TOWARDS DOUBLING COTTON FARMER INCOMES IN MAHARASHTRA

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1 TOWARDS DOUBLING COTTON FARMER INCOMES IN MAHARASHTRA The Government of India in its Annual Budget set a policy target of doubling farmers income by In February, 2018, the Ministry of Agriculture and farmers welfare organised a conference on Agriculture2022- Doubling Farmers Income (DFI). At the event, the Prime Minister shared his aim to overhaul the sector and achieve DFI through his four-pronged strategy of (1) reducing costs of cultivation through neem-coating urea and soil health cards; (2) fetching better prices for produce through new cost plus-pricing MSP formula, reforming agri-markets through e-nam and upgrading 22,000 village-markets; (3) reducing wastages in value-chain through proper storage, logistics, food processing, and implementing Operation Greens-TOP (tomatoes, onions and potatoes); and (4) diversifying sources of farmer incomes through blue, organic, sweet revolution. Doubling real income of farmers till over the base year of , requires annual growth of per cent in farmers income (Niti Aayog, 2017). This implies that the on-going and previously achieved rate of growth in farm income has to be sharply accelerated. Therefore, strong measures will be needed to harness all possible sources of growth in farmers' income within as well as outside agriculture sector. CONSTRAINTS OF COTTON FARMERS Despite having more than 1/3rd area in the world under cotton cultivation and being the second largest cotton producer, India s yield is only about 568 kg/ha lint as compared to the world average of more than 770 kg/hectare. And while average cotton productivity in India had increased from 302kg/ha in 2003 to around 570 kg/ha in 2017 (AICRP, 2017), with the adoption of Bt cotton hybrids, favourable government policies and vigorous promotion of technological adoption in certain regions, the productivity has plateaued in the last five years, stagnating in the range of kg/ha. The prevailing low productivity trend leads to lower profitability of cotton farming and a threat to the livelihood security of cotton farmers. Statewise Yield for Cotton (kgs/ha) Karnataka 769 Andhra Pradesh 719 Rajasthan 692 Haryana 683 Tamil Nadu 680 Gujarat 673 Source: ICAC Telangana 653 Punjab 598 Madhya Pradesh 596 All India 568 Maharashtra 398 Orissa 375 Maharashtra, the largest cotton growing state in the country, covers about 34% of total cotton area and contributes to 17% of the production. However, in comparison with most other states in range, Maharashtra produces significantly low yields of 398 kgs/ha, due to a variety of reason including pest attacks, poor soil quality, lack of irrigation among others. Complexities faced by cotton farmers in Maharashtra that contribute to low productivity include: Several genetically modified cotton hybrids have been approved for cultivation under specific conditions. But as there are no strict regulations regarding restricting their cultivation to the recommended areas, farmers cultivate them wherever they want. Due to lack of knowledge about seeds and non-availability of good quality seeds, farmers end up using even spurious Bt seeds available to them in the local market. Large areas of the cotton belt are under rainfed conditions; the probability of increasing yield in such areas is very remote.

2 Due to lack of proper pest management practices, major outbreaks of sucking pests especially white fly in past seasons have been major causes of low productivity, and in season Pink bollworm resistance to Bt protein is leading to widespread infestations, with an unusual and alarming outbreak affecting most of the cotton growing districts in Maharashtra. Resistance to major insecticides is the result of abundant use of various insecticides without any knowledge of their Economic Threshold Levels (ETL). Due to lack of knowledge and misguidance by commissioned agents, farmers use wrong pesticides to tackle a specific pest, that too of poor quality. This has also led to development of resistance in pests against such chemicals/ pesticides. Soil degradation due to continued use of land without enriching it from time to time, is another factor responsible for reduction in cotton yields. Lack of farmers awareness about Best Management Practices for production of good quality cotton is also a concern. Machine picking has not currently proven to be feasible as is not yet financially feasible for smallholder, among other reasons, especially for plant types of cultivars recommended by technical experts and currently being grown by farmers. DOUBLING INCOME OF COTTON FARMERS Doubling of income from cotton production itself can happen either by increasing yields (and quality/characteristics) or by reducing production costs or both, provided that the market demand remains sustainable. Appropriate technologies and innovative strategies are therefore needed either to increase yields or reduce production costs. Currently, India has access to most cotton technologies and agri-inputs that are available to all other advanced countries, including Australia, Brazil, USA and China, etc. More than 90% of the 10 to 13 million hectares in India are saturated with Bollgard-II Bt-hybrids. However, yields at an average of 500 kg lint per hectare were stagnant for more than a decade and are now on a declining trend despite the access to all the latest technological advances. Currently, there is no prospective promising technology in sight from the private or corporate sector, either in the form of GM or otherwise, that has the potential to trigger a change towards yield enhancement. Therefore, there is an imminent need to seriously introspect and explore multiple interventions, eventually to develop roadmaps to establish alternative cotton production systems to deliver high yields from low production costs. The proposed alternatives also need to be robust enough to inspire confidence in farmers to make a change. According to Dr K R Kranti, former Director CICR, to double farmers income, the productivity needs to be raised by 40% to 700 kg/ha while ensuring that there is only a marginal increase in the operational costs. There are small pockets of farmers in India that are able to produce yields of kgs lint/ha ( ie 3000 to 4000 kg seed-cotton per hectare), with the existing technologies of early sown hybrids or varieties cultivated in deep black cotton soils, grown for about days under drip irrigation, plastic mulching and high levels of fertigation. However, most of these high yield farms are based on high input management and cannot be replicated in the fields of small farmers, especially those having marginal soils under rain-fed conditions. Therefore, there is a need to explore those technological options and knowledge interventions that can be most relevant to the vast majority of farmers who cultivate cotton on marginal soils with low inputs, especially in rain dependent conditions that constitute 60% of India s cotton acreage. And while increased productivity is necessary for augmenting farm income, rising productivity alone will not help to generate surplus income. Farming households in developing countries including India, that generate surplus income rarely derive the same from a single source: there are often several crops grown (some for food, others for sale) as well as a mix of other income generating activities through the year.

3 Livelihood diversification can address many constraints to income growth, conditions like crop failures and builds capacity for investment and is reported to be associated with providing growth and stability in income and consumption in a period of time. This is supported by empirical studies that have consistently shown that diversification to non-farm livelihood strategies rather than relying only on single crop farming, enables households to have better incomes, enhance food security, increase agricultural production by smoothing capital constraints and also to better cope with environmental stresses (Barrett et a., 2001; Liu et al., 2008). In addition, there is substantial evidence for the role of diversification in building household capacities to stabilize income and food consumption over time (Reardon et al., 1992; Block and Webb, 2001). Single crop production enterprises are also subject to a high degree of risk and uncertainty because of seasonal, irregular and uncertain income and employment to the farmers. Crop diversification, including intercropping of rainfed crops is an important risk minimizing strategy for drought proofing in the scarce rainfall zones and cotton growing areas. In contingency situations such as delay in onset of monsoon, adoption of intercropping for delayed plantings can be remunerative instead of sole cropping. Diversification also creates an ongoing set of choices for family members about where to invest their time and other limited resources, in order to maximise the overall benefits to the family. In the context of the cotton farmer this could mean expansion of livelihoods beyond cotton to other crops, intercropping (Nitrogen fixing legumes), 2nd or 3rd Crop cycle (Rabbi and summer crops) and kitchen gardens for subsistence. Beyond agriculture, supplementary income can also be achieved through livestock rearing, agribusiness models, custom hiring or implement banks and other agri-allied services. PROPOSED FRAMEWORK : TOWARDS DOUBLING COTTON FARMERS INCOME (TDFI) IN MAHARASHTRA While the goal of doubling all farmers incomes within the given timeframe proposed by the government is a daunting task, IDH recognises that collective and targeted efforts towards increasing cotton farmers' productivity and income over the long term in Maharashtra, directly contributes to developing economic resilience of the farmer, while potentially developing sustainable and resilient agricultural systems. Figure 1 Proposed Framework

4 The framework above lists a range of intervention strategies that cover reduction in cost of cultivation, increase in yield, adhering to market requirements, moving beyond the cotton crop, as well as non-agricultural sources of income. Through the stages of the framework we are trying to understand and potentially capture the incremental value added by undertaking the various interventions and how these can be operationalised to positively contribute to increasing farmer s incomes. Some strategies recommended by technical experts, that have influenced this framework include: Varietal Traits: Short duration ( days); compact architecture; high harvest index and resistance to sapsucking pests and high ginning% (>40%). Land preparation: Stale seed-bed; nursery raised seedlings or treated seeds; planting in north-south row orientation; precision high density planting at 10cm plant-to-plant spacing and planting on ridges Production Practices: Cotton legume-based cropping systems as cover-crop / inter-crop or crop-rotation; mulching with plastic sheets or crop residues or newspapers; conservation agricultural practices and minimum tillage; water harvesting & precision irrigation and application of organic manures, compost & precision fertilizer application based on soil or plant analysis. Management Interventions: Canopy management; square & boll retention management; green manure crop and incorporation; ecological engineering, integrated pest management (IPM) and insect resistance management (IRM) for pest, disease and weed management, timely termination and crop residue management. Multi-crop model: Expansion of livelihoods beyond the key cash or food crop to other crops, Intercropping (Nitrogen fixing legumes), 2 nd or 3 rd Crop cycle (Rabbi and summer crops), Kitchen Gardens for subsistence. Non-agricultural diversification of livelihoods: Livestock rearing, Agribusiness models, Custom hiring or implement banks, other agri-allied services. OBJECTIVES OF THE STUDY The objectives for commissioning this study are as follows: Qualify and quantify the various interventions that could potentially contribute to increasing cotton farmers income in Maharashtra Propose interventions based on findings to design project implementation that could be prototyped by members of the Maharashtra Cotton Water Platform (MCWP) Use the findings of the study to garner private sector interest in investing in such interventions for cotton farmers in Maharashtra Propose convergence with government schemes and projects and potentially even recommend policy changes STRUCTURE OF THE REPORT A. CONTEXT SETTING Profile of Cotton Farmers in Maharashtra Develop a profile for cotton farmers in Maharashtra detailing average yield, productivity, cost of production, incomes, farm sizes, access to water, soil quality, access to extension, popular seed varieties, major pests, sowing season, access to finance, complementary crops etc. Or even data points by region/districts if available and more meaningful.

5 Constraints of Cotton Farmers in Maharashtra - An identification of the current limiting factors that plague cotton farmers in Maharashtra, including but not limited to pink bollworm infestations, poor soil quality, unpredictable rains, no access to irrigation, low yields, spurious seeds and other low quality inputs etc. This would also include an analysis of the economics of these constraints in terms of their contribution to limiting yields or income. Government programs or Schemes available An inventory of the various government schemes, subsidies, polices etc (eligibility and process) that could have impact on cotton farmers as well as ongoing government projects being implemented in and around the cotton belt; additionally, an analysis of how these could be leveraged towards increasing farmer s incomes. B. ANALYSIS OF IDH TDFI PROPOSED FRAMEWORK Analysis of proposed Interventions A detailed commercial evaluation of the proposed interventions in terms of cost of implementation, enabling environment required, assumptions made as well as potential for each intervention to contribute to an increase in farmers income. Analysis may be presented in the form of a Cost matrix. See attached Ppt File Cost Matrix. This could also include suggestions of key interventions that have not been accounted for by the proposed framework, as well as the rationale for including the same. Interventions will be farm based or agriculture aligned only, with unit of analysis being the cotton farmer. Establish an average cotton farming household s income (from cotton) for Maharashtra (Rainfed, 1.5 Ha, yield 380). Assume average family size of 4 persons Establish an average cost of production (for cotton farming) in Maharashtra Develop an inventory of feasible interventions Calculate cost of each proposed intervention eg. Window based pest management or a Livestock program. This cost could be an average or a range. Calculate the increase in income based on each intervention eg. 26% increase in income through access to extension service, 5% reduction in cost through in-house production of organic inputs Provide assumptions made, sources used for calculations Validation or amendment of the proposed framework Plot this information in a graphic or tabular format eg. Cost matrix, TDFI incremental framework etc. Alignment with Strategy for Doubling Farmers Income by Outlining alignment between proposed interventions of this paper and recommendations (eg. DFI Vol 8B) made by the Committee on Doubling farmers Income as well as the Prime Minister s four-pronged strategy of (1) reducing costs of cultivation (2) fetching better prices for produce; (3) reducing wastages in value-chain and (4) diversifying sources of farmer incomes. Stakeholders Mapping Mapping of crucial stakeholders relevant to the different intervention proposed as part of the framework (including but not limited to FPO s, Cotton Gins, Spinning Mills, Retailers, Traders, APMC s, Village/District/State level government authorities, NGO s, Academic/ Research Institutes, Banking & Financial Institutions, Agriculture Service Providers etc.) Identify frontrunners in the space. Water as an enabling factor As the MCWP has a shared focus on water in cotton production, it would be important to evaluate the role of access to water as an enabling factor and quantify its potential to multiply impact across different interventions. Timely availability of water is an important prerequisite for high yields, crop diversification, taking a second crop and managing livestock.

6 Other enabling factors Farmers operates in a unique context of interrelated regulatory, organizational, political, cultural and physical conditions that facilitate and/or hinder them in improving their output. Some factors that that shape an enabling environment include finance, labour, value chain engagement, enabling policies, infrastructure, gender relations etc. An assessment of the factors that create an enabling environment in the Maharashtra context can be undertaken. C. RECOMMENDATIONS/PROPOSED SOLUTIONS Proposed model - Using the findings of the report, a few models would be proposed that could focus on a single intervention or a combination of a few. These models would be identified and proposed based on a few criteria applicability to the local context in Maharashtra (Vidarbha and/or Marathwada), financial feasibility, evidence base, sustainability of the model, proposed impact, similar successful case studies etc. It would also be important to enumerate assumptions made when developing proposed models for example availability of water, certain inputs, aggregation of farmers, government schemes etc. Successful case studies context Highlighting a few case studies that have been successful at increasing farmer incomes through different interventions or combinations of intervention (eg. BCI Sustainability Standard, Spectrum Crop Diversification, Cotton Connect Gender Integration) DELIVERABLES The intention of this assignment is to develop a report that highlights key interventions and potential models that would contribute to increasing incomes for cotton farmers in the rain-fed areas of Maharashtra. The deliverables would include: i. A concise and well-structured report (100 pages) highlighting the scope defined above along with a tabular/graphical summary of findings/recommendations ii. Executive Summary (4-5 pages) iii. Slide deck (PowerPoints presentation slides) summarising key findings and proposed interventions iv. Spreadsheet detailing calculations and assumptions made for analysing economics of proposed interventions v. Stakeholder consultations with members of Maharashtra Cotton Water Platform (Start of project, outreach through network, review of findings, feedback on models) EXPRESSION OF INTEREST: Consultants/ organizations are invited to send in their expression of interest to Jasmer Dhingra dhingra@idhtrade.org; cc: Edel Monteiro monteiro@idhtrade.org by the 20th June 2018 Kindly include: - A declaration of expertise on the subject and methodology - Capacity and capability of the team that will work on the study - Broad timeline proposed to deliver the assignment

7 ANNEXURES ABOUT THE MAHARASHTRA MULTI-STAKEHOLDER PLATFORM: Government Resolution issued 1 on 18th May, 2017 by the Water Resources Department of the Government of Maharashtra constituted the Steering Board of a Multi Stakeholder Platform (MSP) to facilitate optimal, sustainable and efficient approaches and solutions in water management in the State of Maharashtra. The MSP brings together key public, private, and civil society stakeholders to assess priorities and develop concrete proposals that can help improve the management of water resources in the State Water Resources Group of the World Bank Group will provide secretariat services including analytical and technical support to the MSP. The first meeting of the MSP Steering Board held on 7th August 2017 under the chairmanship of the Hon. Chief Secretary, Government of Maharashtra approved the formation of the following Workstreams: a. Water and Livelihood Security for Rain-fed Agricultural Areas b. Command Area Water Productivity (CAWP) c. Enhancing Urban and Industrial Water Security Water and Livelihood Security in Rain-fed Agricultural Areas Workstream The workstream seeks to deliver coordinated, multi-stakeholder solutions at scale to promote water security and de-risk livelihoods for farmers in rain-fed areas, through a combination of programmatic approaches, partnership models, financing mechanisms, and policy interventions. One of the two taskforces covered under this workstream include is the Maharashtra Cotton Water Platform: (a) Maharashtra Cotton Water Platform The Maharashtra Cotton Water Platform was formed in 2015 under the guidance and leadership of the Department of Agriculture, bringing together representatives from the public sector, industry and civil society to deliver innovative solutions to improve water use efficiency and increase the income of the cotton farming communities; and support partnerships with cotton supply chain actors for offtake arrangements and farm-level interventions. 2030WRG, in collaboration with IDH- The Sustainable Trade Initiative, under an MOU signed in April 2017, will collaborate with each other for program activities developed under the Maharashtra Cotton Water Platform. ABOUT COTTON WATER PLATFORM (CWP): IDH and 2030WRG will bring together representatives from the public sector, industry and civil society to collaborate with each other for program activities developed under the Maharashtra Cotton Water Platform, including: Accelerate partnership models for water-efficient and climate-resilient agriculture, focusing on a combination of improved practices, technology acceleration for water use efficiency, decentralized water storage, and market linkages. Promote sustainable commodity supply chains, aligned with global standards and best practices, in collaboration with institutional buyers and global brands. Deliberate on finance facilitation models by third parties for water-efficient technologies and largescale programmatic implementation, including blended finance models and corporate social responsibility contributions. 1 Government Order No- Misc-2017/19/ (07/17)/WR (Est.) dated 18 May 2017

8 SAMPLE FINDINGS OF STRATEGY FOR DOUBLING FARMER S INCOME 2022 VOLUME 8B