers is taking place slowly.
Overall, the society has succeeded in their efforts to increase the productivity
substantially from sugarcane fields which is evidenced from increase in the capacity
of sugar factory from 1250 TCD to 7000 TCD in a span of 35 years.
Cultures stored at the plant Dnyaneshwar bio-fertilizers in 1kg pack
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Case five: Sree Ganapati Jilha Krishi Audhyogik Sarba Seba Sahakari Society
Ltd Bio-fert cum organic fertilizer (Organic fertilizer unit)
This unit was sanctioned under Corporation Sponsored Scheme by National
Cooperative Development Corporation (NCDC), Fertilizer and Inputs Section, New
Delhi in 2003. NCDC has directed the state Government of Maharashtra to set up a
Bio-fertilizer cum organic fertilizer project with a block cost of 90.0 lakh. But, so far
state Government of Maharashtra has released only 40.5 lakh to the society due to
some reasons. So, the society has established only one part i.e., only organic
fertilizer unit. They bought the site for bio-fertilizer unit and waiting for balance
financial assistance from the State Government.
Society profile
This organization was established by Mr. Chintamanraoji Patwardhan Rajesaheb in
1926. The society is providing restless services to members, farmers, customers,
cooperative societies and common man for last 82 years. The cooperative is situated
at Vasant Market Yard at Sangli in Maharashtra. They have 4435 members and
having savings amount more than Rs. 1.6 crore at the end of 31
st
March, 2008. The
society has under taken a broad range of projects. The wide spread activities
includes godowns, organic & bio-fertilizer project, grape wine project, shopping
centre at vasant market yard, sugar factory, cooking gas supply unit etc. They are
planning to start a few new projects namely, grape winery project, sugar factory
connected distillery & co-generation etc. To initiate these projects a huge amount
investment would be required. They are in connection with the following banks in the
region:
a) State Bank of India, Tasgaon Branch
b) Sangali District Central Cooperative Bank Ltd, Sangali
c) Rajarambapu Cooperative Bank Ltd., Peth
d) Axis Bank, Sangali
Different activities undertaken by society
1. Godown building of 10000 MT capacity: Assistance was obtained from Central
Government through direct funding to built the village godowns. The entire loan
amount was repaid with two years. Through this infrastructure, currently society is
getting more than 30 lakh rent per year.
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2. Shree Ganpati district Tasgaon Sugar factory unit: The society owns a big
sugar factory. Total sugarcane production in the area is about 3lakh MT in the year
2007-08. The sugar produced was more than 3.7 lakh quintal at a good recovery rate
of 12.31 per cent. More than 90% of the sugar produced was exported. Because of
good quality production they are getting good price for their sugar. Hence, they dont
have any marketing and financial problems. Thus, the society is paying good
dividends to its farmer members.
3. Organic and bio-fertilizer project: Under development scheme of National
Cooperative Development Nigam, this project was started. NCDC, Pune financed
this project under NPOF scheme. By utilizing the first phase amount (Rs.40.5 lakh),
they established the organic fertilizer unit in 2004. Society has created its own
brands Shree Ganpati Chap Sendriya 5:10:5 and 5:10:0. Under the second phase,
the establishment of bio-fertilizer unit is pending. The table below shows production
and total sales details of organic fertilizer unit:
Year Production in
Ton
Total sales in
lakh
2006-07 650 38.20
2007-08 525 28.07
2008-09 575 30.00
Targeted in 2009-10 1000 75.00
Raw materials and manufacturing
The organic fertilizer unit uses the raw materials like bone meal, leather powder,
potash, micro nutrients etc. Two forms of organic fertilizer mixtures are producing by
mixing the N: P: K in the proportions of 5:10:5 and 5:10:0. They installed a huge
mixture machines for this purpose. Finally, the end product is mixed with micro-
nutrients also.
Unique properties
Very good quality organic fertilizers at very low cost are the recipe of the success.
These fertilizers are useful for most of the crops and especially for Mango, Grapes,
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Banana and vegetables. These fertilizers release the nutrients slowly and prevent
the nitrate losses in the soil. It also protects the soil texture and micro-organisms.
Major nutrients Nitrogen (5%), Phosphorus (10%) Potash (5%)
Secondary nutrients Calcium, Magnesium, Sulphur
Micro nutrients Zinc, Ferrous, Manganese, Boron
Recommended dosages
Crop Qty per acre Time of use
Grape 1000 kg
500 kg
October
March
Orange, Lemon 1 kg
2 kg
10 kg
1-2 years
2-5 years
More than 5 years
Chickoo, Guava 2 kg
8 kg
15 kg
20 kg
Upto 2 years
Upto 4 years
Upto 7 years
After 7 years
Banana 1000 kg While planting
Mango 5 kg
30 kg
40 kg
After 2 years
After 8 years
After 13 years
Pomegranate 750 kg 8 days before plucking
Sugarcane 500 kg During land preparation
Turmeric, Onion, garlic 400 kg During land preparation
Coconut, Cashew 1 kg
10 kg
During land preparation
After 4 years
Marketing
The society is using both direct and indirect methods of marketing. Under the direct
marketing channel, around 60 per cent of the total production gets marketed. The
remaining 40 percent of the output is being market through dealers. Overall, the
market demand is good for organic fertilizers. Brand value, image of the society,
good quality of fertilizer and cheaper price are the strong forces pushing the product
well in the market. The society is also marketing their products in Konkan region,
Nashik region and rest of West Maharashtra region.
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Summary details about organic-fertilizer unit
Sanctioned capacity 3000 MT per annum
Installed capacity created so far 3000 MT per annum
Current production 600 MT per annum
Capacity utilization rate 20.0 per cent
Financial Bank NCDC, Pune Regional centre
Status of JMC Under the supervision of NCDC
Status of final subsidy Obtained
Rate of Interest 8.5 per cent
License/FCO Obtained
Working days per annum 240 days
Recovery rate 98 per cent
Gestation period per cycle Not applicable
Raw materials cost Rs.8000 per ton (bone meal)
Method of marketing Direct and indirect method
Rating for market demand Good
Opinion about the NPOF scheme Good
"#$%&'()* +),-.$&'/ 0%( 1()0&2&3() 4&'&5%(- +),-.$06 )(#-* 1,) +#$7&'/
171
Cost and returns from Organic-fertilizer unit (Rs lakh per annum)
Item Amount
Raw material costs 42.00
Culture/inoculant cost 0.00
Media preparation cost 0.00
Water charges 0.00
Labor charges 0.72
Salaries for technical persons 0.00
Packing cost 2.40
Marketing costs 0.12
Power charges 0.15
Transport charges 0.00
Tax and insurance etc 0.10
Repairs and maintenance 0.08
Total costs 45.57
Total production (ton) 600^
Gross returns 48.00
Net returns 2.43
Cost of production (Rs/kg) 7.60
Benefit cost ratio 1 : 1.05
^ current capacity utilization @ 20.0 per cent
The results clear indicate the profitability of investment in organic-fertilizer units in
Maharashtra. The current capacity utilization of the unit was low at 20.0 per cent due
to lack of demand. With increase in the capacity utilization, the unit would get more
profits in the years to come.
Problems/suggestions
The management team of the society highlighted the problems in operating the unit.
They are facing long delay in financial approvals from NCDC as well as from State
Government of Maharashtra. Marketing the organic fertilizer is another major
problem. Due to low awareness of the farmers, they are trying hard to convince
them. Slowly, the sugarcane and orchard growers are realizing the importance of
organic fertilizers. They are also facing difficulty in getting sufficient quantity of raw
172
materials for the unit. Labor availability and power shortages also hindering the
production process. Because of all these setbacks, the unit is operating at very low
capacity utilization rate. Finally, the society is eagerly waiting for the phase-II
financial assistance for establishing a bio-fertilizer unit.
By diversifying their portfolios in different ventures, the society is trying to grow
further. The society is having good number of fixed capital assets like godowns,
shopping complex and gas agency etc. The organic fertilizer they are producing is
unique in its character and nutrients prepared based on commonly available raw
materials. Due to their high quality and low cost, they are able to convincing the
farmers in this region. Further financial assistance from NCDC and state government
may raise their profits phenomenally.
Case six: Antecedent Pabulum Inc (Bio-fertilizer unit)
It is a lone bio-fertilizer unit sanctioned under NPOF scheme by NABARD in Punjab
state. The main aim of the unit is reducing the technological gap between research
laboratories and farmers fields. Dr.Prem Narayan Singh, partner of the business
opined that the actual research in the field of bio-technology is not reaching to the
area of bio-fertilizers. If transfer of these technologies could have happened, it would
further reduce the cost of bio-fertilizer further.
Company Profile
Antecedent Pabulum Inc. (API) was incorporated as a biotech company in the year
2006 in Bathinda district, Punjab. Company is showing a repaid growth in the area of
technology development and commercialization of a wide range of agri-bio-inputs for
plant nutrition and plant protection. It is also engaged in the production of feed
additives for live stocks and poultry birds by using appropriate bio-techniques.
Company specializes in the development and manufacture of liquid and carrier
based bio-fertilizers and bio-pesticides. The unit is having very high colony forming
species for fertigation and soil application. It seems obvious that a healthy plant is
more able to withstand the effect of pests and diseases. But at API, this concept has
been taken further with the development of a range of products designed to
173
maximize the health and vigor of crops and thereby to increase their ability to
withstand with pests and diseases.
Infrastructure and growth plans
The company has all required facilities for bio-fertilizers production. They have four
fermentor (own manufactured), laminar air flow station, autoclave, boilers, air
compressor etc. The unit is having enough storage and packing space. The
company is also having a four wheeler and generator facilities. They have their own
R & D lab with sufficient number of technical personnel. They have good technical
collaborations with premier institutions like PAU, NCOF, BHU, IARI etc. The
company has growth plans to replicate the technology by setting of micro-units at
village level in association with different agricultural co-operative societies/farmers
clubs in order to increase their availability at economical rates. The company is also
planning to produce cyno-bacteria cultures especially for enhancing the yields in
paddy crop. The team is also working on the production of Spirolina, which is a rich
source of protein as well as anti-oxidant for poultry.
Types of products (Talc based)
1. Bio-fertilizers
Nitrofix Azotobactor sp., a free living soil inhibiting nitrogen fixing bacteria
Native Phosphate solubilizing bacteria
Garrison Azospirillium sp. an associative nitrogen fixing bacteria
Oedema Rhizobium sp., a symbiotic nitrogen fixing bacteria
2. Bio-pesticides: These are the products based on bacteria, fungus, viruses and
botanical extracts which kill the target insects, pests, disease casual organisms
on a very efficient manner without any disturbance of ecological balance.
Tricoguard A 1.0% W.P. formulation of Trichoderma viride and is used for the
management Sclerotonia, Phytophthora, Pythium, Rhizoctonia, Fusarium,
Sclerotium etc.
Geoguard A 0.5% W.P. formulation of Pseudomonas fluorescence and is used for the
management of bacterial leaf blight of paddy, sheath blight of paddy, root
and foot rot of vegetables etc.
174
Summary details about API unit
Sanctioned capacity 250 TPA
Installed capacity created so far 250 TPA
Current production 500 TPA
Capacity utilization rate 200 per cent
Financial Bank Bank of Baroda, Bathinda branch
Status of JMC Completed
Status of final subsidy Obtained
Rate of Interest 11.00 per cent
License/FCO Obtained
Working days per annum 300 days
Recovery rate 90 per cent
Gestation period per cycle 3-5 days (50 cycles per annum)
Raw materials cost Rs.5000 per ton (Talc)
Method of marketing Indirect
Rating for market demand Very good
Opinion about the NPOF scheme Good
4()8('0,) 9&,:1()0&2&3()5 &' -)#856 )(#-* 1,) 5#2(
175
Cost and returns from bio-fertilizer unit (Rs lakh per annum)
Item Amount
Raw material costs 18.00
Culture/inoculant cost 1.00
Media preparation cost 4.59
Water charges 0.50
Labor charges 6.00
Salaries for technical persons 13.00
Packing cost 60.00
Transport and marketing costs 60.00
Power charges 3.60
Tax and insurance etc 0.05
Repairs and maintenance 12.00
Working capital 12.00
Total costs 190.74
Total production (ton) 500.00^
Gross returns 300.00
Net returns 109.26
Cost of production (Rs/kg) 38.14
Benefit cost ratio 1:1.57
^ current capacity utilization @ 200.0 per cent
The above results show the high profitability of bio-fertilizer production in Bathinda,
Punjab. The cost of production of bio-fertilizer per kg was Rs.38.14. The unit is
earning a net profit of Rs.109.26 lakh per annum. The benefit cost ratio of the unit
was 1: 1.57.
Marketing
The API is marketing its 98 per cent production through indirect marketing. They
have very strong network of dealers all over the state of Punjab. Nearly half of their
cost of production is incurring towards marketing of the products. Their products are
always timely available in the market. The company experiences its peak demand
during the period of July Sept in a cropping year. Overall, they are not facing any
marketing problems. It is also proved by high capacity utilization of the unit.
176
Problems/suggestions
Mr.Prem Narayana has expressed few problems in production of the bio-fertilizers.
They are: difficulties in the preservation of liquid Rhizobium culture in the bottles.
The bottles are bursting due to the gas formation from the culture. They are also
facing the difficulties in P
H
matching. The company is packing the cultures at 20 per
cent moisture level against the recommendation of 30-40 per cent. This is due to
avoid the contamination problems in the cultures.
The broad vision of the company is to improves the texture and porosity of the soil
and maintain its P
H
. Safeguard the eco-system by using beneficial micro-organisms
which are supplemental to chemical fertilizers and pesticides. The usage of bio-
fertilizers not only minimizes the chance of soil, water and air pollution caused by the
excess use of chemicals but also reduces the subsidy burden of the government.
The effective usage of these products reduces the cost of cultivation and increases
the productivity of crops by 15-20 per cent. Ultimately, they are helping in improving
the incomes and employment of the farmers in Punjab. Finally, the company has
succeeded in achieving their goals.
Case seven: Vitthal Rukhmini Gandul Khat Prakalp (Vermi-hatchery unit)
Mr. Sahebrao Ganpat Bhand, promoter of Vitthal Rukhmini Gandul Khat Prakalp, is
the only son of his father Ganpat Kachru Bhand holding 2.4 ha of ancestral land in
the village Dadh Khurd, Sangamner taluka, Ahmednagar district in Maharashtra. He
cultivates his land under the command area of left bank Pravara canal of
Bhandardara dam. He studied upto 11
th
standard before taking up farming as his
primary occupation at the age of 18 years.
He later came in contact with Krishi Vigyan Kendra (KVK), Babhaleshwar district
Ahmednagar located 13 k.m from his home. The scientists of the KVK convinced him
in the improved methods of farming by participating in the front line demonstration
program on Bengal gram. His yields in that year improved from the existing 4 to 9.5
quintals from 0.40 ha area. The KVK further helped him to establish a Kranti farmers
club in 1999 in his native village bringing into the mainstream other village youth and
farmers to participate in new and improved farming. Later he along with other
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members of the farmers clubs was given support for establishing a small scale
vermi-compost unit yielding compost for his crops. He initially utilized vermi-compost
for lime crops that helped him improved yield and quality of fruits. He also secured
higher yield of 80 quintals per acre per annum from the existing 60 quintals. He was
convinced with use of this environment friendly vermi-compost which helped him in
improving yield and productivity. He later started promoting the concept of organic
farming and actively participated in organic farming programs of KVK.
As the awareness of farmers on use and benefits of vermi-compost grew, it became
apparent that the demand for vermi-compost would increase and there would be no
suppliers who could match the demand for vermi-compost from farmers. Thus, he
thought of establishing a permanent structure of vermi-compost unit of size 30ft X 30
ft with production capacity of 5 tons. He utilized a part of this vermi-compost
production for his crops and the remaining sold to other farmers successfully. As the
demand for vermi-compost grew he undertook the benefit of various Govt schemes
for starting a vermin-culture hatchery for distributing earthworms to other farmers
and youths. He established a very innovative hatchery from the spent-slurry of
biogas plant. The results were encouraging and he made an improvised
arrangement for rearing and multiplying vermin-culture hatchery. This helped him to
sell and distribute 100 to 150 kg vermin-culture per year. Further he expanded the
vermi-compost unit to a size of 7320 sq.ft area investing Rs 9.50 lakhs with support
of Rs 4.0 lakhs as bank loan from Ahmednagar District Central Coop Bank,
Chanegaon and 1.5 lakhs subsidy from government under NPOF scheme with
annual production capacity of 400 MT of vermi-compost.
The unit was duly registered as small scale industry under District Industries Centre.
Further, he also obtained manufacturing license and sale license for vermi-compost
unit from the Department of Agriculture. He has plans to export the vermi-compost
for which he legally obtained Import Export code from Joint Directorate of Foreign
Trade, Pune. The production of vermi-compost, vermiculture and vermi wash has
been supplied to 3000 farmers for enhancing their production capacity several times.
The unit employs 9 labours with 2 males and 7 females round the year from his
village. There are 7 other labours who seek secondary employment from supply of
vermi-compost and other products.
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Summary details about vermi-hatchery unit (dung based)
Sanctioned capacity 150 TPA
Installed capacity created so far 400 TPA
Current production 400 TPA
Capacity utilization rate 100 per cent
Financial Bank ADCC Bank Ltd, Ahmednagar
Status of JMC Completed
Status of final subsidy Obtained
Rate of Interest 12.5 per cent
License/FCO Obtained
Working days per annum 365 days
Recovery rate 70 per cent
Gestation period per cycle 50 days (7 cycles per annum)
Raw materials cost Rs.500 per ton (cow dung)
Method of marketing Direct method
Rating for market demand Very good
Opinion about the NPOF scheme Excellent
Part of Mr.Bhand vermin-compost unit Mr. Bhand explaining the production process to
IIMA study team
179
Cost and returns from vermi-compost production unit (Rs per annum)
Item Amount
Raw material costs 325000
Cost of worms 25000
Labor costs 100000
Water costs 50000
Packaging costs 150000
Marketing and transport costs 50000
Rents, taxes, insurance if any 5000
Repairs and maintenance 75000
Interest on working capital # 93600
Total costs 873600
Compost production (Qtl) 4000
Returns from
a. Compost sales
b. Worms sales
1600000
100000
Total returns 1700000
Net returns 826400
COP of vermi-compost (per qtl) 218.4
# @ 12 per cent per annum
The above results have proved that he is one of the efficient producers of vermi-
compost not only in Maharashtra state but in India as well. The cost of production of
vermi-compost was Rs.218.4 per qtl. This value was much lesser when compared
with all three remaining states. The unit was earning a net profit of Rs.8.26 lakh per
annum. The unit was earning almost double the income than the costs incurred to it.
Marketing
He is marketing his entire production through direct sales. He is not only selling his
products in Ahmednagar district but also in the surrounding districts and states.
Mr.Bhand has also obtained all necessary certificates required for export to other
countries. His good reputation as well as maintenance of quality is helping him well
180
in the marketing of the product. He also opined that the delayed payments by
farmers and less demand during summer are some of the bottlenecks in marketing.
Suggestions
Mr.Bhand made few suggestions for effective implementation of the scheme. He felt
that the advance and final subsidies should be released timely and JMC visits should
be completed quickly. He stressed that the government departments and local
universities should support or help the promoters in marketing of their vermi-
compost. He also expressed that the current subsidy amount of Rs.1.5 lakh should
be enhanced further due to escalations in the costs of establishment.
Mr.Bhand is a classic example for successful entrepreneurs in the field of vermi-
compost production in India. With in a span of a decade, he has proved himself as a
role model in this area. His dynamic personality coupled with quick adoptive nature
has helped him to reach pinnacles of life. By proper blending of modern techniques
with his innovative ideas, he has succeeded both in crop production as well as
vermi-compost production.
Case eight: Warana cooperative society (private vermi-hatchery unit)
Warananagar is a small town, situated at the foothills of Panhala-Jyotiba hill ranges
in Kolhapur district of Maharashtra state. Warana cooperative society is an ideal
example of integrated rural development. The region has transformed from a barren
tract of land to an epitome of cooperative movement in last few decades. Late
Tatyasaheb Kore, the architect of the dream, aspired of creating a New Man Nava
Manus. Today, the cooperative society has links with 25 cooperative societies and
having a turnover more than Rs.600 crore. The sugar factory and people of the
cooperative keep the belief in empowering and raising awareness of the farmers.
The major activities of the society are:
1. Warana cooperative sugar factory
Warna is traditionally known for the sugar cane cultivation and conversion of sugar
cane to Jaggery and selling it in to the nearby developed market of Kolhapur. Price
of Jaggery fluctuate but not the price of sugar was the basis behind establishing this
factory. Right from the very first year, it touched horizons of success by producing
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more than 8 lakh bags of sugar at 12.72% recovery rate. Tatyasaheb Kore Warna
co-operative sugar factory has got Union Commerce and Industry Ministry's ''Star
export house grade'' accreditation. Warna sugar factory is the first in the country to
earn such an honor. The factory exported sugar about 12 lakh and 11 lakh quintal in
the current and previous years respectively. Tatyasaheb Kore Sakhar Karkhana Ltd
at Warna nagar has 69 villages in the area of operation with 10,800 ha of land under
sugar cane production in the year 2009-2010. Today, the capacity of the factory is
9000 TCD with almost 13% recovery rate. In almost all years since 1982-83, actual
price paid is higher than SMP and in the last two years, it is more than double.
Various cane development schemes are implemented by the sugar cane factory to
increase the productivity of sugar cane with usage of minimum inputs. They are
providing inputs like chemical fertilizers, pesticides, herbicides etc on subsidized
prices on credit to benefit cane growers.
2. Bio-fertilizers unit
Sugar cooperative society has bio-fertilizer laboratory which produces bio-fertilizers
like Acetobactor, Azotobactor, PSB culture, Decomposing culture, Tricoderma, EM
solution etc. Bio-fertilizers are important for protecting soil health as sugar cane is
high nutrients exhausting crop. The usage of bio-fertilizers helps in biological
nitrogen fixation, mobilization of phosphorus and sulpher etc. The society is
providing at 15% subsidy to promote its usage by farmers.
3. Vermi compost (press mud based)
The unit is not financed by NABARAD or covered under NPOF scheme. It is a
private unit owned by Warana society. The unit was established by the sugar factory
by investing about Rs.20 lakh for producing almost 1200 MT per year. They started
the establishment of unit in 2003. But, it started functioning from January, 2004 at
the capacity of 550 TPA. Mr. Chetan Gore, who is the architect and current
supervisor of this project, is a well educated person having good experience in
producing vermi compost from the wastes of sugar factory.
Infrastructure and raw materials
The unit has 46 steel framed beds each with a capacity of 2 MT compost productions
in every 45 days. The rate of recovery was 25-30 per cent. These beds are placed in
open place but they have a shed for keeping the finished product. The unit has all
182
necessary facilities like raw material availability, seed stock, water supply, store
room, transport vehicles and packing machinery. The raw materials using in the
production are press mud, cow dung, sugar cane leaves etc. The unit is running with
most updated technology. The worms are very healthy and long. Worms are
maturing in 6-8 weeks and the multiplication rate is more than 3 times in six weeks.
They run the unit for 10 months in a year because difficulties of vermi-compost
production during the rainy season. During the slack season, they are preserving the
seed stock. Seven fixed labor are working in the unit including three women.
Manufacturing process
The raw materials that are using in the unit are mainly coming from the sugar factory.
They purchase the press mud at the rate of Rs. 100 per MT if it is wet and Rs. 200
per MT if it is dry. The cow dung is available at Rs. 400 per MT whereas sugarcane
waste is available at Rs. 50 per MT. The collected inputs are kept at a place for 15
days and then mixed thoroughly. They also add some bacterial cultures for quick
decomposition. The steel frames are filled with mixed materials along with worms for
producing compost. On an average, each production cycle takes 45 days for final
compost production. Later, they sieve the compost and packed it 50 kg bags.
Marketing
The unit is producing good quality vermi compost and selling it under the brand
name of Warana. Nearly 90 per cent of their production is sold back to the sugar
factory, who buys it at Rs 1800 per MT. In turn, the sugar factory is selling the
compost to its society members to improve their soil quality and fertility at Rs 2500
per MT, which is comparatively cheaper than the market price. The unit also do
direct marketing to farmers/non-members of society. But, only 10 per cent of their
total production is marketed through this way.
183
Summary details about vermi-compost unit
Installed capacity 1200 TPA
Current production 552 TPA
Capacity utilization rate 46 per cent
Financial Bank Established by Warana Society
Status of JMC Not applicable
Status of final subsidy Not applicable
Rate of Interest Not applicable
License/FCO Obtained
Working days per annum 240 days
Recovery rate 25 per cent
Gestation period per cycle 45 days (6 cycles per annum)
Raw materials cost Rs.100 per ton of wet press mud
Cost of production per kg Rs.1.80
Method of marketing Through society and direct
Rating for market demand Very good
Opinion about the NPOF scheme Not applicable
Steel framed vermi compost bed Packed compost, ready for sales
184
Cost and returns from vermi-compost production unit (Rs per annum)
Item Amount
Raw material costs 3.56
Cost of worms 1.84
Labor costs 2.70
Water costs 0.50
Packaging costs 1.32
Marketing and transport costs 0.00
Rents, taxes, insurance if any 0.10
Repairs and maintenance 0.50
Interest on working capital # 1.20
Total costs 11.72
Compost production (Qtl) 5500
Returns from
a. Compost sales
b. Worms sales
13.80
2.50
Total returns 16.30
Net returns 4.58
COP of vermi-compost (per qtl) 213.0
# @ 12 per cent per annum
The results clearly lend support for production of vermi-compost from press mud in
Maharashtra. The unit costs of production are more or less equal from press mud as
well as dung based vermi-compost units. The unit gained a net profit of Rs.4.58 lakh
per annum. The profits of the unit would increase further with increase in capacity
utilization and efficiency.
Problems/suggestions
Shortage in power supply and absence of favorable atmosphere during rainy season
for vermi-compost production are the major setbacks for the unit. Mr.Gore opined
that the demand for organic manures can be further improved by conducting more
awareness programs and field demonstrations. He also said that their unit is looking
for financial support for further expansion in production. He expressed that integrated
185
usage of organic and inorganic fertilizers will increase the productivity of sugarcane
without damaging the soil, eco-system and natural resources.
High quality and low cost production of vermi-compost by using press mud are the
major reasons for high demand. Moreover, they are marketing in the trade mark of
Warana through warana bazaars giving more impetus for easy marketing. Growing
awareness of farmers about soil health and sustainable production techniques is
further boosting the use of organic fertilizers in this region. However, to generate
more profits in the production of compost, the unit has to increase its current
capacity utilization and scales of production. Since availability of raw materials is not
a constraint in the production, the society should think about some high end
technology for massive production of compost in this region.
4. Warana cooperative Dudh Sangh
Warana dairy is one of the most successful cooperative dairy in India. Established in
1968, it was initially operating in around 66 villages and sending the milk to Miraj.
Later in 1974-75 they established their own dairy and milk processing unit and
started marketing milk, butter and ghee to Mumbai. They have now set their own
cold storage and processing unit at Navi Mumbai as well. The dairy is an ISO 9001-
2000 organization and its ghee got quality of AGMARK. Their annual turnover is
now as high as Rs. 460 crores. The processing units capacity is about 10 lakh liters
per day.
5. Warana cooperative bank
Warana cooperative bank, a big bank of small people, was established in 1966. So
far, it has got 24 well equipped and computerized branches with Rs. 140 crore fixed
deposit, Rs. 85 crore loan disbursements and Rs. 2.8 crore as a share capital.
6. Warana Bazaar
This is the first cooperative departmental store in India. This was established in
1976, with 50 branches, 2 departmental stores and 6 franchises units. Today, the
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turnover is more than Rs 90 crore. About 78 per cent shareholders of the Warana
Bazaar are women. It caters all kinds of needs of rural customers.
Like this, they are infinity number of activities under one roof called Warana.
Tatyasaheb Kore was a Great visionary leader with an in depth understanding of
poor economic status of farmers in this region. Initially, he started with establishment
of sugar cooperative and formed strong market linkages for cane growers. Later, he
has given equal weightage for the developed of agri-allied cooperative such as milk
cooperative and poultry farms. To improve the socio-economic status and savings of
the farmers, he has formulated Warana cooperative bank. He has also given more
emphasis on sectors like education, health, women empowerment etc. All these
initiative paved the way for integrated development of the society and welfare of the
poor.
****************
Chapter VI
Marketing of organic inputs in India
Input marketing is growing at a rapid rate in India. Besides rational output/input
pricing, there is an urgent need to effectively meet the increasing and changing
requirement of various inputs in agriculture. In the recent past, the use of agricultural
inputs has not only increased but certain structural changes in use of different inputs
have also been noticed (Chauhan, 1992). It is felt that the increasing reliance of
farmers on purchased inputs makes him vulnerable to breakdown in delivery of such
inputs and their supply restriction or fluctuations in their cost. In this context
management of agricultural input supply chains assumes greater importance. So,
effective distribution and management of marketing channel hold the key to
commercial success in any industry, but much more so in the agricultural input
industry (Bhargava, 1992).
Major thrust in the policy areas is to be laid on the problems of marketing and finding
solution to such problems through relevant marketing facilities. If the marketing
activity is developed, demand for goods increases, as a result, production of goods
also increases. Due to increased production, the demand for inputs increases i.e.,
the demand for input is derived from the increase in demand for the output. If the
supply of these inputs is ensured with competitive prices, quality and time, without
any risk involved, the needs and desires of farmer will satisfy. This is possible only
when the markets are efficient in supplying the needed inputs to the farmers. Hence,
efficient marketing system would always brings welfare to all those involved in the
system (Acharya and Agarwal, 2008). So creation of an efficient marketing system
for marketing of organic inputs is the need of the hour for strengthening the organic
farming in the country (Singh, 2004; Ghosh, 2004). Thus, this chapter briefly covers
the major channels used by promoters for marketing of their organic inputs in the
study area, problems in procurement and usage of different organic inputs and
issues in marketing of organic inputs.
Ghosh (2004) studied the promotion of bio-fertilizers market in India and concluded
that there has been no accelerated growth in distribution as well as inadequate
spatial diffusion across states. The study also highlighted that about 90 per cent of
188
its usage restricted to Western and Southern regions. Finally, the paper argued that
the government has ample grounds to intervene to set up an effective market for bio-
fertilizers, while encouraging private players. But the policy and instruments of
intervention need to be designed with care. For greater farm level acceptance of
organic inputs, the study gave various suggestions to the Government.
6.1 Channels for marketing of organic inputs
This section specifically emphasizing about the different marketing channels exists in
sample vermi-compost units covered in the study. More or less, the situation is same
in the rest of India. Almost all units were following direct sales method rather than
depending upon any other intermediary. In very few cases, units were linked up with
local dealers and sales representatives. But, the share in total sales was very high in
direct sales (almost 60-80 per cent). In general, the sample units are using the
following three basic channels for marketing of organic input i.e., vermi-compost.
Channel 1:
Channel 2:
Channel 3:
Channel-1 represents the direct marketing of vermi-compost producers to organic
farmers, green houses, nurseries and orchards etc. This was major marketing
channel among the three different types. This channel was exists in all the four
sample states. It accounted for lion share (70%) in the total product marketed. This
way of marketing is taking place basically by his local contacts with different people
and his network in neighboring villages. Faith or trust on the vermi-compost producer
plays a crucial role in this channel. But, the main problem in this channel was sales
Producer Organic farmer
Producer Local Dealer/Distributor Organic farmer
Producer
Dealer/Distributor at distant market Organic farmer
189
on credit basis. The producer has to rely on the organic farmer/nursery person for his
payment till he markets his product. So, producer has to investment first and waits
for his returns. Sometimes, the waiting period varies from 4 to 12 months. Since
many of the producers belong to medium and large land holding categories, they can
sustain to some extent of time delay. However, it is burdening the producers when
marketing it directly. Most of the product marketed through this channel was non-
licensed/certified.
Channel-2 depicted that an entry of one middleman in the direct marketing between
organic input producer and organic farmer. These local dealers/distributors are
basically involved in regular marketing of fertilizers/pesticides in the villages. They
were asking the vermi-compost producers to fill the final product in their bags which
contains dealers trade name or mark on it. Later, the dealer sells the product on his
own trade mark or name to organic farmers in different villages. The maximum
coverage by a dealer/distributor will be around 10-15 villages or one taluka. Here,
the influence of dealer/distributor plays a major role in marketing of the compost. But,
local dealers/distributors were paying very low price to vermi-compost producers.
However, the sales in this channel are also on credit basis. Overall, the producer to
some extent will reduce his marketing risk by loosing some margin in sales. The
quantum of total product marketed through this channel was around 20 per cent. The
type of product marketed through channel was also mostly non-certified. This
channel was operating in Gujarat, Maharashtra and U.P states.
The slight difference between Channel-2 and Channel-3 was the location of the
dealer/distributor. In case of Channel-3, the dealer/distributor operates the marketing
transactions from distant place. The vermi-compost producer will export his product
to the distant dealer/distributor where they have good demand/market. The
distributor/dealer in that place helps in marketing the product there. Here, the
producer has good chances to reap premium prices for his product provided the
quality is high. Normally, the quantity of product marketed through this channel was
very low (10 per cent). This mode of marketing was prevalent in U.P than in the
remaining states. The reason was the proximity to nations capital and export
channels making it more advantageous for U.P state. However, the problem in this
190
channel was certification of the product. Some private labs and brokers taking this as
advantages and getting 5 to10 per cent share in the total returns.
Nature of market demand
The nature of market demand in the vicinity of organic input units in the sample
states were asked during the field visits. The summary of answers is presented in
table 6.1. The sample organic units were classified in to three categories based on
the existing market demand for organic inputs in the surrounding villages. Overall,
32.5 per cent of units rated it poor demand for vermi-compost in their villages. Half of
the study units classified the markets as average. Only 17.5 per cent of promoters
expressed it as good demand for their vermi-compost in the villages. In case of
Gujarat, nearly half of the sample units categorized under poor demand while
remaining half as average. All the promoters in Punjab expressed that the market
demand as average. Out of the four units in Maharashtra, two each were classified
under average and good demand markets. The total sample units in U.P were
labeled in to seven, five and five respectively for poor, average and good market
demand.
Table 6.1 Classification of input units based on market demand (no.)
Quarter Gujarat Maharashtra Punjab Uttar Pradesh Overall
Poor 6 0 0 7 13 (32.5)
Average 7 2 6 5 20 (50.0)
Good 0 2 0 5 7 (17.5)
Total 13 4 6 17 40 (100.0)
Note: Figures in the parenthesis indicates percentage to total
Intensity of market demand
The distribution of market demand across different quarters in a year is presented in
table 6.2. The market demand in sample states were rated across four quarters in a
year. It clearly indicates that there is no uniformity in market demand across states.
These differences were even conspicuous within region. It concludes that the market
demand depends upon a wide range of factors i.e., choice of crop, soil nature, crop
management practices etc.
191
Table 6.2 Market demand over four quarters (ranks)
Quarter Gujarat Maharashtra Punjab Uttar Pradesh
First quarter
(Jan-Mar)
3 3 1 4
Second quarter
(Apr-Jun)
1 4 3 3
Third quarter
(July-Sept)
2 1 2 2
Fourth quarter
(Oct-Dec)
4 2 4 1
The peak demand for vermi-compost in Gujarat was observed in second quarter of
the year. The farmers in Gujarat might be more interested to apply vermi-compost
during land preparation period (before kharif season). The highest market demand in
Maharashtra was noticed during third quarter of the year. The farmers in
Maharashtra also showed interest in application of vermi-compost just before taking
up the kharif crops. In case of Punjab, Jan-March was listed as a top priority. This
may be due to more usage during winter Wheat crop. Similarly, for U.P, fourth
quarter as the choice for maximum consumption. The start of ratoon crop of
sugarcane or wheat crop may be reason for higher demand.
6.2 Problems in procurement and usage of organic inputs
To elicit the information about the problems in procurement and usage of organic
inputs, about 15 organic farmers per state (a total of 60 farmers) were interviewed
during field visits. The detailed information on awareness, purchase source, timely
availability and quality of organic inputs were collected through structured
questionnaire. The major four inputs like seeds, vermi-compost, bio-fertilizer and bio-
pesticides were covered in the study. The input-wise details were summarized and
presented in tables from 6.3 to 6.5.
Seeds
Most of organic farmers are growing desi or local varieties of crop seeds. Initially,
they borrow from fellow organic farmers or NGOs in their region. Later, they preserve
their own seeds for future needs. Nearly 70 per cent of the sample farmers are self-
reliant on seeds. In case of Gujarat (25 per cent), all sample cotton organic farmers
in Kutch district are getting seeds from Agrocel Industries Ltd every year. The
192
remaining 5 per cent sample farmers buy from market or state agricultural
department. Around 88 per cent of the total sample farmers expressed that they
dont have any problem in getting seeds timely. Only 12 per cent of sample farmers
said they are facing problems in timely availability of seeds. 54 out of 60 sample
farmers are satisfied with the quality of seeds available. Approximately 10 per cent
sample organic farmers are not happy with the quality of seeds. In many cases, the
costs of organic seeds (desi) were lower when compared with hybrid seeds of the
same crop. Overall, the sample organic farmers did not express any specific problem
in procuring the seeds across the four study regions.
Vermi-compost
The summary of responses of sample organic farmers across different states on
procurement of vermi-compost is presented in table 6.3. Almost all the sample
farmers have the awareness about vermi-compost. But, many of them are not
exclusively using vermi-compost to supplement the inorganic-fertilizers. They are
applying it in different forms like Farm-Yard Manure (FYM), NADEP compost, bio-
dynamic compost and Amruthpani, Jeevamruthpani etc (liquid manures). The major
problems perceived in the study in vermi-composting are care about worms and
hidden costs in its maintenance.
In case of Gujarat, usage of vermi-compost was very low (around 10%) in organic
crops. Mostly farmers in Kutch district practicing NADEP compost method. Partly,
they are also using neem and castor cakes provided by Agrocel Industries Ltd at
subsidized prices. Nearly 87 per cent of farmers expressed that the compost is
available timely. All most all the cotton growers rated quality of inputs as good.
Table 6.3 Details about procurement of vermi-compost
State Awareness
(yes-%)
Purchase source Timely available
(yes-%)
Quality
Gujarat 100 Own, Agrocel store
and market
87 Good
Maharashtra 100 Own, market 67 Average
Punjab 100 Own, market 93 Good
U.P 100 Own, market 67 Average
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Most of sample farmers in Maharashtra are using bio-dynamic compost, Amruthpani
and Jeevaruthpani etc (liquid manures). Very few farmers are also practicing vermi-
compost for organic cultivation of sugarcane. Nearly, 85 per cent of their compost
requirements met by own production. 10 out of 15 farmers said that the compost is
available timely in the market. But, they graded the quality as average. All the
sample organic farmers in Punjab followed either natural farming (Amruthpani,
Jeevaruthpani etc) or NADEP compost. Most of their compost production
requirements are met by themselves only. The timely availability and quality of the
compost is good. In case of U.P, vermi-compost, NADEP compost, Amruthpani and
Jeevaruthpani are major forms of application. Here, there is a demand for vermi-
compost and farmers are buying it from market as well. The timely availability and
quality of it was low. Overall, the specific problems in procurement of vermi-compost
are lack of organized marketing channels in the study regions. Absence of product
standards and certification of compost are major hurdles. Most of the sales are
based on personal faith or trust of the producer.
Bio-fertilizers
The details about procurement of bio-fertilizers in sample states are presented in
table 6.4. On average, 60-80 per cent of organic sample farmers have good
awareness about bio-fertilizers and their usage. The major sources for procurement
are state agricultural universities and agricultural departments. Absence of organized
input marketing channels is the major constraint for timely availability and quality. 87
per cent of the sample farmers in Gujarat have awareness about bio-fertilizers. They
all purchase from Agrocel stores in the study region. They told that the quality of
input is good. Similarly, in case of Maharashtra only 67 organic farmers are aware of
it. State agricultural university is the major source for them. They expressed that the
quality of bio-fertilizers are effective.
The average awareness rates are almost equal (60 per cent) in case of Punjab and
U.P states. The major sources are state agricultural universities, National
Horticultural Mission (NHM) and agricultural department. In general, they dont have
any problem in getting them timely. But during the peak periods, scarcity occurs
194
because of absence of established input marketing channels. Sometimes, they are
facing the problem of old stocks of bio-fertilizers. Normally, six months after packing
of bio-fertilizers, the effectiveness will go down. They perceive that the performance
of bio-fertilizers is average. The specific problem for procurement is lack of effective
distribution channels at block levels. Product standardization is very poor and there
are no checks for adulteration.
Table 6.4 Details about procurement of bio-fertilizers
State Awareness
(yes - %)
Purchase source Timely available
(yes-%)
Quality
Gujarat 87 Agrocel store 87 Good
Maharashtra 67 Agril. Univ 80 Good
Punjab 60 PAU, NHM, Agril-Dept 74 Average
U.P 60 Univ, Agril-Dept,
Private company
87 Average
Bio-pesticides
The procurement information about bio-pesticides among organic farmers is
presented in table 6.5. On whole, 70 per cent farmers have awareness about bio-
pesticides. But, most of them mainly aware of neem oil, bramhastra and agniastra
etc (natural pesticides). Almost all the farmers prepare these pesticides by
themselves and apply. But, use of bio-pesticides like Trichoderma viride,
Pseudomonas, Beauvaria, Verticillium and Bacillus are limited. Very few farmers in
the sample have exposure about them. In case of Gujarat, organic cotton farmers
are dependent on Agrocel for neem oil. Presence of some private companies who
produces bio-pesticides and natural plant growth regulators was observed in case of
Punjab and U.P states. But, very few farmers are using them or under process of
trials. Overall, the organic farmers are happy about the results of bio-pesticides.
There are no specific problems in procurement of bio-pesticides in the study area.
195
Table 6.5 Details about procurement of bio-pesticides
State Awareness
(yes - %)
Purchase source Timely available
(yes-%)
Quality
Gujarat 87 Own, Agrocel store 87 Good
Maharashtra 80 Own, private 100 Good
Punjab 74 Own, private 87 Good
U.P 60 Own, private 87 Good
Problems in usage of organic inputs
Absolutely, organic farmers did not face any problems in usage of seeds. But, the
preservation, multiplication and accessibility of local varieties should be made
through local research centers or state agricultural universities. Many organic
farmers practicing mixed cropping systems for biological fixation of N in the soil.
They are also growing boarder crops or live fence plants for the control of pests
attacks. In case of vermi-compost, the sample farmers did not express any problems
in its usage. The real problem is about its efficacy in farmers field. The farmers are
not able to judge its efficiency by seeing it physically. So, product standardization
and certification should be made mandatory for marketing. Very few farmers are
experiencing the problem of micro-nutrient deficiency (zn, mn, fe etc) when they
turned from conventional to organic farming, especially in case of orchards.
Farmers are really looking for more awareness/training programs in case of usage of
bio-fertilizers. The quality of bio-fertilizers is always questionable? Strict supervision
and monitoring are needed for implementation of production standards and efficacy
of bio-fertilizers. Most of the botanical pesticides are prepare by farmers themselves.
The main problem is in its application. Most of the botanical pesticides can only be
applied through manual sprays due to their sticky nature. It takes lot of time for
farmers to apply in his entire field. Thus, refinement of botanical pesticides to spray
through power sprays would help the farmers very much. Similarly, more awareness
and training programs are needed for the usage of bio-pesticides like Trichoderma
viride, Pseudomonas, Beauvaria, Verticillium etc.
196
6.3 Issues in marketing of organic inputs
Nearly half of the sample promoters expressed that they are facing severe marketing
problems in marketing of the vermi-compost. As the earlier results summarized, the
demand for vermi-compost was low in the villages. Promoters were trying hard to
market their output. Many times, farmers were succeeded to market only a fraction of
output. Even in some extreme cases, they were applying to their own fields/crops. In
most of these transactions, the sales were on credit basis. Promoters were not able
to get the returns in time. The delay in payments, some times raises the question of
long term sustainability of the units. Due to low demand from the market, the buyers
were offering very low prices for vermi-compost. The total gross returns from vermi-
compost unit were not meeting the total costs. Actually, many of the promoters were
incurring most of their family labor in the production of vermi-compost. But, if we
quantify all those contributions, it is not a viable proposition. There were many
hidden costs in the vermi-compost production system. At the same time, absence of
proper market channels exacerbates the situation. Even though the government
formulated specific standards for some organic inputs, but lack of their
implementation ruin the market. Its giving an opportunity for adulteration of organic
inputs in the market. Lack of proper licensing and certification system was
discouraging many promoters to export their organic inputs. Finally, the government
or NABARD should come up with a plan to backend the sales of compost/organic
inputs.
**********************
Chapter VII
Economics and Efficiency of Organic Farming in India
Organic farming systems have attracted increasing attention over the last one
decade because they are perceived to offer some solutions to the problems currently
besetting the agricultural sector. Organic farming has the potential to provide
benefits in terms of environmental protection, conservation of non-renewable
resources and improved food quality. Some countries like Europe have recognized
and responded to these potential benefits by encouraging farmers to adopt organic
farming practices, either directly through financial incentives or indirectly through
support for research, extension and marketing initiatives. As a consequence, the
organic sector throughout Europe is expanded rapidly (24% of worlds organic land).
But, in the developing countries like India, the share is around 2 per cent only
(included certified and wildlife). There is considerable latent interest among farmers
in conversion to organic farming. However, some farmers are reluctant to convert
because of the perceived high costs and risks involved. Those who have converted
earning equal incomes to their conventional counterparts, if premium markets are
exist for organic produce. Despite the attention which has been paid to organic
farming over the last few years, very little accessible information actually exists on
the costs and returns of organic farming. So, this chapter made an assessment on
these issues in different states of India. A brief profile of organic farmers was also
discussed in this chapter.
Sample coverage
As described in Chapter IV, the study has chosen a random sample of fifteen organic
farmers per state. Thus, a total of 60 organic farmers were interviewed thoroughly
regarding socio-economic details, cropping patterns, costs and returns of major
crops and problems in organic inputs usage etc. Similarly, a random sample of
fifteen conventional farmers was also interviewed per state in the same vicinity for
crop economics data. A well designed questionnaire was developed, pre-tested and
administered to these sample farmers. The distribution of sample farmers in different
states is presented in table 7.1.
198
Table 7.1 Distribution of organic sample farmers
State Gujarat Maharashtra Punjab Uttar Pradesh
District Kutch Sangli and
Kholhapur
Faridkot and
Fatehgarh Sahib
Saharanpur and
Muzaffarnagar
Taluka Rapar Walwa, Panahala,
Hatkangale,
Karver
Jaito, Fatehgarh
Sahib
Gudamp, Thana
Bhawan, Titron
Villages Kedianagar,
Bhutakya,
Padampar
Chikurde, Kodali,
Nilewadi,
Talasande, Kerli,
Bhuyewadi
Dabrikhana,
Chaina,
Randhawa,
Badhou Chikalan,
Satabgarh
Gudamp, Thana
Bhawan,Nabada,
Bhaneda Udda,
Gagor
The sixty organic farmers identified for the study from four states were completely
organic farmers. Most of them were totally transformed and adopting in their entire
farm land. But, a fraction of sample farmers were doing it strictly in piece of their farm
land. However, all the farmers were following organic practices in all crop rotations or
through out the year. The organic farming methods are varying from state to state
and place to place. Farmer convenience, resource availability, family labor
participation and premium prices for the crops were the most influencing factors in
adopting the organic farming.
The details of socio-economic profile of sample organic farmers are summarized in
table 7.2. The primary occupation of the most of sample farmers (96%) was
agriculture. Nearly 60 per cent of the sample farmers were dependent on livestock
for their secondary sources of incomes. About one sixth of sample relies on business
while almost the same proportion also does service jobs for their additional incomes.
Overall, nearly 20 per cent sample farmers were illiterate. The proportion of illiterate
farmers was the highest in case of Gujarat when compared to other states. Most of
the farmers (43.3%) had only primary education i.e., up to 10
th
class standard. About
three fourths of organic farmers were members in different village
committees/organizations. Most of the farmers in Gujarat were members in Fair
Trade Cotton Growers Association at Rapar. The average size of the family was the
highest in Maharashtra while it was the lowest in case of Gujarat. Most of the sample
farmer families in Maharashtra are joint in nature where as they are nucleated in
case of Gujarat state. The size of average land holding was the highest in Punjab
followed by U.P, Gujarat and Maharashtra. The size of land holding was low in
199
Maharashtra when compared with other three states. The nature of soil in Kutch
region was sandy with limited ground water irrigation potential. The soils in
Maharashtra are deep to medium black in nature while the soils in Punjab are mostly
alluvial type. In case of U.P, alluvial, chalka and sandy soil types were observed.
Table 7.2 Socio-economic details of organic farmers (no.)
Item Gujarat Maharashtra Punjab Uttar Pradesh
Primary occupation
a. Agriculture
b. Service
14
1
14
1
15
0
15
0
Secondary occupation
a. Livestock
b. Business
c. Service
d. None
10
0
0
5
9
5
1
0
7
3
5
0
10
2
3
0
Education status
a. illiterate
b. up to 10
th
class
c. up to degree
d. up to P.G
7
8
0
0
2
8
4
1
2
5
4
4
1
5
7
2
Other position if any
a. Yes
b. No
13
2
11
4
10
5
11
4
Avg. family size 6.0 12.6 7.9 10.2
Avg. land holding (acre) 16.8 7.8 28 18.8
Soil type Sandy Black and chalka Alluvial
and black
Alluvial, red
and sandy
The nature of cropping patterns in the study region is presented in table 7.3. The
nature of agriculture in Kutch region of Gujarat is cultivation of irrigateddry crops.
The sample farmers grew either cotton sole or castor sole or cotton+ castor inter
crop in kharif season. During rabi season, they go for either cumin or sesamum crop.
Most of the farmers in this region buy all types of crop inputs from Agrocel Industries
Ltd. In case of Maharashtra, sugarcane was the major crop observed in the sample
farms. They also practice either paddy-wheat or paddy vegetable crop rotations.
Most of the sample farmers self-sufficient and did not depend on outside market for
organic inputs. Paddy followed by wheat is the most prominent cropping system
found in Punjab sample farms. Sometimes, they also rotate paddy with vegetables
like cubbage, cauliflower, potato etc based on the market demand. Sugarcane was
200
also a major crop in Uttar Pradesh state. Paddy wheat or paddy mustard
cropping systems were the other common crop rotations.
Table 7.3 Summary of cropping patterns in the study area
Item Different Crop rotations
Gujarat Cotton + Castor sesamum
Cotton Cumin
Castor Bajra
Maharashtra Sugarcane
Paddywheat
Paddy vegetables
Punjab Paddy wheat
Paddy vegetables
Cotton- wheat
Uttar Pradesh Sugarcane
Paddy wheat
Paddy mustard
7.1 Economics of organic farming vis--vis conventional farming
7.1.1 Brief review of literature
Lampkin (1994) summarized various studies conducted on economics of organic
farming in different crops in South and West of England and parts of Scotland and
Wales. They concluded that the organic farming systems were more diverse in terms
of enterprise mix; have lower yields and higher labor costs which were not
compensated for fully by reduced input costs. Higher prices are essential if organic
farmers are to achieve similar incomes to their conventional counterparts.
Padel and Uli (1994) reviewed several studies on costs and returns of organic
farming in various crops in Germany. Their study revealed that the organic farming
under German conditions was equally profitable with conventional farming. Lower
yields for arable crops were compensated by reduced costs of inputs and premium
prices for most the crops. Many farmers explained that financial stability was the
main reason for converting to organic farming. Introduction of support scheme for
conversion and continuing organic farming also made a significant impact on the
profitability.
201
Dubgaard (1994) studied the economic analysis of organic farming in Denmark. His
results showed that the yield differences were most noticeable for intensive crops
such as wheat and potatoes with organic yields around half the conventional
averages. The organic farms used about twice as much labor per hectare as the
conventional farms. The study also concluded that the substantial price premiums on
output and public support are essential for the economic viability of organic farming
in Denmark.
John (1994) reviewed the various field experiments conducted on organic farming in
Canada. Many sample farms recorded yields that were the same or slightly below
conventional farms. Even though some market regulatory problems exist in case of
organic products, the prices for them were higher (about 30%) than the conventional
products. Overall, the study concluded that 72 per cent of farmers strongly convinced
that organic farming is as profitable as conventional.
Anderson (1994) examined different research studies conducted on organic farming
in USA. They concluded that the lower yields on organic farms contrasted with
conventional farms were balanced by lower production costs. The noted differences
between economic performances of organic and other farms may be due to farm
size rather than farming system. During the study period, the US organic producers
did not receive any benefit from the environmental advantages except to the extent
that consumer willing to support by paying a premium.
Wynen (1994) carried out a review study on organic farming in Australia. He
concluded that the wheat yields were almost similar between organic and
conventional farms. The study also indicated that the variability of wheat yields on
organic farms was lower than on conventional farms. The financial results of two
groups of farmers per hectare were remarkably similar.
Singh et al (2006) examined the economics of organic farming in Uttaranchal (India)
and concluded that cultivation of paddy yielding more profits than wheat cultivation.
Shirsagar (2008) studied the impact of organic farming on economics of sugarcane
cultivation in Maharashtra (India) and concluded that the yields were low in organic
farms than conventional farms but compensated by price premiums. Raj kumar
202
(2009) analyzed economics of carrot cultivation in Nepal and found that higher costs
and revenues in inorganic farms while higher benefit cost ratio was observed in
organic farms.
From review of various studies, it can be concluded that absolutely yields are lower,
but yield differences relative to conventional systems vary depending on the
enterprise and intensity of farming. The cost of variable inputs like agrochemicals
was lower. Gross margins may be similar or higher depends on premium prices
available in the market. Usage of labor was higher and other fixed costs were similar.
Economics of paddy (basmati) cultivation in Punjab
The per acre economics of paddy cultivation in Punjab state is presented in table
7.4. The primary data on cost of cultivation of paddy (basmati) under organic and
conventional farming were collected in Faridkot and Fatehgarh Saheb districts during
November, 2009. Most of the sample organic farmers in this region are following the
concept of Natural farming or Zero-budgeting. The cost of production (variable) per
quintal of paddy was Rs.701 under organic farming (OF) where as Rs.427 in
conventional farming (CF). It is almost 64 per cent higher in OF than CF. The
average cost of cultivation of paddy in OF was Rs.9325 per acre while the same in
CF was Rs.7818 per acre. The cost of cultivation was nearly 19 per cent higher in
OF when compared to CF. The average yield per acre of paddy was 13.35 and
18.36 quintals respectively in OF and CF. The absolute difference between the yield
levels was 5.01 quintal per acre. But, the unit price of paddy was higher (30 percent)
in OF relative to CF. There was no significant unit price differences in fodder prices.
The average net returns per acre of paddy cultivation were Rs. 17828 and Rs.20897
respectively in OF and CF. However, the differences between the gross returns per
acre of these farming were marginal (Rs.1562 only).
Among the different cost break-ups, the real costs on weeding and harvesting
operations were significantly higher in OF when compared to CF. It clearly indicates
the more labor incentive nature of OF than CF. The relative costs on fertilizer
application was higher in OF while the same on plant protection was higher in CF.
The marketing costs were higher under organic paddy because they have to carry
product to specific mandi rather than local mandi for fetching the premium prices.
203
The costs on the remaining cost items were more or less equal in both types. Since,
the organic farmers were practicing organic methods from two or three years, it takes
some more time to stabilize or increase the yields further under organic farming. The
premium prices for paddy helping the organic farmers in Punjab to cover their higher
costs to some extent.
Table 7.4 Economics of Paddy cultivation in Punjab (Rs per acre)
OF CF
CF=100
Land preparation 1265 1307 97
Seed cost 320 279 115
Sowing cost 1790 1815 99
Fertilizer cost 1955 1760 111
Inter cultivation/Weeding 1245 471 264
Plant protection cost 310 928 33
Irrigation cost 310 72 431
Harvesting cost 1180 771 153
Threshing cost 510 300 170
Marketing cost 440 115 383
Other costs 0 0 -
Total cost of cultivation 9325 7818 119
Yield (Kg) 1335 1836 73
Price (Rs) 19.5 15 130
Fodder (Qtl) 11.2 12.5 90
Price (Rs) 100 94 106
Total revenue 27153 28715 95
Net returns 17828 20897 85
Cost of production (per Qtl) 701 427 164
Economics of wheat cultivation in Punjab
The comparison of cost of cultivation of wheat between organic and conventional
farming methods in Punjab is presented in table 7.5. The costs and returns on wheat
data pertains to cropping year 2009-2010. Most of sample organic farmers in the
state were cultivating Bansi (local) variety of Wheat. The cost of production per
quintal was Rs.644 under OF. But, the same in case of CF was Rs.315. The cost of
production per quintal of wheat was more than double in OF. It was due the lower
(nearly half) yields under organic farming. But, the overall cost of cultivation per acre
was slightly higher (17 per cent) in OF when compared to CF. The market price
realization of per kg wheat was significantly higher in OF (117 percent). However,
the gross returns per acre of wheat cultivation in Punjab were Rs.28747 and
204
Rs.24755 respectively for OF and CF. This indicates almost 16 per cent higher gross
returns per acre of wheat under OF over CF. However, the per acre net returns
difference between OF and CF was Rs.2889. It clearly shows the high profitability of
wheat cultivation under organic farming in Punjab. As the organic farmers gains
more experience under OF, higher yields can be expected on par with CF.
Among the different crop operations, the higher costs under organic farming were
observed in weeding, harvesting and threshing. Most of sample organic farmers are
following manual harvesting and threshing practices for good quality of wheat grains
and straw. Due to that the costs on labor per acre was higher under OF. The costs
on fertilizers and plant protection chemicals were significantly higher under
conventional farming. The lower fodder yields were noticed under OF because of
lower yields. Overall, there is huge potential for domestic as well as export of organic
wheat from Northern states.
Table 7.5 Economics of Wheat cultivation in Punjab (Rs per acre)
OF CF
CF=100
Land preparation 1050 1010 104
Seed cost 1240 1285 96
Sowing cost 275 261 105
Fertilizer cost 1163 1520 77
Inter cultivation/Weeding 1350 495 273
Plant protection cost 92 435 21
Irrigation cost 142 130 109
Harvesting cost 1300 840 155
Threshing cost 710 330 215
Marketing cost 217 130 167
Other costs 0 0 -
Total cost of cultivation 7539 6436 117
Yield (Kg) 1170 2042 57
Price (Rs) 22.3 10.3 217
Fodder (Qtl) 11.4 16.4 70
Price (Rs) 233 227 103
Total revenue 28747 24755 116
Net returns 21208 18319 116
Cost of production (per Qtl) 644 315 204
205
Economics of cotton cultivation in Punjab
The details of economics of organic cotton farming vis--vis conventional farming are
summarized in table 7.6. The costs and returns of cotton cultivation from sample
organic as well as conventional farmers were collected during the cropping year
2009-2010. Many of the sample organic farmers were cultivating desi variety of
cotton where as conventional farmers were growing Bt cotton varieties. The cost of
production per quintal of cotton under OF was Rs.662 while the same in case of CF
was Rs.1112. The cost of production in OF was almost 40 per cent lower than CF.
The average cost of cultivation per acre of cotton were Rs.5427 and Rs.12455
respectively under organic and conventional farming. There is a huge difference of
Rs.7028 (66 %) between these farming types. The mean yield per acre of OF was 73
per cent of conventional farming. The unit price realization of cotton was almost
same under both production systems. Total gross returns per acre of organic farming
were 72 per cent of conventional farming. But, in case of net returns per acre, the
share increased to 90 per cent. The average differences between the OF and CF net
returns per acre was Rs.1935. It clearly demonstrates the high potential of organic
cotton farming when compared to conventional farming in Punjab.
Table 7.6 Economics of Cotton cultivation in Punjab (Rs per acre)
OF CF
CF = 100
Land preparation 967 850 114
Seed cost 125 1250 10
Sowing cost 150 125 120
Fertilizer cost 333 2250 15
Inter cultivation/Weeding 1332 650 205
Plant protection cost 33 4550 1
Irrigation cost 380 150 253
Harvesting cost 1967 2500 79
Threshing cost 0 0 -
Marketing cost 140 130 108
Other costs 0 0 -
Total cost of cultivation 5427 12455 44
Yield (Kg) 825 1125 73
Price (Rs) 28 28.5 98
Fodder (Qtl) 0 0 -
Price (Rs) 0 0 -
Total revenue 23100 32063 72
Net returns 17673 19608 90
Cost of production (per Qtl) 662 1112 60
206
Among various cost components, inter cultivation /weeding and irrigation costs were
higher in organic farming. But, the costs on seeds, fertilizers and plant protection
chemicals were significantly higher in conventional farming. Actually, the major
problem for organic cotton farming was lack of premium prices. Establishment of
organic cotton export channels either by government or private organization would
really enhance the incomes of the farmers in Punjab. The results clearly reveal that
the organic farmers can safely earn almost equal amount of net margins per acre as
conventional farmers.
Economics of paddy cultivation in Uttar Pradesh
The costs and returns of paddy (basmati) cultivation both under organic and
conventional farming types are presented in table 7.7. The primary data on sample
organic and conventional paddy cultivation was collected from Ahmednagar district
of Uttar Pradesh pertains to the cropping year 2009-2010. Most of the sample
organic farmers are practicing the method of Natural farming or Zero-budgeting
concept in their farms. The most common basmati varieties growing in this region
are Pusa 1 and Pusa -1121.
Table 7.7 Economics of paddy cultivation in Uttar Pradesh (Rs per acre)
OF CF
CF = 100
Land preparation 3482 3444 101
Seed cost 501 511 98
Sowing cost 1136 1400 81
Fertilizer cost 1082 930 116
Inter cultivation/Weeding 622 375 166
Plant protection cost 350 521 67
Irrigation cost 2281 3300 69
Harvesting cost 2082 2214 94
Threshing cost 1555 1671 93
Marketing cost 140 80 175
Other costs 0 0 -
Total cost of cultivation 13231 14446 92
Yield (Kg) 1518 1807 84
Price (Rs) 15.8 16.9 93
Fodder (Qtl) 10.5 11.8 89
Price (Rs) 70 93 75
Total revenue 24719 31636 78
Net returns 11488 17190 67
Cost of production (per Qtl) 870 803 108
207
The average cost of production per quintal of paddy (basmati) under organic farming
was Rs.870 while the same in conventional farming was Rs.803. The cost of
production per quintal under OF was 8 per cent higher than CF. The mean yield per
acre in OF accounted for 84 per cent of the conventional farming yield. The average
gross returns per acre of conventional farming were nearly 28 per cent higher than
organic farming. The average net returns per acre of paddy cultivation were
Rs.11488 and Rs.17190 respectively for OF and CF. No premium prices were
available for organic paddy in Uttar Pradesh. The yield levels under organic farming
were lower (16%) than conventional farming. The fodder yields per acre were also
lower in organic farming. Among different cost items, weeding cost was significantly
higher in organic farming. The costs on plant protection chemicals and irrigation
were significantly higher in conventional farming. It clearly indicates that organic
farming increases water-use-efficiency of the farm. Lack of premium prices as well
as absence of export market channels limits the expansion of organic farming in the
state.
Economics of sugarcane cultivation in Uttar Pradesh
The detailed break-up of the cost of cultivation of sugarcane in Uttar Pradesh state is
presented in table 7.8. Most of the sample organic farmers were growing CoS 88230
variety of sugarcane while majority of conventional growers were using CoS 88230
or CoS 767 varieties.
The cost of production of sugarcane per ton was Rs.820 under organic farming. But,
the cost of production per ton was 16 per cent higher under conventional farming.
The mean yield per acre was 12 per cent higher under organic farming. The average
cost of cultivation per acre of organic farming accounted for 97 per cent of the
conventional farming cost. The gross returns per acre of OF was 9 per cent higher
than CF. However in case of the net returns per acre, this value gone up to 19 per
cent. The results conclude that the cultivation of sugarcane was more profitable
under organic farming than conventional farming. Premium prices did not exist for
organic sugarcane production in U.P. Creation or addition of premium price would
further increase the profitability of organic sugarcane production.
208
Among different cost components, the costs were more or less equal in both types of
farming systems. One of the major benefits under organic sugarcane cultivation was
the crop can thrive for more than three years without any yield loss. So, organic
farmers can significantly reduce their seeds and sowing costs and reap more
benefits. Production of organic jaggary or any other value addition measures would
further boost organic sugarcane production in the state.
Table 7.8 Economics of sugarcane cultivation in Uttar Pradesh (Rs per acre)
OF CF
CF = 100
Land preparation 2892 3533 82
Seed cost 4090 5065 81
Sowing cost 1514 1313 115
Fertilizer cost 1935 1904 102
Inter cultivation/Weeding 3113 3217 97
Plant protection cost 420 687 61
Irrigation cost 2750 2687 102
Harvesting cost 3495 2847 123
Threshing cost 0 0 -
Marketing cost 2190 1846 119
Other costs 0 0 -
Total cost of cultivation 22399 23099 97
Yield (Kg) 27364 24333 112
Price (Rs) 1.95 2.02 97
Fodder (Qtl) 0 0 -
Price (Rs) 0 0 -
Total revenue 53360 49153 109
Net returns 30961 26054 119
Cost of production (per ton) 820 951 86
Economics of wheat cultivation in Uttar Pradesh
The economics of wheat cultivation under organic farming vis--vis conventional
farming is summarized in table 7.9. Most of sample organic farmers were cultivating
Bansi or 292 varieties of wheat. But, many conventional farmers were growing PBW-
343 or WL-711 varieties. The cost of production of wheat per quintal was Rs.620
under organic farming. The same under conventional farming was slightly lower at
Rs.609 per quintal. But, the average cost of cultivation per acre was lower in organic
farming (8 per cent) when compared to conventional farming. The average yield
levels were 1519 and 1682 kg respectively under OF and CF. However, the gross
returns per acre was higher (15 per cent) in organic farming than conventional
209
farming. This share has further gone up to 39 per cent in case of net returns per
acre. The unit price realization was 28 per cent higher in OF. These results clearly
demonstrate that the cultivation of wheat under organic farming is more profitable
than conventional farming method.
Between different cost components, the costs on weeding and inter culture was
higher in organic farming. But, the costs on irrigation were higher under conventional
farming. Further expansion in green or organic export marketing channels will yield
higher net incomes per acre to farmers in U.P state.
Table 7.9 Economics of wheat cultivation in Uttar Pradesh (Rs per acre)
OF CF
CF = 100
Land preparation 2298 2571 89
Seed cost 1281 1034 124
Sowing cost 663 674 98
Fertilizer cost 981 1054 93
Inter cultivation/Weeding 656 432 152
Plant protection cost 85 214 40
Irrigation cost 994 1532 65
Harvesting cost 1510 1674 90
Threshing cost 844 879 96
Marketing cost 106 159 67
Other costs 0 0 -
Total cost of cultivation 9418 10223 92
Yield (Kg) 1519 1682 90
Price (Rs) 13.4 10.5 128
Fodder (Qtl) 14 13.8 101
Price (Rs) 222 193 115
Total revenue 23463 20324 115
Net returns 14045 10101 139
Cost of production (per Qtl) 620 609 102
Economics of sugarcane cultivation in Maharashtra
The cost of cultivation of sugarcane per acre in Maharashtra between organic and
convention farming is compared in table 7.10. The primary data on economics of
sugarcane cultivation under both the methods were collected in Warana district of
Maharashtra. Most of sample organic farmers are practicing the method of Natural
Farming or Zero-budgeting concept. The most popular varieties under organic and
conventional farming systems are Co-86032 and CoC-671/ Co-8014 respectively.
210
The cost of production of sugarcane per ton was Rs.589 in case of organic farming
where as the same under conventional farming was Rs.745. The COP under OF
accounted for 79 per cent of the same in CF. The mean cost of cultivation per acre
was lower (20 per cent) under organic farming compared to conventional farming.
The average yields were almost equal under both the farming systems. The gross
returns per acre was slightly higher (8 per cent) under OF than CF. But, the
difference has increased to 35 per cent in case of net returns per acre. The results
clearly lend support to organic farming in Maharashtra than conventional farming.
Most of the sample organic farmers are also adding value through organic jaggery
production and syrup preparation. Among different break-up costs, the costs on
sowing and irrigation were slightly higher under organic farming than conventional
farming. But, the costs on fertilizer application and plant protection chemicals were
significantly higher under conventional farming. Overall, development of export
marketing channels will create lot of value addition to organic jaggery in
Maharashtra.
Table 7.10 Economics of sugarcane cultivation in Maharashtra (Rs per acre)
OF CF
CF = 100
Land preparation 3675 4100 90
Seed cost 4825 5300 91
Sowing cost 1313 1120 117
Fertilizer cost 2344 5450 43
Inter cultivation/Weeding 3313 4300 77
Plant protection cost 275 1550 18
Irrigation cost 3588 3040 118
Harvesting cost 2375 2700 88
Threshing cost 0 0 -
Marketing cost 838 760 110
Other costs 0 0 -
Total cost of cultivation 22546 28320 80
Yield (Kg) 38375 38000 101
Price (Rs) 1.6 1.5 107
Fodder (Qtl) 0 0 -
Price (Rs) 0 0 -
Total revenue 61400 57000 108
Net returns 38854 28680 135
Cost of production (per ton) 589 745 79
211
Economics of cotton cultivation in Gujarat
The detailed break-up of cost of cultivation of cotton in Gujarat is presented in table
7.11. The primary data was collected on both organic and conventional farming in
Kutch district of Gujarat. Most of sample organic farmers were growing devraj variety
while many of the conventional farmers cultivating Bt cotton or V-797 variety of
cotton. Agrocel Industrial Limited at Rapar office is providing the technical service,
inputs and buyback arrangements for organic farmers.
Table 7.11 Economics of cotton cultivation in Gujarat (Rs per acre)
OF CF
CF = 100
Land preparation 939 1600 59
Seed cost 206 281 73
Sowing cost 443 375 118
Fertilizer cost 1586 2675 59
Inter cultivation/Weeding 1946 1800 108
Plant protection cost 110 478 23
Irrigation cost 1161 1291 90
Harvesting cost 3515 3525 100
Threshing cost 0 0 -
Marketing cost 0 63 0
Other costs 0 0 -
Total cost of cultivation 9906 12088 82
Yield (Kg) 1263 1400 90
Price (Rs) 35 28 125
Fodder (Qtl) 0 0 -
Price (Rs) 0 0 -
Total revenue 44205 39200 113
Net returns 34299 27112 127
Cost of production (per Qtl 784 863 91
The cost of production of cotton per quintal was Rs.784 in organic farming. The cost
of production was almost 10 per cent higher under conventional farming. The mean
average yield per acre of organic farm accounted for 90 per cent of the same in
conventional farm. The average costs of cultivation per acre were Rs.9906 and
Rs.12088 respectively under OF and CF. The COC per acre was almost 22 per cent
higher under conventional farming. The unit price realization under organic farming
was 25 per cent higher when compared to conventional farming. The gross returns
per acre were 13 per cent higher under organic farming than the conventional
farming. But, in case of net returns per acre this gap has become wider (Rs.7187).
212
Overall, the results conclude that the cultivation of cotton under organic farming is
more profitable than conventional farming.
Among different cost components, the costs on fertilizer and plant protection
chemicals were significantly lower under organic farming than conventional farming.
The organic farmers in the study region were enjoying the benefits of Agrocel
Industries in form of quality inputs (seeds, neem cake, castor cake and neem oil etc)
and zero marketing costs. Moreover, organic farmers were getting additional
subsidies from Agrocel Industries for land leveling and buying drip irrigation systems.
In general evaluation made in light of these research results concludes, organic
farming is a production system which has little lower productivity per hectare, needs
more labour and low energy inputs, follows crop rotation regularly, and has a
changing net income level relating with product selling prices.
7.2 Efficiency of organic farming in India
7.2.1 Brief review on farm level efficiency and its determinants
Athreya V.B et al., (1986) examined the controversial issue of farm size and
productivity in case of agricultural production in Tiruchi district, Tamil Nadu. They
argued that the size-productivity framework might not be the most fruitful one for
analyzing the problem of agricultural productivity. The study covered a detailed farm
household economic survey of 367 households in three wet and three dry villages
of Kulithalei and Manaparei panchayat unions of the state. They defined
productivity as the market value of farm production per unit of operated area and did
crop level analysis on different crops. The results of study concluded that a
significant negative relationship between operated area and value of output per acre
at the farm level only for the wet area, but there was no relationship in the
dry ecotype. Even in the wet area, the observed inverse relationship between farm
size and productivity disappeared at the crop level. The intensity of cultivation and
the class status of cultivating households might be more important criteria than size.
Finally, a methodological conclusion arose out of the study was ecological and
historical specifications of a farm economy play an important role in the
determination of productivity than the size.
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Battese and Tessema (1993) used stochastic frontier production function with time-
varying parameters and technical efficiencies using panel data from ICRISATs
Village Level Studies in three Indian villages namely Aurepalle, Shirapur and
Kanzara, during the period between 1975-76 and 1984-85. The specifications of a
linearized version of a Cobb-Douglas stochastic frontier production function with
coefficients which were a linear function of time, the hypothesis that the traditional
response function was an adequate representation of the data was accepted for only
in Aurepalle village. The hypothesis of time-invariant technical inefficiencies was not
rejected for one of the two villages for which significant technical inefficiencies exist.
The hypothesis of time-invariant elasticities of the input variables was rejected for
two (Shirapur and Kanzara) of the three villages. Further, the hypothesis that hired
and family labour was equally productive was accepted in only one of the three
villages. The technical efficiencies of individual farms exhibited considerable
variation in the two villages with either time-invariant or time-varying technical
efficiencies.
Good et al., (1993) carried out technical efficiency and productivity growth
comparisons using panel data of four largest European carders and eight of their
American counterparts using three alternative estimators of Cobb-Douglas stochastic
frontier production model during 1976 to 1986. They identified that the potential
efficiency gains of the European liberalization by comparing efficiency differences
between the two carrier groups. The reductions in inefficiency described that the
amount of inputs can be decreased without altering output. Finally, they concluded
that while nominal efficiency measures were fairly different across these estimators,
the properties of technology and the estimation of an efficiency gap between
European carriers were rather stable. Eliminating the efficiency gap brought a
savings to the tune of $ 4.5 billion per year and a displacement of about 42000
workers across European industry.
Coelli and Battese (1996) investigated the factors influence the technical inefficiency
of Indian farmers using a stochastic frontier production function for farm-level data on
three villages, Aurepalle, Kanzara and Shirapur from diverse agro-climatic regions of
the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT). The
variables considered in the model for the inefficiency effects include the age and
214
level of farmers, farm size and the years of observation. The results indicated a
significant random component in the inefficiencies effects in all three villages and
that the above four factors have a significant influence upon the size of the
inefficiencies of farmers in Kanzara and Shirapur, but not in Aurepalle. Farm size
and year of observation were inversely related to the level of technical inefficiency in
all villages whereas the effects of age and education of the farmers were found
negatively related to the level of technical inefficiency in two out of three villages.
They also indicated that there were significant differences in the behaviour of value
of output and inefficiencies of production in different regions.
Bokusheva and Hockmann (2005) investigated the causes for production variability
in Russian agriculture. They found that the production risk and technical inefficiency
as two major sources of production variability. The study used a panel data of 443
large agricultural enterprises from three regions of Russia from 1996 to 2001. They
concluded that the production function specification accounting for the effect of
inputs on both risk and technical inefficiency was found to explain appropriately than
the traditional stochastic frontier formulation. Study also found that the output
variability was explained mainly by production risk. The estimates indicated that
there were significant differences in production technologies in the three regions not
only for the production elasticities but also for the impact of technological change.
Finally, the study suggested that the future research is needed to analyze the
farmers response to production risk and their adjusting behaviour.
Olson and Vu (2007) analyzed the economic efficiency and factors explaining it
among Minnesota farm households using DEA method. After studied 400 farm
sample data between 1993 and 2005, they concluded that there was a considerable
degree of inefficiency in Minnesota farms. On average, initial technical efficiency,
scale and allocative efficiency were 0.90, 0.88 and 0.77 per cent respectively. The
study also employed bootstrapping to determine the variability of DEA technical
efficiency estimates and to correct for the bias inherent in the deterministic
measurement. The bias-corrected point estimate of technical efficiency was 0.77.
Tobit analysis was employed in the second step to evaluate factors influencing
efficiency in the study. The results concluded that a higher current asset share, lower
debt-to-asset ratio and higher non-farm income were associated with higher
215
efficiency levels. Higher tenancy ratio was coupled with low technical efficiency
showed improvements were needed in managing larger operations and rented
properties.
Adewumi and Adebayo (2008) examined the profitability and technical efficiency of
sweet potato production in Kwara state of Nigeria using stochastic frontier production
function. A sample of 152 farmers cross-sectional data were collected from Oyun
and Offa local government areas. The study revealed that a positive gross margin of
N15, 29315 per ha. Farm size, planting material and labor inputs were significant
variables having positive impact on sweet potato production while fertilizer were
found to have a negative effect. The study further revealed a mean technical
efficiency of 0.473. This indicates that the input usage can be increased by 52.7 per
cent. The increase in educational level, farm size and contacts with extension agents
have showed tendency of reducing the inefficiency in sweet potato production.
Access to credit sources and membership in the associations has also shown
positive and significant relation to technical efficiency. Household size was
negatively and significantly correlated with technical efficiency.
Begum et al., (2009) studied the application of DEA to evaluate technical, allocative
and economic efficiency of poultry farms in Bangladesh. The results of the study
revealed that under CRS and VRS specification, on average, the farms technical,
allocative and economic efficiencies were 88, 70, 62 per cent and 89, 73, 66 per cent
respectively. The CRS and VRS sampled farms were 12, 30, 38 per cent and 11, 27,
34 per cent respectively, below what could be achieved. The farm households
appear to be dominantly increasing returns to scale. Evaluating factors associated
with efficiency suggested that farmers educational background, experience, training,
family size, and poultry farm size were most statistically significant factors
contributed to efficiency.
Ayinde et al., (2009) assessed the determinants of technical efficiency and varietal-
gap of rice production in Nigeria. A random sample of 675 farmers was selected from
three out of six geographical zones in Nigeria. The farmers in this study were
classified into three groups according to the variety of rice they planted. The three
main varieties of rice planted are local (Ofada), improved (Mai-Nasara) and New
216
Rice for African (NERICA). The technical efficiency indices were computed using the
meta-frontier approach because production varieties and technologies were
expected to differ between the three varieties. This method allows the measure of
the varietal-differences which is the Technology Gap Ratio (TGR). Estimates of the
frontier were obtained assuming a translog functional form. Results revealed mean
technical efficiency of 55%, 58% and 57% for Ofada, Mai-Nasara and NERICA
varieties, respectively. Farm size, hired labour, fertilizer, seed, age, gender,
household size and amount of credit are the determinants of technical efficiency of
farmers in Nigeria rice production. The average values of varietal technology gap
were more than 0.83 in all the varieties.
Ross et al., (2009) assessed the nonparametric efficiency analysis of small-scale
Bean producer farmers (both climbing and bush bean types) in North and South
Kivu, Democratic Republic of Congo. Data used in this study were obtained from the
survey Visite 1: Structure du Menage et Production, which was conducted between
December 2006 and May 2007. On an average, farms were 66 per cent technically
efficient. The results concluded that the North Kivu bean producers have higher
technical efficiency scores than South Kivu producers. Similarly, the climbing beans
have higher technical efficiency scores than bush beans. The Tobit model was used
to identify the correlation of efficiency to other characteristics associated with each
field. Variables like age, field size showed negative relationship with technical
efficiency.
It is clear from various studies that every effort to promote organic farming could be
invalidated if individual farms do not reach adequate productive and efficiency levels
(Lampkin and Padel, 1994; Offermann and Nieberg, 2000). This means that any
policy effort in supporting conversion to organic farming needs an adequate level of
efficiency of individual farms to achieve success (Tzouvelekas et al., 2002a). This
would imply that organic farming must strive to be efficient both productivity and
economically. Therefore, development of organic methods raises significant research
questions related to productivity and efficiency. Studies on productivity are certainly
relevant, but also efficiency analysis provides useful information on the convenience
or otherwise of adopting organic techniques (Cembalo and Cicia, 2002). The
comparative studies between organic and conventional farms, efficiency analysis is
217
particularly suitable for assessing the farmers relative ability in optimizing internal
resources. Further more, the utilization of an efficiency estimation approach is
advisable in studies aimed at providing policy indications (Coelli et al., 2002; Lovell
1995).
But, there are only a few attempts of comparing efficiency between organic and
conventional production systems. Several studies were conducted by Tzouvelekas et
al. (2001a, b; 2002a, b) on Greek agriculture. The authors used a parametric
approach to evaluate olive, cotton and durum wheat farms and obtained
controversial results. In the analysis on cotton farms, Tzouvelekas et al. (2001b)
found that technical efficiency (TE), with respect to their specific technology (organic
and conventional) was higher in conventional farmings favour. On the other hand,
the studies on olive-growing and durum wheat-growing demonstrated the improved
ability of organic farmers in minimizing inefficiency (regarding their specific
technology). Oude Lansink et al. (2002) compared efficiency measures of organic
and conventional farms in Finland. They suggested that organic producers have
higher technical and sub-vector efficiencies than conventional farms in their own
reference groups, but overall efficiency measures suggest that organic farms are
using less productive technology. In Italy, Madau (2005) applied a stochastic frontier
production model and found that conventional cereal farms were significantly more
efficient than organic cereal farms, with respect to their specific technology, which
counter the findings from Tzouvelekas et al. (2001a, 2002a). In another recent study,
Larsen and Foster (2005) compared efficiency measures of organic and
conventional farms in Sweden by a non-parametric technique. Their results indicate
that the average efficiency scores of the organic producers are lower than the
average efficiency of the conventional producers.
Fabio (2007) analyzed the technical efficiency in organic and conventional farming
on Italian cereal farms. He applied stochastic frontier model to estimate technical
efficiency in a sample. All the observed farms were in Sardinia and they participated
in the official Farm Accountancy Data Network (FADN) during 2001 and 2002.
Translog functional form of production function was applied to measure the efficiency
in the farms. The likelihood test results suggested that the organic and conventional
farms in the sample would lie on two different frontier production functions. The
218
estimated TEs for conventional and organic practices are, on average, 0.902 and
0.831 respectively. This concludes that organic farmers were less efficient than
conventional farmers, relative to their specific frontier technology. The conventional
cereal-growing tends to be more productive than organic production and the gap
between them should be interpreted as an absolute advantage of traditional farms.
The results that enforcing some horizontal measures like professional training and
extension services would improve the ability of organic farmers.
Cisilino and Madau (2007) compared the organic and conventional farming in Olive
farms using Italian FADN database. In order to identify some of the main differences
between organic and conventional farms a distance analysis was used. The study
highlighted some of the main characteristics of those two groups of farms to better
address differences in production technology, costs and revenues. They also
estimated differences in efficiency and productivity between organic and
conventional producers using nonparametric method. Results revealed that looking
at the average values on invested areas; conventional farms gross production was
significantly higher than the organic ones, as the net margin, as the net product and
costs. The average values on total labour force instead, shown that, even if
conventional farms still have higher values than organic ones, the distance become
shorter. That means that the two groups are quite similar and that, even if organic
farms still produce a lower economic value, they better compensate productive
factors, especially in terms of labour force. The efficiency analysis found that organic
olive-growing farms were more able in using their disposable resources (with
reference to their own frontier), and the higher efficiency permitted them to
compensate the lower productivity with respect to the conventional farms.
Bayramoglu and Gundogmus (2008) calculated the cost-efficiency between organic
and conventional raisin-producing households in Turkey. They used data
envelopment analysis to compute overall technical and input-specific technical
efficiency measures. The data were collected from fourty-four organic and thirty-eight
conventional producers determined by stratified random sampling. For each
household group the average cost efficiency and technical efficiency coefficients
were 0.712 and 0.862 for organic households, while 0.844 and 0.903 for the
conventional group. According to the coefficients calculated for individual and
219
different returns to scale, study concluded that conventional households are on
average more efficient relative to their own technology.
Funtanilla et al (2009) evaluated the organic cotton marketing opportunity in USA.
They mentioned that according to the Organic Trade Association (OTA), 2004 the
annual growth of organic fiber was 23 per cent. This study was under taken on
organic and conventional cotton growers in 2007 from Texas High Plains (THP) to
estimate their costs and returns, technical efficiency of farms and to identify factors
influencing the efficiency. The results concluded that the average sample organic
farmers produced 976 lbs/acre cotton from irrigated acres, a significantly lower
volume than 1395 lbs/acre cotton harvested by conventional producers under the
same ecosystem. Organic cotton produced from dry land farms is about 649
lbs/acre, while 772lbs/acre were obtained by conventional producers. Dry land cotton
farm yields, on average, are not significantly different across farming systems.
Similarly, higher actual market prices received for organic cotton ($1.27/lb and
$1.15) compared with conventional cotton prices ($0.64/lb and $0.63/lb). The gross
value earned by organic farmers from cotton harvested in irrigated and dry land
acreage in 2007 are $1237/acre and $743/acre, respectively. Conventional cotton
farmers have made $895/acre and $489/acre from irrigated and dry land portions.
On average, the estimated technical efficiencies of sample organic and conventional
cotton farms were 46 % and 78%, respectively. Furthermore, investigating the
variation of farm efficiency scores indicated that all conventional farmers recorded
efficiency rates from 50% to 100%, while only 27% of the organic farms were in the
said range. Interestingly, most organic farms (67%) were found to have an efficiency
level between 30% and 50%. Experience, education, and area showed positive
effect on inefficiency.
Mayen et al., (2010) assessed the technology adoption and technical efficiency of
conventional and organic diary farms in the United States. They addressed self-
selection into organic farming by using propensity score matching and explicitly
tested the hypothesis that organic and conventional farms employ a single,
homogeneous technology. The study utilized the 2005 Agricultural Resource
Management Survey on Dairy Costs and Returns Report (ARMS) data for the
comparison. Results rejected the homogeneous technology hypothesis and find that
220
the organic dairy technology is approximately 13% less productive. However, they
found little difference in technical efficiency between organic and conventional farms
when technical efficiency is measured against the appropriate technology.
The objective of this section is to attempt an empirical evaluation of the technical
efficiency achieved by organic farms in comparison with conventional farms, by
utilizing the recently developed DEA model. Interpreting technical efficiency scores
of two different methods of farming always come with an important caveat, i.e. the
higher scores exhibited by one farming system with respect to the other does not
indicate that the former are more efficient by some degree than the latter
(Tzuovelekas, Pantzios, and Fotopoulos 2001, 2002; Oude Lansink et al. 2002). The
sample farms considered in this study are facing different production technologies.
As per review of various studies, higher technical efficiency score of one sample
farm relative to their counterpart means that, on average, the former lay closer to
their specific production frontier than the sample counterpart does with their
respective production frontier. Each observation consists of the gross value of
production per acre as output (Y) and costs on four inputs. They are per acre costs
on seeds (X1), fertilizers (X2), pesticides (X3) and inter culture/weeding (X4). Since
the costs on land preparation, sowing, irrigation, harvesting, threshing and marketing
did not vary significantly among organic and conventional farms, they are not
included in efficiency analysis. In-put oriented DEA model is applied in the analysis.
This type of analysis is expected to illustrate possible efficiency-associated
differences between the two types of farming and provide empirical evidence, which,
at least in the field of organic farming performance, is scarce or even absent. Such
assessments may be useful for pointing out the overall competitiveness of the sector
as well as to assist policy makers in forming suitable policies for the sectors viable
development. This is particularly important, since policy decisions made in the early
stages of a sectors development may decisively affect its future course.
Efficiency of Paddy cultivation in Punjab
The comparison of technical and scale efficiencies of conventional and organic farms
in Punjab are presented in table 7.12. Mean technical efficiency both under CRS and
221
VRS models were higher in conventional farming than organic farming, relative to
their specific frontiers. However, it does not indicate that conventional farms are
more efficient than organic farms to the same degree, because the two practices are
situated on different technology frontiers. It only implies that conventional farms
operate close to their specific frontier than organic farms. Organic (conventional)
farms under CRS assumption would be able to increase the efficiency by 45 per cent
(12.9%) with the present state of technology, using their disposable resources more
efficiently. The scale efficiency is also higher in conventional farming. These results
are in conformity with the study done by Madau (2005) in Italian cereals.
Table 7.12 Frequency distribution of technical and scale efficiencies of paddy
farms
Efficiency
%
Conventional farming (n=7) Organic farming (n=10)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 10 0 10
26-50 14.3 0 0 40 30 10
51-75 0 14.3 14.3 30 10 30
75-100 85.7 85.7 85.7 20 60 50
Max (%) 100 100 100 100 100 100
Min (%) 38.1 66.5 57.4 9.3 31.3 24.7
Mean (%) 87.1 93.8 91.3 55.0 77.9 70.8
Efficiency of wheat cultivation in Punjab
The frequency distribution of technical and scale efficiencies of organic and
conventional wheat farms in Punjab are presented in table 7.13. The average
technical (both CRS and VRS) and scale efficiencies were higher under conventional
farming than organic farming, relative to their production frontiers. The frequency
distribution of technical and scale efficiencies clearly indicates that most of the
conventional farms were in the range between 75 and 100. But, significant sample of
organic farms were distributed under less than 50 per cent category. The minimum
technical and scale efficiency values were very low in organic farming when
compared to conventional farming.
222
Table 7.13 Frequency distribution of technical and scale efficiencies of wheat
farms
Efficiency
%
Conventional farming (n=12) Organic farming (n=13)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 38.47 7.69 15.38
26-50 0 0 0 7.69 15.38 7.69
51-75 33.33 16.66 16.66 15.38 0 30.77
75-100 66.67 83.34 83.34 38.46 76.93 46.16
Max (%) 100 100 100 100 100 100
Min (%) 60.5 72.2 63.6 14.8 24.4 14.8
Mean (%) 86.2 93.0 92.5 55.1 84.2 66.1
Efficiency of cotton cultivation in Punjab
The summary of technical and scale efficiencies of cotton farms in Punjab are
tabulated in table 7.14. Contrary to the earlier findings, the mean technical and scale
efficiencies were higher in organic farms (relative to their production frontiers) than
conventional farms. Most of the sample organic farms were categorized in the range
between 75 and 100 where as many sample conventional farms were between 51
and 75. The minimum technical and scale efficiency values were also more in
organic farming. The results were inconformity with Oude Lansink et al., (2002).
Table 7.14 Frequency distribution of technical and scale efficiencies of cotton
farms
Efficiency
%
Conventional farming (n= 4) Organic farming (n= 4)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 0 0 0
26-50 0 0 0 0 0 0
51-75 75 0 75 25 0 25
75-100 25 100 25 75 100 75
Max (%) 100 100 100 100 100 100
Min (%) 58.3 - 58.3 60.3 - 60.3
Mean (%) 69.5 100 69.5 90.1 100 90.1
Efficiency of paddy cultivation in Uttar Pradesh
The mean, maximum and minimum technical and scale efficiencies of paddy farms
under organic and conventional farming are summarized in table 7.15. The average
technical efficiencies (both under CRS and VRS) were 80.8, 89.0 and 73.4, 87.9 per
223
cent respectively for conventional and organic farming systems. The mean scale
efficiency was 90.4 and 81.6 per cent respectively for CF and OF. The results
indicate that the three efficiencies calculated in the study are higher for conventional
farming than organic farming (relative to their production frontiers). It also suggests
that the technical efficiency (CRS model) can be further improved by 19.2% and
26.6% respectively under conventional farming and organic farming systems. The
organic farms are not able to compensate for their technical disadvantage (less
productivity) with higher efficiency of input use.
Table 7.15 Frequency distribution of technical and scale efficiencies of paddy
farms
Efficiency
%
Conventional farming (n= 7) Organic farming (n= 11)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 0 0 0
26-50 14.3 0 0 27.27 9.09 0
51-75 28.6 28.57 28.57 9.09 18.18 27.27
75-100 57.1 71.43 71.43 63.64 72.73 72.73
Max (%) 100 100 100 100 100 100
Min (%) 46.0 61.0 59.0 31.7 48.2 50.9
Mean (%) 80.8 89.0 90.4 73.4 87.9 81.6
Efficiency of sugarcane cultivation in Uttar Pradesh
The frequency distribution of technical and scale efficiencies of sugarcane farms
under conventional and organic farming is presented in table 7.16. In relative terms,
the mean technical and scale efficiencies of organic farms were lower than the
conventional farms. There is a huge difference of technical efficiency (TE) between
CF and OF. Most of conventional farms were distributed in the range between 75
and 100 per cent. In contrary, many of organic farms fell under less than 50 per cent
category. The estimated TE scores suggest that production is not adequately
efficient under organic farming. The results clearly indicate that there is a need for
improvement of efficiency under organic farms through more technical trainings and
field demonstrations.
224
Table 7.16 Frequency distribution of technical and scale efficiencies of
sugarcane farms
Efficiency
%
Conventional farming (n= 15) Organic farming (n= 11)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 36.37 27.27 0
26-50 6.6 0 0 27.27 27.27 9.10
51-75 13.4 13.4 6.67 9.09 0 45.45
75-100 80 86.6 93.33 27.27 45.46 45.45
Max (%) 100 100 100 100 100 100
Min (%) 42.2 68.0 62.0 8.7 12.5 43.9
Mean (%) 87.6 93.4 93.0 45.3 60.3 74.3
Efficiency of wheat cultivation in Uttar Pradesh
The efficiency of wheat cultivation both under conventional and organic farming
systems in Uttar Pradesh is summarized in table 7.17. The mean technical and scale
efficiency values were higher (relatively) in conventional system when compared to
organic system. There is ample scope for further increase in the efficiency of organic
wheat farms in U.P. The conventional farms were relatively closer to their production
frontiers than the distance between organic farms and their frontiers. Nearly 60 per
cent of conventional farms were having the CRS-technical efficiency in the range of
75 to 100 per cent. But, only 30 per cent of organic farms showed this range of
technical efficiency.
Table 7.17 Frequency distribution of technical and scale efficiencies of wheat
farms
Efficiency
%
Conventional farming (n= 14) Organic farming (n= 16)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 18.8 0 0
26-50 7.10 0 0 12.5 6.25 31.25
51-75 28.6 14.3 7.1 37.5 12.5 31.25
75-100 64.3 85.7 92.9 31.2 81.25 37.5
Max (%) 100 100 100 100 100 100
Min (%) 45.5 58.8 54.4 12.6 32.2 27.9
Mean (%) 85.1 90.9 93.3 60.8 89.6 65.2
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Efficiency of sugarcane cultivation in Maharashtra
The findings from the efficiency of sugarcane cultivation in Maharashtra are
presented in table 7.18. The empirical findings show that the conventional farms
were having higher (97.6 per cent) efficiency than the organic farms (77.6 per cent),
relative to their production frontiers. The result would suggest that there exist ample
margin for the increasing of managerial and technical skills as to improve
performance in organic sugarcane-growing in order to compensate adequately the
gap (with respect to conventional farms) in terms of efficiency. The technical
efficiency of conventional farms ranged from 89.2 to 100 per cent where as the same
in case of organic farms 45.1 to 100 per cent. Moreover, these findings were against
to results obtained by Tzouvelekas et al (2001a) in Olive-farms in Greek.
Table 7.18 Frequency distribution of technical and scale efficiencies of
sugarcane farms
Efficiency
%
Conventional farming (n= 5) Organic farming (n= 8)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 0 0 0
26-50 0 0 0 12.5 12.5 0
51-75 0 0 0 37.5 37.5 0
75-100 100 100 100 50.0 50.0 100
Max (%) 100 100 100 100 100 100
Min (%) 89.2 - 89.2 45.1 47.5 89.0
Mean (%) 97.6 100.0 97.6 77.6 79.4 96.9
Efficiency of cotton cultivation in Gujarat
The estimated farm-specific, input-oriented technical efficiency measures for both
farming methods are presented in table 7.19. The average input-oriented technical
efficiency score is 88.2% for organic farms and 76.9% for conventional farms under
CRS model. Hence, conventional farms may be viewed, in general, as more
technically efficient than conventional farms. However, it should be stressed that
since organic and conventional cotton farming represents different production
technologies, organic cotton farms face a different production frontier from the
conventional ones. Therefore the differences between the average technical
226
efficiency score of organic farms and that of conventional farms does not imply that
conventional are more efficient than organic farms, by the same degree.
Table 7.19 Frequency distribution of technical and scale efficiencies of cotton
farms
Efficiency
%
Conventional farming (n= 4) Organic farming (n= 14)
CRS-TE VRS-TE SE CRS-TE VRS-TE SE
> 25 % 0 0 0 0 0 0
26-50 0 0 0 7.2 0 7.2
51-75 25 0 25 42.8 0 42.8
75-100 75 100 75 50.0 100 50.0
Max (%) 100 100 100 100 100 100
Min (%) 67.7 - 67.7 50.0 - 50.0
Mean (%) 88.2 100 88.2 76.9 100 76.9
Overall across different states and crops, the efficiency levels were lower in organic
farming when compared to conventional farming, relative to their production frontiers.
There was only one exception in case of cotton in Punjab where the reverse trend
was observed. The results conclude that there is ample scope for increasing the
efficiency under organic farms. Exposure to more trainings as well as increase in
technical guidance would enhance the efficiency of organic farms.
7.3 Factors influencing efficiency in organic crops
The factors influencing efficiency in the organic crops was analyzed by fitting a
multiple regression equation. The efficiency of farm selected as dependent variable
and it was regressed against different household characteristics. Ordinary Least
Square (OLS) method was employed for estimating regression coefficients in the
regression equation. Due to the limitations in the number of observations, regression
equation was fitted only for wheat crop in Punjab and cotton crop in Gujarat. The
summary of these results are presented in tables 7.20 and 7.21.
Two efficiency parameters (TE-CRS and SE) were used as a dependent variable in
case of organic wheat crop in Punjab. The TE-VRS results were not presented
because it was a very poor fit. Household head characteristics like education,
number of family members participate in the farm, size of land holding (acres) and
227
experience in growing organic wheat crop (years). A dummy variable (Y=1 or N=0)
was used for participation or undertaken any formal training in organic farming.
Another dummy was used for source of organic inputs like seeds and compost etc (if
it is own =1 or bought from market=0).
The best fit among the two regression equations was technical efficiency under CRS
model. Among different factors, education of the household is positive and significant
at 5 per cent level. The participation in the formal training increased the efficiency of
the farms. It is also significant 5 per cent level. None of the other variables were
significant in the regression equation. The increase in number of family labor and
input type both have showed a negative sign, but they are not statistically significant.
The adjusted R-square value for regression equation on scale efficiency was 0.478.
Variables like education, size of land holding and participation in formal training
programs showed a positive relation with scale efficiency. The contribution of family
labor had a negative relationship with scale efficiency. It was statistically significant
at 10 per cent level. The years of experience in growing organic wheat did not
showed any impact on efficiency of farm.
Table 7.20 Determinants of efficiency in organic wheat (Punjab)
Variable CRS- TE SE
Constant -0.668
(-1.622)
-0.642
(-1.742)
Education 0.543**
(2.488)
0.451***
(1.947)
Family labor -0.690
(-1.576)
-0.952***
(-2.050)
Landholding 0.828
(1.903)
1.039***
(2.247)
Experience -0.250
(-1.155)
0.178
(0.775)
Training (dummy) 1.163**
(3.245)
1.275**
(3.352)
Input type (dummy) -0.364
(-1.275)
-0.391
(-1.291)
R-square 0.768 0.739
Adjusted R-square 0.537 0.478
N 13 13
Figures in the parenthesis indicatest values
* Significant at 1 per cent level
** Significant at 5 per cent level
*** Significant at 10 per cent level
228
Table 7.21 Determinants of efficiency in organic cotton (Gujarat)
Variable CRS- TE
Constant 0.414
(1.546)
Education 0.471
(1.799)
Family labor -
Landholding -
Experience 0.388
(1.482)
Training (dummy) -
Input type (dummy) -0.446***
(-1.854)
R-square 0.424
Adjusted R-square 0.251
N 14
Figures in the parenthesis indicatest values
* Significant at 1 per cent level
** Significant at 5 per cent level
*** Significant at 10 per cent level
The determinants of efficiency of organic cotton crop in Gujarat are presented in
table 7.18. The adjusted R-square value of the equation was 0.251. Since there was
a correlation between number of family labor and size of land holding, both these
variable were dropped from the equation. Similarly, the dummy on training was also
excluded because all the growers had a formal training with Agrocel Industries Ltd.
Only the dummy variable on input type showed a negative relation with technical
efficiency. It indicates that the farmers who are using their own inputs in the farms
showed less efficiency when compared to the farmers who buy from outside market.
On the whole, the regression results conclude that the education and formal training
programs have significant impact on efficiency of organic farms. The improvement of
organic crop management skills should also be extended to all the family members
working in the farms. More training and demonstration programs are needed for
farmers to increase the quality of their own organic inputs production.
7.4 Suggestion for expansion of organic farming
Suggestions for strengthening of organic farming were elicited both from organic
farmers as well as organic input producers during the field visits. Some of the major
responses are:
229
a. Creation of separate Green channels for organic foods
The major problem of organic producers is absence of separate Green market
channels for organic foods. Most of farmers were selling their organic food in local
conventional market. Lack of recognition and demand from consumers force the
farmers for distress sales. Especially, the farmers who produce organic sugarcane in
U.P and Maharashtra states have no option to sale the organic cane to sugar
factories. Neither it is beneficial to society nor the farmers getting premium prices.
The Public-Private-Partnership (PPP) model of marketing of organic products at
least at the district level will boost marketing of organic sector in the country.
b. Premium prices should be announced for organic products
Another major problem for organic food is lack of premium prices in the market.
Absence or assurance of attractive prices for organic food puts the organic growers
in risky situation. Lower productivity coupled with lack of premium prices for organic
products yields lower returns per acre than conventional farming. So, the
government should announce premium prices for at least staple food crops like
paddy, wheat, jowar, bajra etc.
c. Creation of demand through more awareness programs
Adoption of modern farming has resulted in land degradation and environmental
pollution besides creating a very unsustainable system for mankind. Many long-term
experiments conducted in the world have proved that the organic farming increases
the crop productivity while sustaining the eco-system. Hence, the role of government
is critical in motivating the farmers towards organic farming by more awareness
programs and field demonstrations. These programs should also be aimed to
influence the ultimate consumers about benefits of organic food.
d. Input put/conversion subsidies for organic farming
Conversion from inorganic to organic farming takes a while for the soil to adjust to
both biological and chemical change processes. Many studies have concluded that
the farmer may face initial years lower yields when compared to conventional
farming. There is a time lag of 2-3 years for attaining competitive yields in organic
farming. Therefore, to encourage organic farming in the country, government should
230
provide input/conversion subsidies to organic growers who are facing these losses in
the initial years.
e. More R& D investments and technical support to farmers
Many developed countries (Europe, USA, Germany etc) are investing huge amounts
in organic agricultural research, extension and development activities. But, our
country investments on organic research and development were very low. There is
no specific extension and technical support division to address the organic farmers
problems. Thus, involvement of state agricultural universities and agricultural
departments is necessary for rapid expansion of organic farming in the country.
f. Cheap and quick certification process
Organic certification and costs involved in this process is another major problem for
growth of organic certified area in the country. Many of the organic farmers are
belongs to small and marginal category. The complex and high costs of certification
process is burden to them during conversion phase. Development of an innovative
cheap and simple certification process would help in bringing more cultivated area
under organic farming.
g. Availability of high quality certified organic inputs
Availability of quality organic inputs is crucial for success of any farming. Due to
absence of quality organic inputs in markets, the illiterate poor organic farmers are
using adulterated organic inputs. It is not only causing yield losses to farmers, but
also leading to loss of faith on organic farming. So, the need of the hour is
development of organic input marketing channels in the country. It will improve both
the productivity and efficiency of organic farming in the country.
******************
Chapter VIII
Summary and Conclusions
India had developed a vast and rich traditional agricultural knowledge since ancient
times and presently finding solutions to problems created by over use of
agrochemicals. Todays modern farming is not sustainable in consonance with
economics, ecology, equity, energy and socio-cultural dimensions. Indiscriminate
use of chemical fertilizers, weedicides and pesticides has resulted in various
environmental and health hazards along with socio-economic problems. Chemical
base farming system is no more beneficial as it requires high input and low return,
resulting migration of youth from rural area to urban area in search of other jobs.
Besides that cultivable area and forest land is shrinking day by day and become
biggest threat to habitat of animals and birds. Though agricultural production has
continued to increase, but productivity rate per unit area has started to decline.
The entire agricultural community is trying to find out an alternative sustainable
farming system, which is ecologically sound, economically and socially acceptable.
Sustainable agriculture is unifying concept, which considers ecological,
environmental, philosophical, ethical and social impacts, balanced with cost
effectiveness. The answer to the problem probably lies in returning to our own roots.
Traditional agricultural practices, which are, based on natural and organic methods
of farming offer several effective, feasible and cost effective solutions to most of the
basic problems being faced in conventional farming system. There is also need to
conserve our traditional seed, some of which have drought resistant properties and
resistant to different pest and diseases. Many long term studies have reported that
soil under organic farming conditions had lower bulk density, higher water holding
capacity, higher microbial biomass carbon and nitrogen and higher soil respiration
activities compared to the conventional farms. This indicates that sufficiently higher
amounts of nutrients are made available to the crops due to enhanced microbial
activity under organic farming.
Organic agriculture is developing rapidly; its share of agricultural land and farms
continues to grow in many countries. According to the FiBL Survey, 2008; almost
30.4 million ha are managed organically by more than 7,00,000 farms (based on
232
2006 consolidated data). Oceania holds 42 per cent of the worlds organic land,
followed by Europe (24 per cent) and Latin America (16 per cent). On a global level,
the organic land area increased by almost 1.8 million ha compared to the previous
year, 2005. Global demand for organic products remains robust, with sales
increasing by over five billion US dollar a year.
India is bestowed with lot of potential to produce all varieties of organic products due
to its agro-climatic regions. In several parts of the country, the inherited tradition of
organic farming is an added advantage. This holds promise for the organic
producers to tap the market which is growing steadily in the domestic market related
to the export market. Currently, India ranks 33
rd
in terms of total land under organic
cultivation and 88
th
position for agriculture land under organic crops to total farming
area. The cultivated land under certification is around 2.8 million ha (2007-08, 1.9%
of GCA). This includes one million ha under cultivation and the rest is under forest
area (wild collection) (APEDA, 2010). India exported 86 items during 2007-08 with
the total volume of 37533 MT. The export realization was around 100.4 million US $
registering a 30 per cent growth over the previous year (APEDA, 2010).
With having such a due importance of organic farming in India, the important event in
the history of the modern nascent organic farming was the unveiling of the National
Programme for Organic Production (NPOP) in 2000. The subsequent accreditation
and certification program was started in 2001. The implementation of NPOP is
ensured by the formulation of the National Accredited Policy and Program (NAPP).
Later, the Department of Agriculture and Cooperation, Ministry of Agriculture has
also launched a central sectoral scheme entitled National Project on Organic
Farming (NPOF) during Xth five year plan. The main objective of the program are:
capacity building through service providers; financial support to different production
units engaged in production of bio-fertilizers, fruit and vegetable waste compost and
vermi-hatchery compost; human resource development through training on
certification and inspection, production technology etc. Development of model
organic farms, market development, developing domestic standards and creating
awareness were other components in the project. To implement the various
schemes, Ministry has prepared detailed guidelines for each component.
233
Setting up of organic input units with capital investment subsidy is one of major
component under NPOF for encouraging the organic inputs production since 2004.
Availability of quality organic inputs is critical for success of organic farming in India.
To promote organic farming in the country and to increase the agricultural
productivity while maintaining the soil health and environmental safety; organic input
units are being financed as credit-linked and back-ended subsidy through NABARD
and NCDC. These units will not only reduce the dependency on chemical fertilizers
but also efficiently convert the organic waste in to plant nutrient resources. Three
types of organic input production units namely; Fruit/vegetable waste units, Bio-
fertilizer unit and Vermi-hatchery units are being supported @ 25 per cent of their
total project costs respectively. Around 455 vermi-hatchery units, 31 bio-fertilizer
units and 10 fruit and vegetable waste units were sanctioned across different states
by NABARD till May, 2009. But, NCDC has so far sanctioned only two bio-fertilizer
units in Maharashtra state.
At this juncture, it is very interesting to know what the present status of these units,
what the production and capacity utilization of each unit and suggestions for
enhancing capacity utilization etc. It is also very important to get the feed back from
promoters for further improving in the implementation of the scheme. However, very
little effort has been made so far to find out the performance of organic input units in
terms of its capacity utilization, cost of production and efficiency. Very few attempts
were also made till now to assess the economics and efficiency of organic farming in
India. Such analysis can provide valuable insights for undertaking appropriate
measures for faster expansion organic farming in the country. With this background,
broadly the present study has been planned to cover the following major issues:
1. To perform SWOT analysis of organic farming to articulate and refine policy
prospective and schemes
2. What is the present status of organic input production in India?
3. To evaluate the capacity utilization and efficiency of production units
sanctioned under NABARD and NCDC
4. What are the constraints in establishment of units and identification of
problems in marketing of organic inputs?
5. To examine constraints in procuring and using organic inputs by the farmers
234
6. What is economics and efficiency of organic farming in India?
7. What are the suggestions for effective implementation of project?
The study addresses the wide range of problems of conventional/modern farming
with the foundation of various research studies. It also covers the status of organic
farming in the World and India. This study presents a model based non-parametric
DEA approach for efficiency analysis of organic input units. Multiple regression
models are also used to estimate the drivers for efficiency in input units. The same
DEA approach is also used for estimating the efficiency between organic and
conventional farming systems. Similarly, the determinants for efficiency in organic
farming are also estimated.
8.1 Major findings and conclusions
A scan of the internal and external environment is an important part of the strategic
planning process. Organic farming has several major strengths than conventional
farming. The major strengths are: organic farming provides safety, healthy and tasty
organic food which lives up to its promise; high comparative advantage in organic
food production such as tea, spices, coffee, rice, wheat, cotton and vegetables etc;
low cost of production; high quality and improved nutrition of organic food; improves
the soil health; fetch premium prices for organic food; environmental sustainability;
high water-use-efficiency; favorable government initiatives like NPOP and NPOF for
promotion organic farming in the country; it preserves traditional varieties and bio-
diversity and increases self life of food etc. With all these strengths, India can
significantly play a major role in the international organic market.
Despite of many benefits in organic farming; why many farmers are not adopting it?
Organic farming has limited weaknesses when compared with conventional farming.
They are: initial productivity gaps in cultivation; it is intensive and needs high labor;
lack of established output markets; poor quality management in production and
processing; less incentives from government; limited research and development
investments on organic farming research; most of the organic markets are
buyers/consumer driven rather than supply/producer driven; lack of clear strategy for
development of organic faming in the country; disjointed producers, processors and
traders; availability of poor or adulterated quality organic inputs; large number of
235
small farms with weak organizational building etc. Until and unless we remove these
weaknesses in the system, the growth of organic farming is questionable!
The Indian organic farming has several opportunities to reap the untapped benefits
in the future. They include: big and growing organic domestic market potential;
growing purchasing power of consumers; nearly 70 per cent of gross cropped area
under rain fed with limited fertilizer application; growing health awareness of
consumers; can reduce heavy subsidies on food and fertilizers; control the nitrate
leaching and CO
2
emissions and finally earn substantial export earnings. If India
could tap all these potentials avenues, the growth in agriculture shall easily surpass
the mile stone of 4 per cent per annum.
There are few possible threats for expansion of organic farming in India. The major
concerns are: high cost of organic food relative to conventional food; costly and
complex nature of organic certification process; lack of sufficient number of
infrastructure facilities and certification bodies; only export regulated organic market;
low awareness about usage of organic inputs; most of the Indian fields are
contiguous and problem of contamination and lastly interest towards introduction of
GM crops in to the country.
Recently, Government of India has taken policy initiatives like NPOP and NPOF for
promotion of organic farming in India. The review of various policies indicates that
some of the nagging policy issues will hinder the growth of organic farming in the
country. In India, APEDA is the highest controlling body for organic certification for
export. Till date there are no domestic standards for organic produce within India.
Although there is no system for monitoring the labeling of organic produce sold
within India, which particularly affects the retail market. Many researchers have
noted that the rapid increase in organic sales and certified acreage around the world
is not matched by an equal rate of growth in the number of organic farms as might
be expected. In an attempt to reduce the inequality of this trend, a number of
alternative methods to guarantee the organic integrity of products have to be
developed for small domestic producers (like PGS). An innovative cost effective
certification method uniform in standards across various countries need be
developed to connect numerous small and marginal farmers in the country.
236
India has enough potential for production of sufficient quantities of organic inputs.
Substantial capacities have been generated for production of different organic
manures through diverse state and central financial assistance schemes. As per
NCOF (2007-08), the total compost/vermi-compost production (includes rural, urban,
FYM and other sources) at all India was 3830.9 lakh tones and area covered by
these units was 1694.8 lakh ha. Similarly, the total green manure production in the
country was 133.5 lakh tones with 13.0 lakh ha area coverage. The total installed
capacity created for production of different bio-fertilizers in the country was 67162
tons. But, their actual production of different bio-fertilizers was 38932.6 tons. This
data clearly indicates that only 58 per cent of their capacity was utilized. However,
the growth in production of bio-fertilizers was quite significant when compared to
2004-05. The results also showed that the total production of bio-fertilizers was the
highest in case of Tamil Nadu followed by Karanataka, Andhra Pradesh and Kerala.
It also concludes that the awareness and usage of bio-fertilizers was higher in south
zone than other zones in India. Among different types of bio-fertilizers, the share of
Phosphorous Solubilizing Bacteria (PSB) production was higher. The status of bio-
pesticides production in India is still in infant stage. The production is slowly gaining
momentum with the increased awareness of the farmers.
To assess the capacity utilization and efficiency of organic input units, a random
sample of 40 vermi-hatchery units were identified purposively from four states of
India. They are namely; Gujarat, Maharashtra, Punjab and U.P states. Similarly, two
fruit and vegetable waste units and four bio-fertilizer (3 NABARD + 1 NCDC) units
were also chosen for present study. The detailed cases on fruit and vegetable units
and bio-fertilizer units are presented in chapter 5.
The primary data was collected from 40 vermi-harchery units through a structured
questionnaire and the data was analyzed. The empirical results were summarized
and elaborately discussed in the Chapter 4. Overall, only three beneficiaries (7.5%)
out of 40 were having vermi-hatchery as their primary occupation. Most of the
sample beneficiaries expressed agriculture as major source of income.
Correspondingly, only 7.5 per cent sample dependent on vermi-hatchery as their
secondary source of income. These results suggest that most of the beneficiaries
are not taking up the vermi-hatchery units in a commercial way.
237
Around 97.5 per cent of the sample promoters are educated. The average size of
family was 6.3. The average no.of family members participating in the vermi-
hatchery units were 1.5. Out of 40 units, only 22 units were functioning on the day of
visit. The main reasons for not functioning are: lack of demand for vermi-compost,
neither JMC visit nor subsidy release from NABARD, death of worms in high temps,
heavy rains and floods. The number of non-functioning units were maximum (100%)
in case Gujarat. NABARD has finished the conduct of JMC visits only in case of 70
per cent units. The remaining 30 per cent units are still waiting for JMC visits and
final subsidy. This indicates a huge delay in the process of subsidy release. Out of
the 28 units (70%) who completed JMC visits, only 19 units have received the final
subsidy amounts. Almost 32 per cent of units are waiting for release of final subsidy.
This was another bottleneck in the scheme where lot of time was consuming for
processing. A lone farmer in the entire sample was succeeded in obtaining the
license/certification for his product. Most of the promoters did not have any
awareness about these aspects.
On an average, the total financial out lay per unit was Rs.5.9 lakh. The outlay was
the highest in case of Maharashtra whereas it was the lowest in Punjab. The results
conclude that there is a huge gap between subsidy released till now (0.93 lakh) and
eligible subsidy (1.5 lakh) per unit. This gap is the highest in case of Gujarat (1.23
lakh) followed by U.P (0.27 lakh) and Punjab (0.25 lakh). Some of the main reasons
for this difference are: non-adoption of NABARD guidelines while establishing the
units and lot of delay in release of final subsidy after JMC team visited the unit.
Nearly, 78 per cent of the units were financed by commercial banks and the
remaining by cooperative banks.
Capacity utilization is a concept refers to the extent to which an enterprise actually
uses its installed productive capacity. The average installed capacity of the sample
units was 150 TPA. But, the mean production was around 76.2 TPA. The average
capacity utilization rate was only 50.8 per cent which indicates nearly half of its full
potential. Across different states, this value was the highest in Maharashtra (124.6%)
followed by U.P (70.0%), Punjab (22.0%) and Gujarat (16.1%). The main reasons for
low capacity utilization were lack of demand, poor production skills and insufficient
infrastructure. Based on promoters past experiences in vermi-compost, the data on
238
different productivity indicators were also collected. In general, the average working
days per annum were 332 days. The average recovery rate for entire sample was
42.7 per cent. The highest recovery rate was noticed in case of Maharashtra (52.5%)
followed by Gujarat (48.0), U.P (39.7%) and Punjab (33.3%). The average gestation
period per cycle for the entire sample was 48.8 days. The capacity utilization under
fruit and vegetable waste units and bio-fertilizer units showed a mix trends.
The state-wise detailed break-up of average cost of production, yield, and gross
returns of sample vermi-hatchery units were calculated. The cost of production of
vermi-compost per quintal in Gujarat was Rs.453. But, the same was Rs.218 per
quintal in case of Maharashtra state. The huge differences between these two
Western states were due to low productivity and capacity utilization in Gujarat.
Similarly, the costs of production per quintal in Punjab and U.P were Rs.433 and
Rs.324 respectively. Over all, the weighted average cost of production per quintal
was Rs.286. The price realization and net margins were Rs.506 and Rs.220 per
quintal respectively. The results indicates significant margin for promoters in this
venture. Among different cost components, the lion share was occupied by raw
materials followed by labor costs and seed stock. Between two regions, the cost of
production was slightly higher (42.8%) in Northern region when compared to
Western region. But, the price realization (49.4%) and net margin (58.4%) per quintal
of compost were higher for Northern region indicating higher demand in that region.
The estimated mean technical, allocative and economic efficiencies of sample vermi-
hatchery units under DEA-CRS model were 63.7, 50.95 and 32.95 per cent
respectively. The results clearly indicate the low technical, allocative and economic
efficiency of sample units. Correspondingly, the mean values for DEA-VRS model
were 83.39, 59.42 and 50.24 per cent. The frequency distribution of technical
efficiency of sample units indicated that about 45 % of the sample units have more
than 90 per cent efficiency (under VRS) where as only 20 % of the sample units
were belonged to that category under CRS assumptions. In case of allocative
efficiency, 40.0 and 47.5 per cent samples fell under less 50 per cent category
respectively under VRS and CRS models. This concludes that majority of the sample
units are inefficient in allocating their inputs. The percentile distributions of sample
units fell below 50 per cent economic efficiency were 85.0 and 57.5 respectively
239
under CRS and VRS assumptions. It signifies that the organic inputs are suffering
from both technical inefficiency as well as allocative inefficiency. The mean scale-
efficiency of the sample was 77.7 per cent. Among different states, the mean
technical efficiency under CRS model was the highest for Maharashtra (0.84)
followed by U.P (0.69), Gujarat (0.55) and Punjab (0.52). However when compared
between regions, slightly higher efficiency was observed in Northern region.
The socio-economic characters of promoters were regressed against efficiency
values to determine the drivers for efficiency in vermi-hatchery units. The results
concluded that the size of the unit, contribution of family labor have shown positive
relation with technical as well as scale-efficiencies. Participation in the training
programs is also enhancing technical efficiency. The age of the unit and subsidies
discouraged the scale-efficiency.
Out of the total sample, only six promoters have repaid entire borrowed loan amount
from bank. Nearly 85 per cent of the sample promoters are having unpaid loans with
bank. Almost, half of the sample promoters were categorized as regular payers by
the bank authorities. Overall, 67.5 per cent beneficiaries obtained preliminary training
in vermi-compost production. Majority of U.P promoters have undergone training
since NCOF is situated in the same state.
Majority of the sample promoters did not face any problem in establishment of vermi-
hatchery units. Very few expressed some difficulties while establishing them. The
major problems are: non-availability of quality worms in the vicinity, lack of sufficient
raw materials, wild boar attacks on compost units, no proper guidance from
NABARD, heavy rains and delay in release of bank loan amounts etc.
Almost all vermi-hatchery units are following direct sales method rather than
depending upon any other intermediary. The quantity of total sales is very high in
direct sales. Nearly half of the sample promoters expressed that they are facing
severe marketing problems in marketing of their compost. The main reasons are lack
of demand, sales on credit basis, very low unit prices and absence of proper input
marketing channels. Lack of certification/licensing facilities are also discouraging
240
promoters to export their compost. Adulteration of organic inputs also exacerbates
the situation.
To elicit the information about the problems in procurement and usage of organic
inputs, about 15 organic farmers per state (a total of 60) were interviewed during
field visits. The sample organic farmers did not express any specific problems in
procurement of seeds. The problems in procurement of compost are lack of
organized marketing channels, absence of product standards and certifications.
Similarly, lack of distribution networks at block level, product standardization and
lack of supervision on adulterated products are the difficulties in case of bio-fertilizer
procurement. Farmers are looking for more awareness/training programs in case of
usage of bio-fertilizers. Most of sample farmers are quite satisfied with usage of
botanical pesticides for controlling the pests and diseases. But, the awareness and
usage of bio-pesticides like Trichoderma, Pseudomonas, Verticillium etc are limited
among sample farmers.
Due to very little accessible information on economics and efficiency of organic
farming in India, an attempt is made to assess it in different crops and states. The
results showed mixed response. In general, organic farming is a production system
which has low productivity levels, needs more labor, require low energy inputs and
has a changing net income levels along with selling prices. Overall, crop economics
results concluded that the unit cost of production is lower in organic farming in case
of cotton (both in Gujarat and Punjab) and Sugarcane (both in U.P and Maharashtra)
crops where as the same is lower in conventional farming for Paddy and Wheat
(both in Punjab and U.P) crops. The mixed results are in conformity with the findings
of Lampkin and Padel, 1994. The DEA efficiency analysis conducted on different
crops indicated that the efficiency levels are lower in organic farming when
compared to conventional farming, relative to their production frontiers. These results
conclude that there is ample scope for increasing the efficiency under organic farms.
The determinants of the efficiency in organic farming are education of the farmer and
formal participation in training programs.
The broad suggestions for promotion of organic input units are collected from the
respondents. The major issues are: prompt and timely conduct of JMC visits; quick
241
and timely disbursement of subsidies to promoters; inclusion of buffaloes, training on
vermi-compost production and insurance components in the going scheme; help in
easy licensing and certification of compost; supply of quality seed stock at cheaper
rates; intervention of NABARD/state Govt./ SAUs in marketing of compost;
encouragement of organic inputs usage by subsidies; creation of market demand by
promoting more awareness programs and finally further increase in subsidy upper
limit in the establishment of input units.
8.2 Policy implications
The Ministry of Agriculture should introduce favorable governmental policies and
strategies for the promotion of organic farming in India. These should include:
A single authority at national level with a well-defined role should be
responsible for the organic sector. An important role would be the
responsibility for regulating and supervising the organic sector at domestic
level, including any foreign bodies active in the country. With regard to export,
the national authority should act as counterpart to the authorities of the
importing countries and could thus strengthen the organic sector's export
potential.
The national authority should link with other institutes, NGOs, farmers
organizations and the private sector in designing strategies to support and
energize the organic sector, particularly in the fields of research, training,
extension, post-harvest handling and marketing. Through linking with the
different sectors, substantial experiences can be brought together and
organized in a strategic and coordinated way.
Current market demand is considerably higher than the supply, a situation
which creates potential opportunities for countries in the short and medium
term. So, India should use this opportunity timely to tap the national and
international markets by framing a well defined strategy on organic farming
sector at the national level. The development of international markets can
also stimulate domestic as well as regional market opportunities.
The quality organic input production (compost, bio-fertilizers and bio-
pesticides) in the country should be further encouraged with latest
242
technologies and improved way of financial assistance so as to reduce the
high dependency on inorganic-fertilizers in a phase manner and to save our
domestic subsidies. It not only protects our soil health but also sustains the
environmental and natural resources.
The organic input units established under various schemes in the country
should be linked up with suitable market channels to improve their capacity
utilization or to make use of entire installed capacities. NABARD /state Agil
dept/ IFFCO should intervene in providing necessary support for their
marketing of organic inputs. Establishment of organic input marketing
channels is the need of the hour for expansion of organic farming in the
country.
The technical efficiency of organic input production should also be enhanced
by imparting more production skills to the promoters. The economic and scale
efficiency of the units should also be improved by providing more technical
guidance, quality seed stock and training programs.
Government should take a lead role in conduct of training and demonstration
programs for creating more awareness about use of different organic inputs
and their benefits. The state agricultural department and state agricultural
universities should also actively involve in these programs and should also
promote through their extension services. So that it will not only boost the
confidence of the farmers and but also increases the demand for organic
inputs. The demand should also be enhanced by subsidizing the usage of
organic inputs in the country.
Creation of Green markets or output market channels/linkages should be
developed for marketing of organic produce in the country. The promotion of
the organic sector in the country must involve development of complete
product chains including some value addition and export strategies.
Support structures should be introduced for small farmers group certification.
Local competencies for inspection and certification are increasing, which
leads to a strengthening of the local organic sector. Methodologies for group
certification are functioning technically, but need political recognition.
Competencies for inspection and certification are increasing in the country
243
and providing opportunities to localize the organic sector. This trend needs
more political strengthening vis -vis international trade.
A comprehensive program/scheme should be developed to assist the farmers
that who want to convert their lands from conventional to organic farming. It
includes some conversion or input subsidies, providing technical guidance
and finally certification of farm. It will dramatically expand the organic farming
in the country and ultimately sustains our food production.
Increase investments are needed on research and development activities in
organic agriculture and to scale-up the projects that have already proven
successful. The efficiency of organic farming should be improved by
disseminating improved methods of cultivation and packages of practices.
The Indian Council of Agricultural Research (ICAR) should take an initiative in
developing common course curricula on organic farming across different
universities in the country.
The establishment of a monthly information bulletin for farmers on local and
international prices for organic food items as well as inputs should be
developed. Similarly, establishment of systematic data/information about
various levels of organic product chains and market opportunities at
internationally, regionally and domestically are needs to be developed.
Regional information exchange on organic farming methods and research
results should be encouraged from international players like FAO, ESCAP,
the International Trade Centre and IFOAM etc to country level players and
finally to local farmers.
Finally, the most important task would be to ensure consistency of
government policies on organic sector. Through focusing of policies and
activities, the organic sector can be developed more quickly and more
effectively. Institutional barriers to the development of the organic sector are
considered greater than the technical and trade barriers. So, most relevant
institutions and partners should be prepared to competently involve in the
promotion of the organic sector in the country.
*********************
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i
Appendix
Table 1 TE, AE and EE of sample units under both CRS and VRS
Model of DEA analysis (%)
DEA-CRS Model DEA-VRS Model
SE
Unit no TE AE EE TE AE EE
1 50.0 18.5 9.2 100.0 38.2 38.2 50.0
2 50.0 18.5 9.2 100.0 38.2 38.2 50.0
3 50.0 18.5 9.2 100.0 38.2 38.2 50.0
4 50.0 18.5 9.2 100.0 38.2 38.2 50.0
5 100.0 33.9 33.9 100.0 36.8 36.8 100.0
6 100.0 33.9 33.9 100.0 36.8 36.8 100.0
7 48.6 31.2 15.2 100.0 75.7 75.7 48.6
8 37.5 23.5 8.8 100.0 89.4 89.4 37.5
9 37.5 72.7 27.3 100.0 98.0 98.0 37.5
10 34.7 34.2 11.9 44.6 30.8 13.8 77.8
11 56.2 55.6 31.3 100.0 88.0 88.0 56.3
12 37.5 62.1 23.3 100.0 68.6 68.6 37.5
13 62.5 85.3 53.3 73.9 81.4 60.2 84.6
14 82.5 28.9 23.8 83.9 29.3 24.6 98.3
15 82.3 56.8 46.7 83.4 64.8 54.0 98.7
16 80.4 26.2 21.0 80.5 26.4 21.3 99.9
17 50.0 58.3 29.1 72.4 87.7 63.5 69.0
18 68.3 68.3 46.6 69.6 67.8 47.2 98.2
19 37.5 57.8 21.7 83.0 69.6 57.8 45.2
20 56.2 52.0 29.2 83.5 63.9 53.4 67.4
21 25.4 45.4 11.5 77.5 39.8 30.9 32.7
22 100.0 100.0 100.0 100.0 100.0 100.0 100.0
23 44.1 82.5 36.4 63.6 87.4 55.6 69.4
24 46.7 92.1 43.0 53.4 80.9 43.2 87.4
25 80.7 49.5 39.9 81.6 51.5 42.0 98.9
26 79.2 55.1 43.6 80.6 59.0 47.6 98.2
27 79.6 53.3 42.4 80.8 55.8 45.1 98.5
28 71.0 25.6 18.2 75.4 30.5 23.0 94.2
29 100.0 98.7 98.7 100.0 100.0 100.0 100.0
30 100.0 19.3 19.3 100.0 24.8 24.8 100.0
31 40.5 64.4 26.1 46.4 65.8 30.5 87.4
32 40.5 64.4 26.1 46.4 65.8 30.5 87.4
33 40.5 43.8 17.8 45.8 43.8 20.1 88.5
34 40.5 43.8 17.8 45.8 43.8 20.1 88.5
35 75.0 12.8 9.6 81.8 16.3 13.4 91.7
36 75.0 12.8 9.6 81.8 16.3 13.4 91.7
37 100.0 88.7 88.7 100.0 100.0 100.0 100.0
38 37.5 88.8 33.3 100.0 62.9 62.9 37.5
39 100.0 71.1 71.1 100.0 82.3 82.3 100.0
40 100.0 71.1 71.1 100.0 82.3 82.3 100.0
ii
Photographs of vermi-hatchery units in Gujarat state
iii
Photographs of vermi-hatchery units in Maharashtra state
iv
Photographs of vermi-hatchery units in Punjab state