India - Eastern Region Foodgrains Production Review (Assam)

Document of The World Bank FOR OFFICIAL USE ONLY CONFIDENTIAL Report No. 1175-IN INDIA EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) August 25, 1976 South Asia Projects Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS US$1.00 = Rupees (Rs) 8.75 Rs 1 = US$0.114 Rs 1 million = US$114,000 WEIGHTS AND MEASURES (Metric System) 1 kilogram (kg) = 2.20 pounds 1,000 kg = 1 metric ton = 0.98 long ton 1 meter (m) = 1.09 yards = 3.28 feet 1 kilometer (km) = 0.62 mile 1 hectare - 2.47 acres 1 square kilometer (km2 = 7.47 bighas = 100 ha 2 = 0.39 square mile 1 cubic meter (m ) = 35.39 cubic feet ABBREVIATIONS AAIDC - Assam Agro Industries Development Corporation AAU - Assam Agricultural University ASMCS - Assam Cadre Management Cooperative Society ARDC - Agricultural Refinance and Development Corporation ASC - Assam Seeds Corporation BDO - Block Development Office CAD - Command Area Development CLMB - Assam Cooperative Central Land Mortgage Bank FCI - Fertilizer Corporation of India GOA - Government of Assam GOI - Government.of India GPL - Gaon Panchayat Level (Societies) HYV - High Yielding Variety IES - Intensive Extension Service IDA - International Development Association NCDC - National Cooperative Development Corporation NSC - National Seeds Corporation PLMB - Primary Land Mortgage Bank RBI - Reserve Bank of India SFDA - Small Farmer Development Agency VLEW - Village Level Extension Worker VLW - Village Level Worker ASSAM RICE SEASONS Ahu (pre-monsoon) - April-June/July Sali (monsoon) - June/July-November/December Boro (rabi) - Jan/Feb-May FOR OFFICIAL USE ONLY CONFIDENTIAL INDIA EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Table of Contents Page No. THE GENERAL REPORT Equivalents Selected Data and Indicators 1. INTRODUCTION ....................................... 1 The Eastern Region Foodgrains Production Review .... 1 The Foodgrains Production Review of Assam .......... 1 II. POTENTIAL FOR DEVELOPMENT .......................... 2 III. PRODUCTION STRATEGY AND TARGETS .................... 5 Proposed Development Strategy ........ ........... 5 Basic Considerations .......................... 5 Target Groups ................................. 5 Target Areas .................................. 7 The Elements of Production Increase ........... 8 Projections of Production .......................... 8 Effect on Total Food Production and Consumption ................................. 12 IV. SECTOR PRIORITIES AND ISSUES ....................... 13 Prerequisites for Development ...................... 13 Research and Development ...................... 14 Development of Irrigation ..................... 15 Transfer of Technology ........................ 16 Incentives ................................... 18 Demand for Inputs and Credit .................. 19 Distribution of Inputs ........................ 19 Agricultural Credit ........................... 22 Planning and Implementation ................... 23 Policy Implications and Sector Issues .............. 24 V. THE PROPOSED IDA PROJECT ***********2............... 27 Outline of Project ................................. 27 Extension ..s*********************.................. 28 Adaptive Research ******************................ 28 Groundwater Development Program .................... 28 Command Area Development ........................... 29 Project Preparation ...............******........... 30 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - 2 - APPENDIX - Surface Water Irrigation Surveys: Draft Terms of Reference STATISTICAL APPENDIX ANNEXES 1. Potential for Foodgrains Production 2. Agricultural Extension 3. An Expanded Program of Adaptive Research 4. Groundwater Development 5. Command Area Development 6. Seed Procurement and Production 7. Report on Institutional Credit for Agriculture 8. Input Supplies, Marketing and Storage 9. Gaon Panchayat Level Societies 10. Reaching the Rural Poor CURRENCY EQUIVALENTS UJS$1.00 = Rupees (Rs) 8.75 Its 1 = US$0.114 Rs 1 million = US$114,000 WEIGHTS AND MEASURES (Metric System) 1 kilogram (kg) = 2.20 pounds 1,000 kg := 1 metric ton = 0.98 long ton 1 meter (in) = 1.09 yards = 3.28 feet 1 kilometer (km) = 0.62 mile I hectare = 2.47 acres 1 square kilometer (km2 7.47 bighas = 100 ha 2 = 0.39 square mile 1cubic meter (m ) = 35.39 cubic feet ABBREVIATIONS AAIDC Assam Agro Industries Development Corporation AAU Assam Agricultural University ASMCS Assam Cadre Management Cooperative Society ARDC Agricultural Refinance and Development Corporation ASC Assam Seeds Corporation BDO Block Development Office CAD Command Area Development CLMB Assam Cooperative Central Land Mortgage Bank FCI Fertilizer Corporation of India GOA Government of Assam GOI Government of India GPL Gaon Panchayat Level (Societies) HYV High Yielding Variety IES Intensive Extension Service IDA International Development Association NCDC National Cooperative Development Corporation NSC National Seeds Corporation PLMB Primary Land Mortgage Bank RBI Reserve Bank of India SFDA Small Farmer Development Agency VLEW Village Level Extension Worker VLW Village Level Worker ASSAM RICE SEASONS Ahu (pre-monsoon) - April-June/July Sali (monSoon) - June/July-November/December Boro (rabi) - Jan/Feb-May ASSANs SLTED DATA AND INMCATORS (figures in parentheses are for India) P tion and the Land Total Population (1971) 14.6 million of vhichs rural 13.3 million : 91% plains 14.2 million = 97% Population growth rate (average) 1901-1961 2.4% p.a. (1.2%) 1961-1971 3.0% p.a. (2.2%) Literacy rates malfis 37% (40%) femnles 19% (19%) Total Land Area (1970/71) 7.8 mllion ha of sihich: cultivable 3.1 dllion ha plains 6.3 M11ion ha Percentage of Total Area sown 28% (46%) Density of Population (1971) total state 186 per km2 (167) plains 225 per km2 culilvable land 471 per km Incomi and aSployment Net State Domestic Product (1973/74) R9.46 billion $1.08 billion of which: agricultural crops 4b% tea 7 1/2% other agriculture 5 1/2% secondary industry 18% commerce, etc. 13% services 12% Per capita income (1973/74) R600 - $68 ($120) Total work force 4.09 million of which: cultivators 2.28 million agric. laborers and others 0.85 million Administrative Areas No. of' districts 1974 10 " "subdivisions, 1974 23 CD blocks, 197 - 130 revenue circles, 197k 76 towns, 1971 72 villages, 1971 22,000 Range of district population sizet sma3lest (N.C. hills) 76,000 largest (Kamrup) 2.8 million Ag ture Total number of holdings (1970/71) 1.96 million of which: less than 0.5 ha 0.65 million 33% 0.5-1.0 ha 0.k7 million 24% 1.0-2.0 ha 0.47 million 24% Average size of holding 1.k7 ha (2.30). Area under principal crops (1970/75) 2.65 million of which: foodgrains 2.2k million - 85% paddy 2.06 million = 78% Average yields (kg/ha) 1970/71-1974/75 rice 101 (1104) wheat 1126 (1294) Jute 1340 (1206) Cropping intensity (mission est.) 125% % of not area under irrigation (mission est.) 6.7% Food ains Production Rate of growth per annum: total foodgrains productions 1952/53-1964/65 0.8% (2.5%) 1964/65-1973/7 1.1% (1.7%) total cultiiated areat 1952/53-1964/65 1.3% (1.2%) productivity: 1952/53-1964/65 -0.8% (1.8%) Producbion per head (kg per annum) 1963/64 163 1974/75 128 Ferti Lzer consumption (1971/72) Nitrogen 1.5 kg/ha (9.7) All Ltrients 2.5 kgAa (14.5) % of seed requirements purchasea as c-tified/tested seed 4% Miscellaneous Indicators ELectricity generatio-n(1974) 540 million kwh Electricity consumption (1973-7h) 1406 million kwh of whicht tea gardens 58 Mllion kwh irrigation 7 million kwh Per capita consumption (1972/75) 28 kwh (97) % of villages electrified 6% (26%) I. INTRODUCTION The Eastern Region. Foodgrains Production Review 1. The Eastern Region of India - comprising the States of Assam, Bihar, Orissa, West Bengal and part of Uttar Pradesh is regarded as the coutry's "rice bowl". These states share many common characteristics. Most of the region enjoys moderate to heavy monsoon rains and contains large areas of fertile, alluvial soils, while there is a large, mainly unexploited potential for both surface and groundwater development. Yet foodgrain yields are generally much lower than those achieved in other states, production has barely kept pace with population, rural institutions are generally weak, and most indicators of social and economic development are lower than for the rest of India. Population pressure is intense, and farms are generally small and heavily fragmented. The Government of India (GOI) looks to the region for about half of all the increased foodgrain production required during the period of the fifth plan, but recognizes that, because of the unusually severe constraints to development in the region, a concerted effort will be necessary to release its full potential. 2. During the course of discussions between the GOI and the Bank which were held in New Delhi in November, 1974 under the direction of Sir u Crawford, it was agreed to undertake a joint review of the Eastern Region, to assess the agricultural potential of the region, to identify critical constraints, and to help design action programs and identify projects to achieve a quick increase in foodgrains production. While the primary objective was to increase food production, it was agreed that the review should also give attention to the problem of the small farms and maeasures to increase rural incomes and employment. The Foodgrains Production Review of Assam 3. The GOI and the Bank agreed to undertake the Eastern Region Food- grains Production Review in stages by conducting separate reviews of indivi- dual states over a phased program. The first of these reviews was under- taken in Orissa in September 1975, and an Agricultural Intensification pro- ject identified during the review is presently (May 1976) being appraised by IDA. A brief review mission visited West Bengal in November, 1975 and discussed its report-with Government in March, 1976 The third exercise was held in Assam during February/March 1976 as a joint operation between the GOI, the Government of Assam (GOA) and a team of staff members and consultants from the Bank and the FAO/IBRD Cooperative Programme in Rome 1/. 1/ Members participating in the mission were Messrs. Burrows (Mission Chief), Allison, Harrison, Krafft and Rodger (IDA), Hocombe (FAO/IBRD), Burt (Consultant) and Ms. Murray (Research Assistant). Messrs. Bisht and Holla of the ARDC were mainly responsible for the work on credit. Dr. Kalkat and Mr. Joseph of the Ministry of Agriculture, New Delhi, visited Assam for brief periods to participate in discussion. Mr. Burrows revisited India in June 1976 to discuss the draft report with GOI and GOA. -2- 4. Under its general terms of reference, the mission had three major functions: (a) to reach a judgement about foodgrains production and demand prospects in Assam over the next five to ten years; (b) to help identify a short-term action program to promote foodgrain output, including possible projects for IDA financing and further preparatory work; (c) to review key sector issues.- 5. The main part of the report provides a brief summary of the mission's conclusions in regard to the potential for increasing foodgrains production, recommends the general outline of a strategy for increasing production, identifies the major problems to be overcome, and the priorities for action. The report then presents the mission's recommendations for a project designed to increase foodgrains production. More detailed technical justification and analysis is provided in the supporting annexes. 6. The views contained in this report are those of the World Bank staff only, and do not necessarily reflect the policy of the central or state governments or the views of any of their officers. However, in preparing the report, the mission has taken account of the views of the many government officers and other experts who participated in the review, and it is hoped that there is a wide measure of agreement in regard to both the general sector strategy and the priorities for short-term action. II. POTENTIAL FOR DEVELOPMENT 7. The State of Assam can be most easily identified as that part of India through which the Brahmaputra River flows. With a total area of 78,500 km2 and a population of about 17 million, it is the largest state of the northeast region, an isolated group of five states and two union territories which is almost surrounded by Bhutan, Tibet and China to the north, Burma to the east, and Bangladesh to the south. Assam, like other Eastern States, is densely populated and pressure on available land is intense. Overall population density in 1975 is over 200 people per square kilometer but, because less than half the land is cultivable, there are more than five persons per cultivated hectare in the plains. Over 90% of holdings are less than 3 ha in size, and most of these are further fragmented. 8. The economy is still heavily dependent on agriculture. In 1971 the agriculture sector contributed over 57% of total state income and occupied nearly 77% of the total working force. About 76% of agricultural output is -3- accounted for by crop production (referred to as "agriculture proper" in official documents), 13% by tea production 1/, 6% by animal husbandry and only 4% by forest and fishing. Most of the cropped area is used to produce food- grains .(2.2 million ha out of about 2.7 million ha), with rice being the predominant grain. The most important commercial crops are tea (186,000 ha), oilseeds (183,000 ha), jute (120,000 ha) and sugarcane (42,000 ha). 9. The scope of this report is limited to foodgrains, which we have defined as rice, wheat, coarse grains and pulses only. By far the most important foodgrain in Assam is rice. In 1974/75 it accounted for 92% of the area under foodgrains, and about 80% of the total area under annual crops. Since only about 7% of land is commanded by irrigation, present land use in Assam is predominantly rainfed paddy production. 10. Assam comprises three topographical and ecological zones: the Brahmaputra Valley, thE! Mikir and North Cachar Hills, and the Southern Barak Valley (Cachar District), which is separated from the Brahmaputra Valley by the Cachar Hills. The focus of the report is mainly on the alluvial valley - the seven plains districts of the Brahmaputra Valley, together with Cachar District - which are the main rice production areas. The potential for agricultural production in the plains is considerable (see Annex 1). Exclud- ing the tea gardens (180,000 ha), the cultivated area of Assam amounts to about 2.6 ta,ilion ha. Of these, about 1.8 million ha comprise the alluvial deposits of the Brahmaputra. These soils are relatively fertile and generally very suitable for rice production. Average rainfall is very high (usually over 2,000 mm) and the main monsoon season tends to be longer than in the other northeastern states. Also, because of the humid and relatively cool conditions during the rest of the year, the rate of evapotranspiration is low. and residual moisture is only.slowly depleted. Thus the risk of crop failure in the main monsoon (Kharif) season is less than in most Indian states and over much of the valley it is technically possible to produce two rainfed crops a year. 11. The long monsoon and low rates of evapotranspiration in the winter season mean that irrigation is much less critical in Assam than in most of India. The role of irrigation is either to prolong the season, to supplement rainfall during the season, or to supplement residual moisture during the Rabi season. The scope for year-round surface flow irrigation in the valley is limited because of the topography, but groundwater resources are apparently very large indeed (see Annex 4). Most of the valley has ground- water available within a few meters of the surface, sometimes near enough to reach the surface by capillary rise even at the end of the dry season. This great reservoir offers the possibility of an almost .limitless source of water which could be exploited at fairly low cost. 1/ Including value-added in tea processing, the tea industry contributes 12-13% of Assam's domestic production and a little over half of India's total production of made tea. -4- 12. Despite these apparent advantages, the agricultural sector in Assam has developed very slowly. Over the past ten years (1965/66 to 1974/75) the total production of foodgrains increased from 1.8 to 2.1 million tons, or by only 15%. Over the same period, Assam's population expanded by about 38%, which means that the growth of food production has fallen far short of popu- lation growth 1/. Of course comparisons between individual years are not very reliable because of seasonal variations, and the last very favorable season (1975/76) may prove to have produced an exceptionally large harvest. However, an examination of the production figures over the past decade (see Statistical Appendix, Table 5) suggests a trend growth rate of less than 2% a year. Virtually all of the increased production is attributable to increases in area, and yields (with the significant exception of wheat) have shown no tendency to rise. Since the scope for bringing new land under the plough is now limited, production in Assam threatens to fall even further behind population growth unless the land is used much more intensively in the future. 13. The technical reasons for this sluggish performance in agriculture are not hard to find. Cultural practices are still largely at the traditional level and few farmers have any experience in using modern inputs. Average fertilizer use (excluding tea) is less than 2 kg of nutrients per ha (compared with an all-India figure of about 14 kg), only about 10% of rice is under HYVs or improved local varieties, and most farms still rely on traditional farm implements. The vast potential for irrigation is largely untapped, and crop- ping intensity, in spite of the potential for double cropping under rainfed conditions, is only about 125%. 14. In seeking to explain the low level of technology in Assam, one comes up against a similar set of problems as in the other Eastern Region states, but in an even more severe form. As in the rest of the region, there is no single overriding constraint to development; there is, rather, a whole series of constraints which tend to reinforce one another. The main techni- cal problems arise from Assam's high rainfall. Up to 15% of the cultivated area may be inundated by the Brahmaputra River in the monsoon season, and these flood-prone areas have to adopt cropping patterns designed to avoid the periods of peak risk. The very high rainfall also causes problems of drainage and excessive surface run-off in flood-free areas, which dis- courage the use of fertilizers and restrict access to fields, and create difficulties for drying and storing early-planted crops which mature at the height of the monsoon. Finally, while the monsoon season is rela- tively long, there is some variability in rainfall at both ends of the season, and these unpredictable variations add to the risks inherent in farming, particularly when purchased inputs are being used. 15. The mission's general conclusion is that these natural constraints, while of obvious concern, are more than offset by the natural advantages which Assam's soils and climate have to offer. In fact, the most severe 1/ These figures imply that per capita production of foodgrains fell from 150 kg in 1965 to 125 kg in 1975. -5- constraints to development in Assam today are to be found rather in the weaknesses of institutions serving the agricultural sector, certain gaps in policy, and the absence of systematic planning. The nature of these problems, and a suggested strategy for overcoming them, will be discussed in the next section. III. PRODUCTION STRATEGY AND TARGETS Proposed Development Strategy 16. Basic Considerations. In assessing the potential for increasing fooodgrains production the mission has on the one hand been impressed by the great potential for development in Assam - particularly the scope for increas- ing both average yields and cropping intensity. On the other hand, the peculiar climatic characteristics of Assam, the traditional practices of most farmers and the general. weakness of the institutions serving the agricultural sector suggest that progress will be neither easy nor very rapid. A realistic strategy, therefore, should be selective in its appraoch, concentrating on the measures which can have the greatest impact on production and on removing the most crucial constraints to increased production. 17. Target Groups. Apart from the tea estates, there are virtually no large holdings in Assam. Over 90 percent of holdings are less than 3 ha in size and 80 percent are less than 2 ha. Thus, to a very large extent, any strategy for increasing foodgrains production in Assam must also be a strategy for increasing small farm productivity, and vice versa. In suggesting the general outlines of a production strategy, therefore, the mission has given preference to measures which can in theory reach all farmers, depending only on their receptivity to innovation. Most farmers in Assam are still at a traditional level of operation, and have little or no experience of modern inputs or services. A development strategy should therefore take, as a starting point, the needs and capabilities of the typical farmers as they now are, and design a graduated and carefully phased program to introduce them to modern methods. This means that in the early years of the program the emphasis is likely to be on encouraging farmers to adopt fairly simple but important improved cultural practices which could substantially increase production - and lay the basis for the successful introduction of modern inputs in the future - without any major change in production techniques or significant risk to the farmers. 18. However, while virtually all farms in Assam are-small by any standards, some are smaller than others, and the distribution of land is very uneven: -6- Size of holding in ha % of holdings % of cultivated land Below 0.5 33 6 0.5 - 1.0 24 12 1.0 - 2.0 24 24 2.0 - 3.0 10 17 3.0 - 5.0 7 18 Over 5.0 2 23 100 100 Over 40 percent of land area is contained on the relatively small number of holdings over 3 ha in size, and a production-oriented strategy can ill afford to neglect the potential of these "larger" farmers. Many of these farmers are already using more advanced farming techniques, have more resources to invest in their land, and have better access to credit and input supplies. A development program must therefore allow for the possibility that these far- mers, as well as the more enterprising smaller farmers, will be able to take advantage of modern technology much sooner than the majority, and should be given every encouragement to do so. Some components of the short-term action program, particularly the shallow tubewell program, are aimed speci- fically at this group of larger farmers. 19. About a third of all farms are so small (less than one-half ha) that they are likely to consume any additional foodgrains they produce. These very small farmers, may never be commercially viable as farms (in the sense of having a marketable surplus from which to buy modern inputs or to finance investment), and most of them will have to rely on off-farm employment or much more land-intensive activities to generate income 1/. However, even. this group of the population can be given an opportunity under the program to increase their level of consumption, by up to 30 percant, by adopting improved cultural practices which do not involve any significant cash expenditure. In fact, because these families ate under such economic pres- sure, they could well respond more quickly than larger farmers to a produc- tion-oriented extension program. 20. Another population group comprises tenant farmers, including share- croppers. In theory, the sharecropper presents a special problem in develop- ment economics because he is less likely to adopt modern technology if he has to pay for all inputs, and accept the total risk, but typically share half the benefits of his investment with the landlord. It is difficult to know how widespread tenancy, and particularly sharecropping, is in Assam. Accord- ing to the official statistics, only 15 percent of holdings (and 10% of the land) are operated by tenants and, of these, negligible proportion are share- cropped 2/. Thus, officially, the problem of sharecropping does not exist. Yet the mission was told by many people in Assam that the incidence of share- cropping in some form or other was much higher - possibly 20% or more. I/ See Annex 10. 2/ World Agricultural Census, Assam, 1970-71. - 7 - 21. However, even if sharecropping is more common than the official figures claim, we believe there are two reasons for optimism: (a) As with the very small farmer, the sharecropper can be assisted under the proposed strategy to increase his production by methods which involve very little cost and therefore avoid some of the disincentive effect of sharecropping. (b) There is some reason to believe that sharecropping may give way to other forms of tenancy 1/ once both the tenant and the landlord are convinced that farming can be a profitable commercial undertaking. 22. Target Areas. The proposed development strategy is confined to the plains districts because that is where 95% foodgrains are produced and where 97% of the people are. The strategy also concentrates primarily on rainfed areas because these account for the overwhelming proportion of the cultivated land. While estimates vary widely, the mission has taken the areas under effective irrigation to be 150,000 ha, or less than 7 percent of the area under fouagrains. This area will increase quite rapidly during the next 1e years, as will the productivity of irrigated areas, but even so by far the larger proportion of incremental food production in the short to medium term will clearly have to come from purely rainfed areas. 23. However, the potential for raising production per hectare is obvious- ly greater where irrigation is available, in terms of both higher yields and * cropping intensity as well as more reliable production, and in the longer term Assam will need to give increasing attention to irrigation. It is therefore appropriate that the Government plans to accelerate groundwater development, to implement a first phase program of command area development, and to deter- mine the priorities for future surface irrigation (see section IV below). 24. A particular constraint to production in Assam is the risk of flooding from the Brahmaputra which can affect up to 400,000 ha in a bad year. After many years of largely unsuccessful flood control measures, GOA has concluded that Assam has to learn to live with the risk of floods, and is developing a strategy for flood avoidance and risk minimization in flood-prone areas. This strategy is recognized in our analysis (see Annex 1) where different cropping patterns are assumed in flood-prone and flood-free areas. 1/ There are many variations of tenat.y already practiced in Assam allowing for rent to be paid as a fixed monetary amount, a fixed quantity of produce, a fixed share of the produce, or a mixture of terms. Some landlords apparently are already willing to share in the costs of investments which have been demonstrated to be successful. - 8 - 25. The Elements of Production Increase. There are three ways in which foodgrains production might be increased: by increasing the area under cultivation, by raising crop yields or by increasing cropping intensity. Although only a third of Assam's plains are presently devoted to annual crop- ping, very little additional land could be brought under the plough in the short term. Over 27% of the plains districts are under forests, another 23% is classified as uncultivable or non-agricultural, and 7% is already under tree crops or permanent pasture. There are about 180,000 ha of land which is classified as "cultivable waste", some of which could be brought under perma- nent cultivation. Government has a program, under Agricultural Farming Corp- orations, to settle landless laborers on this land, but the program is rela- tively small and costly 1/, and cannot be expected to add significantly to the cultivated area. In the longer term, there may be scope for opening up forest lands for arable cultivation, but this would require a major review of land use policy. In the short term, production can be stimulated most quickly and effectively by increasing the efficiency of land use - that is by increasing yields and cropping intensity. 26. There is ample scope for increasing crop yields. All-India HYVs such as Jaya, IR-8, Pusa 2-21, and Ratna, as well as improved local varieties such as Monahar Sali, produce high yields in Assam in research trials. Re- cent trials on farmers' fields, which used HYVs and high fertilizer application, produced rice yields about three times as high as the present state average, even under rainfed conditions. Other trials have demonstrated that yields can be increased substantially by introducing HYVs, even without fertilizer, and by improving husbandry. As indicated earlier, the scope for raising cropping intensity is considerable. Since most farmers take a full Sali (monsoon) rice crop, increasing cropping intensity in practice means expanding either Ahu (pre-monsoon) or Rabi (post monsoon) crops. Ahu cultivation is essentially risky without irrigation because of the uncertain timing of the pre-monsoon rains and problems of harvesting and storing Ahu crops which mature at the height of the monsoon rains. In the general strategy, therefore, we have tended to favor increasing Rabi cultivation, particularly wheat, to take advantage of one of Assam's major assets - residual moisture. Projections of Production. 27. In estimating the production increase which could take place in Assam, we have assumed that an intensified program, of the kind suggested in this report, gets under way in 1977/78. As a result of this program we have assumed that farmers progress through (for simplicity) four levels of manage- ment, each associated with a "package" of practices. Package "0", which is representative of the majority of farmers at present, comprises traditional practices, local varieties .f st-z-4, minimal cash inputs and generally poor cultural practices. Package 1 still makes minimal use of modern inputs, but emphasizes improved cultural practices, particularly land preparation, time of planting, plant population and weed control. Package 2 introduces HYVs 1/ Present proposals are to develop 12 A.F.C. farms, covering an.area of about 3,000 ha at an estimated cost of R 39 million (nearly $1500 per ha), to settle 3,000 landless laborers and their families. -9- (or composite maize seed) and a modest dose of fertilizer (25 kg of nutrient/ ha). for the first time. Packages 3 raises fertilizer to 50 kg and introduces the regular use of pesticides 1/. 28. The progressive adoption of improved practices by the farmers, at the rate we have assumed, would have a substantial impact on both yields and cropping intensity. The progression of yields associated with the four management packages (taking the main sali rice crop as the most important example) is assumed to be (in MT/ha): Package 0 Package 1 Package 2 Package 3 Rainfed rice 1.0 1.3 1.9 2.3 Irrigated rice 1.2 1.6 2.4 3.0 The rate at which farmers progress from one package to the next is assumed to be a function of their exposure to the new extension service (see paras. 44-50) After six years of extension, we have assumed the following increases in average (Sali) rice yields: Present Year 6 Rainfed rice 1.1 1.4 Irrigated rice 1.4 2.1 Over the same period, the cropping intensity of all foodgrains is calculated to increase as follows: Present Year 6 Rainfed areas: flood-prone 69 100 flood-free 106 130 Irrigated areas: flood-prone 77 130 flood-free 120 180 We have assumed that the area benefiting from effective irrigation increases (as a result of the groundwater and CAD programs) from 150,000 ha in 1974/75 to 185,000 in 1979/80 and to 280,000 i. 1982/83, or from 6.7% to 10.2% of total net cultivated area. 1/ There is little information concerning existing practices of farmers. We have assumed that 86% of farmers are presently using package "0" for rainfed rice and 75% for irrigated rice.. The full set of assumptions is shown in detail in Annex 1. - 10 - 29. Based on these assumptions, we have estimated that foodgrains production in Assam could be increased by over 50% between 1974/75 and 1982/83. The projected increase in production is as follows 1/: Production in 1,000 tons Increase 74/75-82/83 1974/75 1979/80 1982/83 1,000 tons % Rice 1,994 2,180 2,696 702 35 Wheat 79 196 483 404 514 Coarse Grains 13 20 40 27 205 Pulses 39 51 76 37 95 Total 2,125 2,447 3,295 1,170. 56 Source: Annex 1 30. Total foodgrains production is estimated to increase by 322,000 tons by 1979/80 (or 15%) and by a further 848,000 tons (or 35%) between 1979/80 and 1982/83. The largest absolute increase-would come from a 35% increase in rice over the whole period, but as a result of the assumed changes in cropping patterns, we would expect to see much faster growth rates in other foodgrains, particularly wheat. 31. The following figures show the expected contributions from irrigated and rainfed areas: Foodgrains Production in 1,000 tons Increase 1974/75 1979/80 1982/3 1974/75-1982/83 Rainfed areas 1,914 2,132 2,762 848 Irrigated areas 211 315 533 322 Total 2,125 2,447 3,295 1,170 Over 70 percent of increased production is expected to come from purely rainfed areas, but the relative importance of irrigation grows quite rapidly - from less than 10% of production in 1974/75 to over 16% in 1982/83. Total irrigated production expands by over 150%, whereas rainfed production increases by only 44% over the period. 1/ The projections are analyze- in detail in Annex 1. See particularly Annex 1, Appendix 1. -31 - Table ls PRESENT AND PROJECTED FUTURE FOODGRAIN CONSUMPTION, PRODUCTION AND RELATED DATA 1975-1983 1975 1976 1977 1978 1979 1980 1981 1982 1983 POPULATION (1)(million) 16.90 17.35 17.81 18.26 18.71 19.16 19.62 20.07 20.53 CONSUMPTION (thousand tons) At constant 1975 per capita (2) 2,146 2,203 2,262 2,319 2,376 2,433 2,492 2,549 2,607 At 1% increase per year 2,146 2,226 2,308 2,390 2,473 2,558 2,645 2,731 2,823 SUPPLY (thousand tons) Gross Production Rice 1,994 2,181 2,697 Wheat 78 196 483 .Coarse Grains 13 20 40 Pulses 39 51 76 Total Foodgrains 2,124 2,448 3,296 Less: seed retained (3) - 77 - 85 - 91 post-harvest losses - 106 - 122 - 165 Net Production 1,941 2,241 3,040 Net Surplus(+)/Deficlt(-) At 1975 consumption level - 205 - 192 + 433 Allowing 1% p.a. increase - - 317 + 217 INPUTS Gross Cropped Area (thousand ha.) Paddy 2,058 2,109 2,218 Wheat 61 135 293 Coarse Grains 26 35 56 Pulses 97 117 158 Total Foodgrains 2,242 2,396 2,725 of which, irrigated 163 222 312 Fertilizer Demand/Supply (nutrient tons) Total Assam Production (4) 300180 138,000 Consumption: foodgrains 4,500 7,300 23,000 tea 1700 000 0,0 Total 21,500 27,300 43,000 Net Surplus 13,500 110,700 95,000 Seed Purchases (tons) Paddy 1,000 930 2,600 Wheat 2,450 5,400 12,150 Other 37 160 Total 3,450 6,367 14,910 YIELDS (tons per ha.) Rice 0.98 1.03 1.22 Wheat 1.26 1.45 1.65 Coarse Grains 0.52 0.57 0.71 Pulses 0.40 0.44 0.48 Notes: (1) Estimates for 1975-81 population obtained from Directorate of Economics and Statistics, Assami population growth rate 1981-83 assumed to be 2.3% p.a. (2) 1975 per capita consumption assumed to be 127 kg. per year (estimate provided by North Easterp Council). (3) Equals total estimated seed requirements less estimated seed purchases. (4) Actual production 1975; assumes 80% utilization of capacity in 1980 and 1983. - 12 - 32. The projected increase in production would lead to an increase in the demand for inputs. On the same set of assumptions about the rate of adoption of the various packages of practices (see Annex 1), the demand for fertilizers and improved seed is projected to expand as follows: 1974/75 1979/80 1982/83. Fertilizer (nutrient tons) 4,500 7,300 23,000 Purchased seed (tons): rice 600 1,100 2,850 wheat 4,000 7,000 13,700 other 20 57 175 While the demand for inputs accelerates over the period, the total require- ment in 1982/83 is still expected to be quite small in absolute terms. This is because the present level is very low and because it is assumed that the emphasis of the extension program will first be on demonstrating improved cultural practices, followed by the introduction of improved seed and only modest doses of fertilizers. Effect on Total Food Production and Consumption. 33. The effect of this production program on the total foodgrains balance in Assam is shown in Table 1. We assume that population grows ac- cording to the estimates provided by the Directorate of Economics and Stat- istics in Assam (an average of 2.75% p.a.). By 1980 (the third year of the proposed project) increased net production only keeps pace with increasing population, but allows no increase in per capita consumption levels. About 200,000 tons of grain would still have to be imported, even to maintain 1975 per capita comsumption. By 1983 (the sixth year of the project) the momentum of development is expected to have picked up, and net foodgrains production (after seed and losses have been allowed for) is projected to be over 3 million tons. With this level of production, there would be a net "surplus" of over 400,000 tons of grain, at the 1975 level of per capita consumption, which could be used to increase per capita levels in Assam or to provide to the all-India pool. 34. The increased foodgrains production projected in table I represents the benefits which might be expected from the 3-5 year project proposed. Other projects which might be implemented during this period would also contribute to increased production and therefore swell the likely surplus. In particular, a second expanded program of groundwater development and CAD, and possibly some reclamation of cultivatable waste or'forest land, could have additional impact - 13 - on production within the six-year period 1/. Table I projections of production are based primarily on the expected timing and impact of the new extension program. We have conservatively assumed that the program is implemented over four years, which is a longer period than usual. At this rate its full impact would be felt only after 11 years. If it proves feasible to introduce the program more quickly, the benefits (in terms of increased foodgrains production) would also be realized sooner. IV. SECTOR PRIORITIES AND ISSUES Prerequisites for Development 35. What is required to achieve the increase in foodgrains production which we have projected? The mission considers that there are five major prerequisites for intensified development: (a) to develop an improved technology, particularly for rainfed conditions, which is suited to the needs and capabilities of the majority of small farmers; (b) to expand groundwater development and promote efficient use of existing irrigation schemes; (c) to establish an efficient mechanism to transfer improved technology to the farmers and to motivate them to change their patterns of behavior; (d) to ensure that the inputs, services and infrastructure necessary to adopt new technologies are available to the farmers; (e) to strengthen the planning, project preparation and implementation capacity of the institutions serving the agricultural sector. We discuss each of these priority areas in the following paragraphs. 1/ To demonstrate the possible impact of additional development effects on foodgrains production, we have estimated the incremental production which might be derived from: (a) an additional 100,000 ha of irrigation (divided equally between flood-prone and flood-free e--as); (b) an additional 100,000 ha of new land (reclaimed waste or forest land) opened up in flood-free rainfed areas. These two measures, if they could be implemented, could contribute an additional 267,000 tons of foodgrains by 1982/83 - or an 8% addition to projected total production. - 14 - 36. Research and Development. Most farmers in Assam, as indicated earlier, are on very small holdings, and are following traditional farm practices at the subsistence level under rainfed conditions. To increase production Assam will have to increase the productivity of these farmers by inducing them to change their traditional management practices. But traditional farmers are reluctant to adopt innovations which appear risky to them. A small farm development program must therefore be able to offer the farmers a phased program of technological improvement which is within their reach technically, which is clearly beneficial to them, and which can be adopted at very little risk. 37. Research and development in Assam has however for the most part been geared to evolving relatively sophisticated technologies which have little relevance to the needs or capabilities of the typical farmer. For example, the Department of Agriculture has until recently advocated a "full package" of practices for crop production, including HYVs, a moderately high application of chemical fertilizers, pesticides and hired labor. Such a package can be expected to give very good results on a research station where inputs, finance and management are readily available. But the average farmer has neither the skill nor the means to adopt such a technology, and could not in any case risk the huge investment required, which is anywhere from 10 to 30 times his normal annual expenditure. To make matters worse, the credit institutions, acting on the advice of the Department, have limited their short-term lending to the same generally inappropriate package of practices 1/. This procedure has recently been relaxed, and a lower scale of finance is now available for "traditional" agriculture, but even this is much more than farmers are accustomed to spend on their farm 2/. It is not surprising that extension advice based on too sophisticated a tech- nology has not been generally followed. An additional danger is that farmers who try to follow such advice, but who lack the skill or means, may end up worse off than they were before, and the extension service falls into disrepute. 38. Other gaps in technology can be identified. For example, Govern- ment agencies hire out tractors (at highly subsidized rates), but little research has been undertaken to develop better hand tools or draught implements suited to the limited power of indigenous animals. Similarly, Assam has done excellent R and D in shallow tubewells, notably in adopting the cheap and simple bamboo or p.v.c. well and filter. However, the smallest 1/ The scale of finance followed by Assam Cooperative Apex Bank in 1976 for rainfed HYV rice amounts to R 1,322 per ha, which is more than the total value of output of the typical small farm (See Annex 7, Appendix II). 2/ The ACAB scale of finance for local paddy amounts to R 171 per hectare, allowing for 90 kg urea per ha. In contrast, a sample survey of farmers in Jorhat area undertaken by AAU showed that most farmers spend less than R 50 a year on their whole farm. - 15 - available engine is a 3.5 hp diesel (costing R 4,800), which has the capacity to irrigate up to 6 ha. While such a pump is appropriate for a farmer with 3-4 ha, it is too large for economic use on most small and fragmented holdings. 39. The mission proposes a two-pronged approach to technology. First, in the short term, we believe that there is considerable scope for increasing yields through quite simple improved cultural practices, which are already known to give reliable results. They can be adopted without a major change in small farm technology, without any major reliance on modern inputs or credit, and without any significant risk to the farmers. The first stage of an extension program might therefore concentrate on demonstrating the effectiveness of basic cultural practices such as weed control, spacing, timeliness of operations, seed selection and organic manuring. Such improve- ments, by themselves, might conservatively increase a farmer's yields by up to 30 percent (see Annex 1). 40. These simple improvements, however, will sustain development for a few years only. The second urgent priority, therefore, is to develop tech- nologically more advanced practices which are designed with the particular capabilities and constraints of the small farmer in mind, and which have been testri and proved to be feasible under actual small farm conditions. The mission has recommended a greatly expanded program of adaptive research which, together with more agro-economic research on the economics of small farm operations, will test research station results in different agro- climatic areas and modify research recommendations, where necessary, to make them more relevant to the typical farmer. Such research, which aims to bridge the gap between the great potential demonstrated on research stations and the dismal results achieved by most farmers, will enable the policy maker to devise a graduated scale of progressively more sophisticated practices (of the kind postulated in our projections) which can be con- fidently recommended to farmers (see Annex 3). 41. Development of Irrigation. Despite the real prospects for increas- ing both yields and cropping intensity under purely rainfed conditions, in the longer term the full potential of the land will only be realized when irrigation and drainage are available to ensure good water control in the monsoon and to guarantee two or three crops a year. Dry season irrigation will also be important in developing the flood-prone areas, where annual flood- ing rules out the possibility of a monsoon crop on about 250,000 ha and makes it risky on about a.further 150,000 ha. Yet despite the great potential for irrigation in Assam, progress has been meagre compared with other states. Estimates vary widely, depending partly on definition, but it seems probable that only about 150,000 ha are present1. umder command of surface irrigation schemes. Less than half of this area can be irrigated in the dry season, and water management l:s generally poor, owing to the lack of field channels, drains and structures 'elow the outlet and the absence of voluntary or mandatory forms of communal water sharing. Groundwater development has been insignificant: there are presently only about 30 deep tubewells and about 1,000 shallow wells, together irrigating less than 4,000 ha. - 16 - 42. Until about ten years ago, the main focus-of the Irrigation Depart- ment was on flood control. Government policy now is to give priority to increasing the performance of existing surface irrigation schemes, through command area development (CAD), and to developing.groundwater, particularly in flood-prone areas. Progress is likely to be slow in both of these fields. GOA has had no actual experience of CAD under Assam conditions and the mission believes it would be unrealistic to prepare a full-scale CAD and irrigation improvement project in one step. Neither the physical improvement required on the ground nor the forms of cooperation between farmers have yet been identi- fied, and there is no organization with powers to coordinate the activities of the various government departments in command areas. Legislation will also be required to enable compulsory CAD and cost recovery before any development can take place. The first step should therefore be to establish pilot schemes which can test out the CAD concept under Assam conditions and lay the founda- tion for a much larger and more ambitious program in the future (see Annex 5). 43. In groundwater development the first priority in our view is to implement an accelerated program of shallow tubewells. The technology for installing shallow tubewells is already well tested.: the major requirements are to promote and support irrigated agriculture through the extension ser- vice, to remove the present bottlenecks in both medium and short-term credit, and to ensure adequate repair and supply services (see para 79). However, as indicated above, the orthodox shallow tubewell and pump is suitable for only the largest 15% of farmers, if they own and operate their own supply. While these larger farmers hold about half the land, there is clearly a need to spread the benefits of groundwater to small farms, on grounds of both efficiency and equity. The second priority is therefore to develop either smaller and cheaper tubewells and pumps which will be within the reach of small operators, or workable systems for sharing water (see Annex 4). 44. Transfer of Technology. Ultimately, agricultural production can be increased only by changing farmers' behavior: by inducing them to adopt better cultural practices and more advanced technologies. This in turn re- quires not only the development of appropriate small farm technology, as described above, but also a quick and efficient mechanism for transfering technological knowledge and an appropriate incentives system which motivates the farmer to adopt new techniques and accept a degree of risk. The present extension and farmer training program in Assam is not an efficient mechanism for transfering knowledge. At present, field level extension work is supposed to be the primary responsibility of the Village Level Worker .(VLW), a multi-purpose worker employed by the Department of Panchayats and Community Development and responsible directly to the Block Development Officer (BDO). Apart from agricultural extension, the VLW is responsible- for community development activities, the collection of statistics, regulatory work, the supply of agricultural inputs and for relief work in times of drought or other natural calamities. Since he is tesponsible for virtually all aspects of rural development, he is unable to perform any of his duties very efficiently. In - 17 - particular, although the VLW is supposed to spend about 80 percent of his time on agricultural activities, the Department of Agriculture has no direct control over his activities, and in practice he probably devotes only 20-30 percent of his time to agriculture. These two problems - the-lack of close professional supervision and the diffusion of responsibilities - make it virtually impossible to build up the VLWs into an effective corps of extension specialists. The VLWs, with their part-time responsibilities for agriculture, are too thinly spread over too many farmers to have any significant effect, and their coverage of farmers is further reduced by a lack of mobility. 45. Even when the VLW does contact the farmer his effectiveness as an extension agent is often limited. Most extension staff from the VLW up had their agricultural training more than ten years ago, and they have few opportunities for in-service training. Their extension work is neither planned systematically nor adequately supervised, and the extension service has little ongoing contact with research workers. Moreover, as pointed out earlier, what recommendations are passed down from research to farmers through the extension services are often inappropriate both for farmers' needs and for their technical and finan- cial abilities. 46. In spite of these difficulties, the extension service has had some notable achievements, most recently in the successful development of wheat. This says much for the competence and enthusiasm of the extension workers and their effectiveness when they have a proven "message" to deliver. Yet GOA has recognized that the present system cannot provide the modern and effec- tive specialized extension service which is needed to increase agricultural production in Assam. It has therefore decided to establish an intensive state extension service (IES), under a single line of control, within the Department of Agriculture. About 80 percent of existing VLWs will be transferred to the Department of Agriculture and these, together with the existing agricultural demonstrators, higher Level agricultural extension officers and subject matter specialists, will be molded into a modern professional service capable of giving farmers sound technical advice on their entire farm operation. 47. The new service is scheduled to be introduced over a four-year period, and staff will be trained and recruited as necessary. The staffing pattern is based on the number of farm families which one Village Level Extension Worker (VLEW) can reach - in Assam about 800 families. A basic feature of the system is that the VLEW works primarily through selected "contact farmers." The VLEW will concentrate his efforts on these contact .farmers not only to help these farmers, but to use them to convince all farmers in their group of what they can achieve. The organizational structure above the VLEW, comprising the Agricultural Extension Officer at the block level, and more senior supervisory staff at the subdivisional and district levels, will provide for an efficient system of training and supervision at all levels (see Annex 2). - 18 - 48. The new service, which follows the approach successfully adopted in other states, puts great emphasis on concentration of efforts, on sys- tematic and regular training, close supervision of staff at all levels, and a fixed schedule of visits to groups of farmers. Coupled with an expanded, program of. adaptive research of the kind referred to earlier, the system has the capacity to transmit appropriate recommendations from the policy maker to the village level quickly and effectively and at little extra cost to Government. 49. Incentives. An important condition for the adoption of new tech- nology relates to incentives. We have assumed in this report that farmers in Assam will respond to incentives - at least when they feel that little risk is involved 1/. But no farmer will willingly adopt a new practice unless he believes it will pay him to do so, either in increased income or in higher levels of consumption. Therefore, the relationship between costs, risks and prices become crucial. Unfortunately, the mission could not find sufficient up-to-date survey data in Assam from which to judge the incentive effect of present prices 2/. Nor is there any continuous review by Government or the University of cost-price relationships. We consider that this is an important priority for sector planning. 50. Both the State Government and the GOI have made extensive use of subsidies to promote new technology or to assist small and marginal farmers. We believe that these subsidies have not been very effective in Assam, for reasons which we discuss further in Annex 10, and that they have had harmful side effects. In general we feel that a major reliance on subsidies is not necessary to increase foodgrain production in Assam. If the scientists and extension workers have a technically sound and financially attractive technology to offer the farmer, then subsidies are not necessary - even for very small farmers. On the other hand, subsidies will not make an unsound technology any better or make an uneconomic propo- sition viable. Yet subsidies can play a useful role in development, pro- vided they are fully integrated into a broader development program and are carefully designed and controlled (see Annex 10). 1/ Some observers question this assumption and suggest that the indi- genous Assamese farmer may not be strongly motivated to increase production through working harder. We have, in our projections, allowed for a proportion of farmers who do not respond to opportunities offered to them, but assume that the majority do. 2/ The FAO/IBRD Cooperative Programme, which has been assisting GOA in project preparation, has sub,esquently prepared indicative farm models to assess the profitability of the proposed production strategy to the farmers of Assam. The models show that even the less successful farmers who respond to the extension message can achieve a marked increase in their subsistence requirements and a substantially larger cash surplus. - 19 - 51. Demand for Inputs and Credit. The mission believes that the factors discussed above are the most important prerequisites for development. Once an enterprising farmer has seen a new technique working and is satisfied that it will make money, he can go a long way by himself without further help. The reverse is certainly true - farmers will not accept credit, or pay for expensive inputs (even if subsidized) unless satisfied of their value. At this stage of Assam's development it seems probable that, although the credit and input supply institutions are in disarray, the real constraint to increasing fertilizers, other inputs and credit is a lack of demand. Most farmers are not yet convinced that they will make money for them. Moreover, the proposed strategy, which relies mainly on improved cultural practices in the early years of the programs, would generate a rather gradual buildup in demand for inputs. Thus, we do not see the capacity of the supporting services - however weak they now are - as the binding constraint in the immediate future. However, as the program continues, the demand for inputs and credit is projected to accelerate, and could increase faster than we estimate. Therefore, since it will take some years to improve the performance of these institutions, it is necessary to start now. There is no time to lose. 52. Distribution of Inputs. Use of modern agricultural inputs in Assam is among the lowest in India (see Annex 8). Average fertilizer consumption has fallen to about 2 kg of nutrients per ha, which means that although Assam will soon have the capacity to manufacture over 300,000 tons of urea and 100,000 of ammonium sulphate per year, the present level of consumption is less than 5,000 tons of nutrients per year. Sales of certified or germination-tested seed are also very low - less than 4,000 tons in 1974/75. The distribution of other agro-chemicals and implements is at a similarly low stage of development. 53. On the basis of the projections of production made earlier, the demand for purchased seed and chemical fertilizers is likely to expand fairly slowly - to about 15,000 tons of seeds and 23,000 tons of nutrients by 1983 (see para 32). However, it is doubtful whether the present distribution system could handle even these modest quantities without major changes being made. The input distribution system is plagued by two main problems: inadequate margins and the organizational and financial weakness of supply agencies. As indicated below, these two weaknesses in the system are not unrelated. 54. The present 'Levels of margins on inputs, particularly fertilizers, are so low that no agency - whether private sector, co-operatives or govern- ment agency - can handle them without loss. For example, the present con- trolled margin on urea (at R 115 per metric ton) provides a gross margin be- tween supplier's price and final consumer's price of only 5%, from which both wholesale and retail margins, transport and storage charges, losses and shrink- age, and interest on capital have to be met. The mission has estimated that a margin of about R 350 per ton would be required to provide an incentive for suppliers to handle fertilizers, and that margins on seed also need to be raised (see Annex 8). - 20 - 55. We recognize that the Government of India is anxious to keep the price of fertilizers to the farmer as low as possible as an inducement to increased utilization. But farmers cannot use fertilizers if they are unavailable, and for the farmer using fertilizer for the first time it is particularly important that supply agencies should stock the right fertil- izer in suitable packages, in the right place at the right time. Yet the supply agencies will never offer an efficient service as long as they lose money on every bag of fertilizer they handle. Unless government can afford to subsidize distribution costs, therefore, there seems no alternative but to allow a wider spread in the pricing system, either by freeing controls and allowing free competition to determine market prices or by increasing the prescribed margins. 1/ Either method would increase the retail price to the farmer, but it is surely better for farmers to have access to fertil- izers at a higher price than not to have access to fertilizers at all. 56. Another problem affecting the procurement of both seed and fer- tilizer is the responsibility for the risk of procurement. There is a conflict here between the policy objectives of Government and the commercial viability of supply agencies. Government, in its endeavors to increase out- put, wants to ensure that supplies of seed and fertilizer are adequate - even at the risk of overstocking. The procurement agencies, on the other hand, are likely to base their procurement policy on conservative estimates of demand if they have to bear the loss on carry-over stocks - particularly when margins are already inadequate. In our discussions with Government we suggested the principle that Government should accept the full risk (and cost) of procuring supplies in excess of those considered prudent by the supply agencies 2/. 57. The institutions supplying inputs to the agricultural sector are presently unable to provide an adequate service. The principal suppliers of fertilizers in Assam are the Assam Agro Industries Development Corporation (AAIDC) and the Fertilizer Corporation of India (FCI), each of whom appoints agents, including the recently created multi-purpose Gaon Panchayat Level (GPL) Cooperative Societies. Throughout Assam there are only 262 sales points for fertilizers, less than in any other state. The seed suppliers (primarily the Assam Seeds Corporation and the Tarai Development Corporation) have only about 24 outlets in the state. However, it is at the retail or village that the system is chiefly deficient. Government's policy is to encourage both the private sector and cooperatives to distribute inputs, but favors channeling an increasing proportion through the GPL Societies. 1/ We have suggested in Annex 8 two possible formulae: -either to increase the flat margin to a higher and uniform level or, which might be pre- ferable, to allow a fixed handling margin plus a variable transport margin, depending upon Lhe distance from the point of supply. 2/ One means for doing this would be for an agency to operate two accounts, one for its own commercial operations and one kept on behalf of Govern- ment. Orders placed by Government would then be accounted for separately. - 21 - But few private traders are handling fertilizers or-seed, and the GPLs, since their inception in 1973, have distributed hardly any inputs at all. To make matters worse, the distribution of inputs by the BDO through the VLWs, which has been a major means of supply in the past.may be difficult to con- tinue after the majority of VLWs have been transferred to the new extension service. 58. To some extent it is a chicken and egg problem: it is difficult to establish an efficient distribution system when demand (and therefore turn- over) is very small and margins unviable; but it is also difficult to stimulate demand for inputs as long as they are physically unobtainable. There is no doubt that an efficient extension service will stimulate demand for inputs. On the supply side we would suggest a three part strategy: (a) First, in view of the problems of the GPL Societies (see Annex 9), the quickest and cheapest way to improve distribution is to stimulate the private sector, in particular the village trader. To some extent this will happen automatically as soon as farmers start to demand inputs. Two actions need to be taken by Govern- ment, however: to resolve the problems of margins as indicated earlier and to remove or liberalize controls. Controls which may have been appropriate under conditions of shortage seem 1-' make little sense when the emphasis should be on expanding demand. The interests of the farmers might best be served if as many traders as possible were allowed to handle seed, fertilizers and other inputs, subject only to the inspection required to maintain acceptable standards of service. (b) Second, a major program is required to strengthen and super- vise the GPL Cooperatives, as proposed in Annex 9. It is recommended that they focus primarily on the provision of inputs and short-term credit. However, their rehabilitation will be a lengthy process, and may involve a phased program taking one geographical area at a time. It is doubtful there- fore whether it will be possible to rely solely on the co- operatives in the foreseeable future - hence the need to stimulate private enterprises 1/. (c) Third, we suggest in Annex 8 the need to review the functions and operations of both the AAIDC and the ASC. We have suggested that the AAIDC might distribute inputs down to a lower level - either the block or panchayat level, particularly in support 1/ This proposal may be criticized oi, the grounds that the private sector would weaken the cooperatives by taking away business. The important criterion in our opinion is that farmer service societies should operate for the benefit of the farmers. If, after a costly program of support the cooperatives cannot compete with traders in providing a reliable distribution system, there would be no reason (from the farmers' point of view) for them to continue performing this function. - 22 - of the GPL Societies - while divesting itself of its unprofitable custom service functions. We also suggest that the ASC might concentrate on procurement and (limited) production of seed, and hand over its seed distribution functions to the AAIDC. 59. Agricultural Credit. The flow of agricultural credit in Assam, which has always been very weak, has recently all but dried up completely. During 1975 Kharif season only about 4,000 cultivators received short-term credit, amounting to less than R 1 million. Long-term credit disbursed through the Assam State Co-operative Land Mortgage Bank has also been low - R 1.7 million in 1975/76. These two amounts combined represent the equivalent of hardly more than one rupee per farm family! Nor have the commercial banks been very successful in pushing credit into the agricul- tural sector. 60. The reasons for this situation are analyzed in some detail in Annex 7. The problems can be grouped roughly into four categories. First, and we believe foremost, is the lack of demand. Since there are so few inputs purchased in Assam and there is apparently little investment of a medium term nature, it would follow that there will be little demand for credit to finance such investments. Thus, as with the supply of inputs, the basic requirement in building up a healthy credit system is to encourage an understanding of the benefits to be gained from the proper use of credit. 61. The second set of problems relate to the recurring difficulties over repayment. An exceptionally high level of overdues destroyed the pre- vious short-term cooperative credit structure, has brought the operations of the medium term structure to a halt, and is a major obstacle to expanding credit through the new GPL Societies. We regard the problem of overdues as primarily a political problem. There is little doubt that many people in Assam have been encouraged, by the issue of "Taccavi" loans, by periodic flood relief, and by the reluctance to prosecute defaulters, to believe that agri- cultural loans are a form of welfare payment, given by a munificent state, which do not have to be repaid. Unless there is strong political commitment to building up a viable credit sector and a determined effort to educate (and if necessary discipline) the people in the proper uses of credit, no "action program" can succeed, and new institutions will be created only to fail once more. 62. A secondary but probably important factor contributing to high overdues may be that some of the loans themselves have been unsound, so that there was no surplus from which to repay the loans. One example of this already quoted is the "full-package" scale of finance, under which farmers are obliged to take loans far in excess of their ability to utilize. The danger that the farmer is actually impoverished by his loan is increased when the loan is given in cash, rather than in kind 1/. Fortunately, this practice is no longer followed. I/ Research studies at the University show that very little of the "agricultural loans" received in cash by a sample of farmers was used for agricultural purposes. Much was utilized for consumption. - 23 - 63. The third and most complex category of problems concern the credit institutions. There is much to do over the whole front: the medium/long- term structure has to be overhauled, the new GPL credit machinery set in motion, and the constraints on the operation of commercial banks removed. There is no shortage of proposals. The Expert Group on State Enactments (the Talwar Committee) drew up a number of recommendations affecting commercial banks some years ago, the Reserve Bank of India in 1971-72 prepared a Master Plan to maintain the flow of rural credit, and the ARDC has prepared a detailed action program, for both short: and term lending, which incorporates most of these recommendations (see Annex 7). 64. The last category of constraints is the lengthy and often con- fusing procedures which farmers have to go through to obtain credit: it would be less of a deterrent to farmers if the procedures were simpler as well as quicker. Also, a credit system which relies on fixed, pre- determined scales of finance is too rigid to respond to farmers' individual needs or to changes in the demand for credit which occur during the pro- duction season. We have suggested in Annex 7 that a more flexible system is required, possibly incorporating a farmer's credit passbook, which would allow him to draw on a line of credit for production purposes, when and only if he requires it during the season, up to an agreed credit ceiling. We have also suggested the need to update land records, to accelerate the process of recording mutations and of registering tenancies, and to streamline the issuing of certificates of non-encumbrance. 65. Annex 7 contains a program of action for credit which is too de- tailed to refer to here. Of all the recommended actions listed in the program, we might select three as the priorities to support the foodgrains production program: (a) to mount a determined campaign to recover overdues; (b) to agree on a program to strengthen GPL Societies operations in short-term credit; (c) to finalize arrangements for term lending for tube- wells through the commercial banks. 66. Planning and Implementation. The implementation of the full stra- tegy outlined above would represent a formidable task which would call for a high level of commitment and political leadership on the part of the State Government and sustained effort on the part of its officers at all levels; additional staff will have to be recruited and trained, and many of the existing officers will have to be retrained or learn to work harder; many of the institutions serving the aZ-icultural sector will have to be strengthened or reorganized and several new ones created. Among the more important institutional tasks would be: - 24 - - establishing the new specialised extension service under a single line of command; - expanding and equipping the AAU in conjunction with the Department of Agriculture to undertake a larger program of adaptive technical and economic research; - a major reform and revitalization of the cooperative structure, including the GPL cooperatives, the cooperative banking sructure and the Department of Cooperatives itself; - new cells in the Irrigation Department to co-ordinate groundwater development and to undertake command area development; - the strengthening of groundwater survey and monitoring; and - a review of the organization, functions and management of the ASC and AAIDC. 67. A particular weakness in Assam is the absence of an agricultural planning unit which, if it existed, could take the lead in formulating and coordinating an overall development program. Also, some of the more urgent tasks facing Assam are unlikely to be undertaken without a central point of responsibility. Two such tasks are to implement an action program on credit and to review the operations and margins of the input supply agencies (in- cluding the private sector). At present, such problems are the responsibility of no one in particular. 68. The mission considers it very important, therefore, that GOA should establish the nucleus of an agricultural planning cell as soon as possible. It could be located either under the Agricultural Production Commissioner or under the Secretary of Agriculture or even within the Directorate - its location is less important than its speedy establishment. Nor is it necessary to establish a very elaborate cell in the first instance. It would be a good start to set up a three-man unit: perhaps one senior officer with operational experience at the project level, assisted by an economist and a financial specialist. Policy Implications and Sector Issues 69. The strategy outlined above would mark a significant shift in emphasis from the past in a number of ways. Among the more important are the following: - 25 - General sector strategy - a greater emphasis on the development of rainfed areas; - a shift in emphasis in the short term from the previous emphasis on a high- input technology to a low-cost tech- nology which is within reach of most farmers; extension and. research - replacing the long established concept of the multi-purpose VLW with a corps of specialized agricultural extension agents; - accepting that extension will concentrate on a few carefully selected and supervised "impact points"; - a major reorientation of research towards the needs and capabilities of the small farmer. irrigation - a further shift in emphasis in irrigation from flood control and surface irrigation to the promotion of (largely private) groundwater schemes; - greater emphasis, in groundwater, on the development of low-cost tubewells suitable for small and fragmented holdings. - a greater emphasis, in,surface irrigation, on below-the-outlet distribution, water management and increased agricultural production; credit, input supplies - shift in emphasis of GPL societies from consumer goods to agricultural inputs and credit; - more tolerant policy towards the pro- ductive functions of the private sector; - mor, realistic attitude to transport and handling margins; - development of more flexible and appro- priate scale of finance and credit procedures. - 26 - 70. In discussions with Government, both during the main mission and during the subsequent follow-up mission, we found considerable support for the general thrust of this strategy. In many important areas, in fact, GOA has already adopted or is considering measures which are consistent with those proposed in this report - for example: - GOA has decided to establish the new extension service throughout the state, and the new system has already been successfully introduced in one sub-division in time for the 1976 kharif season; - The need for more adaptive research, and for closer link- ages between research and extension, has been accepted and proposals are being worked out; - Major policy decisions have been taken in irrigation to concentrate on command area development and the promotion of shallow tubewells; - Water charges have been increased considerably 1/; - GOA has accepted that GPL Societies should concentrate their efforts on the supply of credit and inputs and recognizes the urgency to improve their administrative and financial management. A number of different approaches are being considered in collaboration with commercial banks and the National Institute of Banking Management; - GOA recognizes the need for central coordination of agricul- tural credit and, as a first step, intends to appoint a senior officer to oversee the implementation of a credit action program; - Government also intends to proceed with the establishment of an agricultural planning unit. 71. The Government of Assam is faced with the need to grapple with a number of problems at once and none of them will be easy to resolve. However, the above actions or decisions which have already been taken are indicative of the Government's commitment to pushing ahead with development. Among the other problems which require political commitment and decisive action, two seem of particular importance in the short term: - to take firm measures to reduce credit overdues; - to establish adequPte margins for the distribution of inputs and credit (see Annex 8). I/ Standard charges have been raised to the equivalent of R 56 per ha for Sali paddy (supplementary irrigation), R 150 per ha for wheat, and R 225 for Boro paddy (full irrigation). - 27 - 72. The focus of this report, and of the strategy proposed, is on short-term production gains, and we have therefore emphasized only the immediate priorities. For the longer term, other policy decisions lie ahead and one of the functions of the new planning unit'might be to initiate the necessary .studies to allow such decisions to be taken in due course. Some of the more important policy issues might be: - to determine the priorities for and phasing of future investment in irrigation; - to assess the potential for opening up new land (on cultivable waste or possibly forest land) and devise a suitable program; - to draw up systematic plans for the development of the hill districts and of forest areas; - to formulate a coherent strategy for assisting the weaker sections of the community. V. THE PROPOSED IDA PROJECT 73. Outline of Project. The preceding chapters outline the actions which, in the mission's view, are required to increase foodgrains produc- tion in Assam. The mission's final function was to identify a project, from the components of the overall action program, which might be suitable for IDA financing. In its first draft report (dated May 25, 1976) the mission identified a number of project components for possible IDA financ- ing, including extension and research, groundwater development, CAD, seed production, support for GPL cooperatives and input supply agencies, map production and the improvement of land records. These are described in detail in the annexes. The final definition of an IDA project involved a choice between the size and complexity of the project on the one hand and speed of preparation and implementation on the other, because some com- ponents would take much longer to prepare than others. Moreover, after reviewing the preliminary report, GOA felt that some components, such as the strengthening of ccoperatives or the improvement of land records, while important, were not suitable for World Bank assistance. 74. It was therefore agreed that GOA would concentrate on preparing a first phase project for IDA appraisal which would comprise four main com- ponents: agricultural extension, resea:ch, groundwater development and command area development. It was also agreed that, where possible, the first phase project should help design and finance preliminary work leading to the preparation of second phase projects (see reference to surface irri- gation investment survey below). - 28 - 75. Extension (see Annex 2). The establishing of IES will require additional personnel, vehicles, facilities and financial resources. It is proposed to include the incremental cost of these .items, over a five-year period, as a component of the project. The largest cost component will be the salaries and allowances of incremental staff. It is estimated that to implement the service throughout the state will require an additional 570 VLEWs, 31 supervisory staff at the subdivisional level and 43 additional subject matter specialists. The cost of initial training of new personnel and of the in-service training of existing staff will also be included in the project. 76. All the extension staff will have to be mobile enough to carry out their schedule of visits on time. It is therefore proposed to provide loans for VLEWs to buy bicycles and for Agricultural Extension Officers to buy motorcycles. These personnel will be provided with a travel allowance, in accordance with government regulations, which will be included in project costs. Government vehicles will also be obtained for the exclusive use of subdivisional staff so they can carry out their responsibilities for super- vision, research and training. 77. Adaptive Research (see Annex 3). This component would aim to increase both the volume and the relevance of research by: - creating a unit within AAU to quantify the constraints under which farmers operate, in terms of resources available, attitudes to risk, etc.; - establishing several regional sub-stations reprctsenting different agroclimatic zones, which would provide total facilities for the evolution of extension recommendations fully compatible with the skills and resources of local farmers, and provide a base for both the training of extension workers and their program of trials on farmers' fields; - strengthening AAU facilities for the development of improved animal-drawn implements and hand tools. 78. Groundwater Development Program (See Annex 4). The mission has recommended a first phase groundwater development program which would plan to install about 15,000 small (3 1/2 hp) pumpsets to irrigate a total area of about 50,000 ha. It is estimated that 12,500 of these pumps would be in- stalled on shallow tubewells to irrigate an average of 3.3 ha each. The re- maining units would be used to pump directly from streams or ponds and could each command an area of about 4 ha. The initial program would be confined to four project areas, compr.sing 20 development blocks, mainly in flood-prone areas. The program would be administered by the Irrigation Department, but close liaison will be necessary with the Department of Agriculture, which will be promoting the development of irrigated agriculture through the new extension service, and with the credit institutions. - 29 - 79. The major component of the groundwater program will be the medium- term credit required to finance the pumpsets and wells (about Rs 90 million). It is intended that the whole of this component will be financed through the commercial banks, on standard terms, and refinanced by ARDC. The remaining components are primarily designed to strengthen the Government's capacity in groundwater survey and monitoring, research and development and in the implementation of the proposed shallow tubewell program. They include: - installation of a valley-wide network of groundwater observation wells and pumping tests on deep and shallow tubewells; - a training program comprising a series of short courses on irrigation and hydrology for lower level staff; - vehicles, equipment, repair and maintenance facilities, and the production of maps; - installation, field testing and demonstration of alter- native, low-cost approaches to groundwater development. 80. The last component, which is intended to develop technology and systems which are more appropriate for the smaller farm, will try out some attractive but as yet untested possibilities such as: - developing even cheaper materials (possibly bamboo poles) for well filters; - using small (1 hp) electric pumps where power is available; - improved manual (pendulum) pumps for very small farms; - developing more mobile pumps to serve several wells (in- cluding possible use of "pump wallahs" to provide custom hire services); - alternative forms of water sharing among farmers. 81. Command Area Development. GOA has, in its development plans, empha- sized the need to increase agricultural production on the existing irrigation areas by increased water supply through tubewells and additional pump-lift facilities and by better on-farm water use through command area development (CAD). The Government originally proposed a first phase development in three areas, each of 30,000 ha. However, since GOA has no previous experi- ence of CAD and has not yet tested either the technical solutions or the necessary social organizations under field conditions, the mission recom- mended a smaller first stage project. In its draft report, the mission sug- gested that a component should be included for 8,000 ha CAD (mainly simple - 30 - field channels) within a 20,000 ha area which would be provided with irriga- tion network improvements to guarantee the CAD area water supply. A small (1,500 ha) tubewell subproject might be included in the project to test the organizational requirements and viability of conjunctive water use. The project is designed as a 3-4 year pilot scheme which, it is hoped, will lay the foundation for a larger project in a few years' time (see Annex 5). 1/ 82. Project Preparation. In proposing the outline of a first-phase project for IDA financing, we have explicitly recognized that many components will have to be excluded because they will take longer to prepare. However, it is hoped that the impetus built-up by the first project will lead to one or more second-stage projects. Some components of the project (e.g. ground- water and CAD) can be expected to lead naturally to larger second-phase projects, depending on their success. Also, such components as research on low-cost groundwater technology will, it is hoped, open up new areas for development. 83. In addition, we have suggested that funds should be included in the project to finance surveys, pre-investment studies and preparation work leading to other projects. Some of this amount will be used for a study of irrigation potential and priorities, which will be expected to identify a larger irrigation project for appraisal in about two years' time (see Appendix). These funds might also be used to employ consultants to pre- pare programs in such fields as input supply and grain storage, or to review the organization of land records. 1/ After reviewing the mission's draft report and the preliminary project report prepared by GOA, the Bank suggested to GOA that the initial proj- ect might probably be larger than originally proposed by the mission, provided the increased cost could be accommodated within the State budget. The matter is presently (August 1976) being considered by GOA. APPENDIX Page 1 Surface Water Irrigation Surveys: Draft Terms of Reference 1. Background 1.01 On the basis of soils and topography Assam has about 2 million ha of irrigable land of which less than 10 is irrigated despite the large water resources available. Because many riverine areas are flood-prone in the summer and have adequate shallow depth groundwater available for winter irrigation, and because the principal surface water source in the main Brahmaputra River channel would be difficult, expensive and time-consuming to exploit, surface water irrigation is expected to be confined to the upper less-flooded plains of the tributary rivers; up to 1 million ha may be involved. 1.02 Tn Assam surface water irrigation would probably mostly take the form of medium sized projects (each up to say 30,000 ha), with infrastructure down to appropriate levels of water turnout and complementary surface drainage networks, rather than traditional Command Area Development (CAD) type projects. 1.03 The Government of Assam (GOA), with Government of India (GOI) assistance, propose over the next 3 years to carry out surveys to improve their data base for irrigation development and to help identify investment projects. The surveys would pave the way for detailed project preparation and appraisal. The following terms of reference refer to surface water irrigation development surveys; parallel groundwater studies have also been included in the foodgrains project proposal. The surveys would relate to both improvement and extension of existing projects and to potential areas for new surface irrigation. 2. Surface Irrigation Survey Objectives 2.01 The surveys would be carried out in two phases as follows: (a) Phase 1: Initial assessment: Assemble a data inventory covering all existing public surface irrigation projects and private sector (probably minor) irrigation development; define, and collect basic information on, potentially irrigable areas; make preliminary analysis of costs and benefits of irrigation (see also para. 3.). (b) Phase 2: Evaluation and project formulation: Review and evaluate results of the initial assessment phase; set up suitable technical and socio-economic criteria for identifying and preparing for appraisal medium and minor scale surface water projects. APPENDIX Page 2 3. Initial Assessment 3.01 The data inventory would be compiled as a comprehensive description of: (a) each command area, its irrigation facilities, and current performance of existing irrigation developments on a project by project basis, (b) the potentially irrigable areas defined on a basis of agronomic, topographic and hydrological data. 3.02 These descriptions would include: land tenure data from cadastral surveys and revenue records; topography and soils; water supply available and likely projected demand; existing and potential cropped areas, yields and agricultural production; project facilities (irrigation and drainage infrastructure, comunications, power supply); capital investments and recurrent budgetary allocations on operation and maintenance; project organization and management; agricultural supporting services available in each area; agricultural marketing and input supply situation. The hydrologists would assist GOA to set up a basic streamflow gauging network at the outset of the surveys. 3.03 In the case of potential new areas, alternative means of irrigation would be examined (e.g., by surface water gravity flow from diversion/storage points, tubewells, and pump-lift from rivers and streams). All new projects would focus on year-round irrigation whereas existing surface water diversion projects would only be able to convert entirely to this standard by adding conjunctive use of groundwater and/or reservoir storage. 3.0b Concurrent with these surveys a preliminary irrigation sector study should be undertaken in Assam to assist GOA and GJI to set priorities for irrigation investment in the State. The preliminary results of the proposed all-India Irrigation Sector Survey should be available in September 1977 (about the time of commencing implementation of the Assam Foodgrains project).and would be used as ihputs into the guidelines for the Assam irrigation sector studies. 3o.0 The work involved in the initial assessment would rely primarily on existing data, which would be assembled from published material in GOA and GOI/CWC sources, research of government iles and records, and discussions with concerned officials. These data would be supplemented and cross checked where necessary by sample field surveys to verify their accuracy and to update the available information. The surveys would be at reconnaissance level and would not include detailed topographical surveys; GOA would, however, discuss and agree with GOI for priority aerial photography and mapping to be commenced by Survey of India (S01) within 12 months of the start of the -rrigation surveys and to be completed by the end of the 24 month initial assessment phase. APPENDIX Page 3 3.06 The initial assessment phase would be completed by pre6aration of project briefs setting out: the current status of each irrigated and irrigable area; the constraints to development; recommendations for development action and the costs and benefits of irrigation. These briefs would be discussed at appropriate levels in departments of GOA to ensure that these comments were fully accounted. Copies would be made available to 00I ( and to potential financing agencies when cleared by GO0). 3.07 It is estimated (on the basis that up to 1 million ha of covering both existing projects and nw irrigable land would be reviewed for consideration for surface water irrigation development) that the first phase work could be accomplished in 2?4 months with about 384 man months of local consultants' time. It is assumed that WAPCOS would be commissioned for this work and that they would be invited to make specific technical and financial proposals covering its implementation and cost. h. Evaluation and Project Formulation 4.01 This phase would overlap with the last 12 months of the initial assessment phase to the extent that information would become available and agreed decisions could be reached on irrigation priorities. The first step in the project formulation phase would be a thorough review and evaluation of the results c1tained in the initial phase. Second, a policy decision on irri7stion priorities by GOA, in consultation with GOI, and the selection of possible projects for further preparation prior to appraisal. Priorities would focus on the need for identifying quick yielding surface irrigation projects. These would be scrutinized using the economic planning yardstick developed in the parallel irrigation sector studies, would be evaluated against alternative irrigation methods (e.g., groundwater) and would be required to take account of the criteria developed for other India medium and minor surface irrigation projects (para. 4.02). Third, the formulation of a tentative project pipeline which would probably include a blend of rehabilitation and new projects. Cost benefit analysis for each project, consideration of implementation requirements, and future budgetary allocations would determine the composition and size of the project pipeline which would be set in a convenient (say 5-year) timeframe. b.02 A GOI/Central Water Commission (CWC) committee is currently developing generalized, planning, design, operational and economic criteria based on guidelines discussed between GOI and the Bank. These criteria will be introduced during project appraisals scheduled for FY77 in Orissa and other Indian States. These criteria could be used in evaluation Assam projects at identification state (para. L.01). 4.03 This phase would last 12-months and will absorb about 108 man months of local consultants services. APPENDIX Page 5. Consulting Services Requirements 5.01 Manmonths of Service Consultants Phase 1 Phase 2 Project Manager (I&D Engineer) (1) 24 12 Irrigation Engineers (4) 96 24 Hydrologists (2) 48 12 Topography Surveyers (4) 96 12 Soil Scientist (1) 24 12 Agriculturists (2) 48 12 Agricultural Economist (1) 24 12 Planning Economist (1) 2 12 Total Professional Staff 384 108 5.02 GOA would provide: counterpart professional, technician and office personnel; office accommodation and supplies; transportation, field accommodation; map making and drafting office facilities; hydrological gauging for the studies. WAPCOS would specify these local requirements fully in their proposals for consulting services. STATISTICAL APPENDIX List of Tables 1. Assam: Total Land Area and Classification, 1969/70 2. Assam: Area and Population by District, 1971 3. Assam: Distribution of Holdings by Size, 1970/71 4. Assam: Area Under Principal Crops, 1974/75 5. Assam: Area, Production and Yields of Foodgrains, 1970/71-1974/75 6. Assam: Estimated Net Areas Under Cultivation, 1974/75-1982/83 Statistical Appendix Table 1. ASSAM: TOTAL LAND AREA AND CLASSIFICATION 1969/70 km2 Total Geographical Area 78,463 less: Hill District 15,225 equals: Total area of Plains Districts 63,238 less: forest land 17,437 non cultivable land 1h400 equals: Total cultivable area 31,401 less: permanent pasture 2,339 land under tree crops 2,260 cultivable wastelands 1,837 fallow land( 2,904 areas not reported (1) equals: Total Net Area Sown 21,548 Rlu: area sown more than once 5,328 equals: Total Gross Cropped Area 26,876 (1) Difference between total surveyed area and areas reported by village surveys. Source: Department of Economics and Statistics, Assam. Statistical 'Appendix Table 2. ASSAM: AREA AND POPULATION BY DISTRICT, 1971 District Area in Sq. Population Densit per Kas. k 1. Goalpara 10,359 2,225,103 215 2. Kamrup 9,863 2,854.,183 289 3. Darrang 8,775 1,736,188 198 4. Nowgong 5,561 1,680,895 302 5. Sibsagar 8,989 1,837o389 204 6. Lakhimpur 5,768 711,600 123 7. Dibrugarh 7,024 l,ll,19 201 8. Cachar 6,962 1,713,318 246 Total plains districts 63s301 l,169,795 224 9. Mikir Hills 10,332 379,310 37 10. N. C. Hills 4,890 76,07 16- Total Hills Districts 15,222 455,357 30 Assam Total 78,523 14,625,152 186 Source: Economic Survey Assam, 1974/75. Statistical Appendix Table 3. ASSAM: DISTRIBUTION OF HOLDINGS BY SIZE Size in ha. Number of Holdins Area 1,00U % cu.% 1000 ha % cu.% Below 0.5 652 33.2 33.2 169 5.9 5.9 0.5-1.0 468 23.8 57.0 340 11.8 17.7 1.0-2.0 467 23.8 80.8 662 23.0 40.7 2.0-3.0 .89 9.6 90.4 459 15.9 56.6 3.0-5.0 130 6.6 97.0 491 17.0 73.6 5.0-10.0 50 2.5 99.5 327 11.3 84.9 Over 10 8 0.5 100.0 435 15.1 100.0 TOTAL 1j964 100.0 2,883 100.0 Source: World Agricultural Census Assam, 1970-71. Statistical Appendix Table 4. ASSAM: AREA UNDER PRINCIPAL CROPS, 1974/75 1,000 ha Rice: Ahu (pre-monsoon) 587 Sali (monsoon) 1,P431 Boro (rabi season) 4o Total 2,05t Wheat 61 Maize 16 Other cereals 10 Pulses 97 Total Foodgrains 2,72h Rape and mustard 168 Other oilseeds 15 Jute 120 Other Fibers 15 Sugarcane 42 Potatoes (1) 26 Other principal crops (1) 24 Total principal crops 2 (1) There are no complete figures of gross cropped area. Source: Department of Economics and Statistics, Assam. Table S. ASSAM: AREA. PRODUCTION AND YIELDS OF FOODGRAINS 1965/66-1974/75 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 191 Ayea (1,000 ha) Paddy 1s798 1,852 1,887 1,953 1,968 1,968 1,967 2,069 2,078 2,058 Wheat 5 5 6 7 9 21 40 112 42 61 Coarse Grains 1k 16 15 16 .6 17 18 21 23 26 Pulses 88 84 86 90 93 85 86 98 95 97 Total Foodgrains 1,905 1,957 1,99 2,020 2,086 2,091 2,111 2,300 2,238 2.2I2 Average Yields (2) (kg/ha) Rice (1) 953 881 948 1,018 902 1,006 971 1,052 994 964 Wheat 681 660 641 631 622 571 1,200 1,29 1,143 1,279 Coarse Grains 497 527 532 532 530 588 500 524 522 500 Pulses 438 425 426 429 393 376 360 490 474 412 Total Production (1,000 tons) Rice (1) 1,713 1,632 1,788 1,990 1,776 1,980 1,908 2,177 2,066 1,984 Wheat 3 4 4 4 6 12 48 160 48 78 Coarse Grains 7 8 8 6 9 10 9 11 12 13 Pulses 38 36 37 39 36 32 31 48 45 40 Total Foodgrains 1837 1,680 1,837 2,039 1,827 2,034 19996 2,396 2.171 2.115 Source: Department of Economics and Statistics, Assam. P3 C+ (1) Production as clean rice. (2) Yields have been calculated by dividing official figures of production by area. 0 The resulting figures differ slightly from published yields figures. July 23, 1976 Statistical Appendix Table 6. ASSAM: ESTIMATED NET AREAS UNDER CULTIVATION 1974/75-1982/83 1974/75 1979/80 1982/83 Rainfed Areas Flood-prone 360 342 331 Flood-free 1,730 1,713 1,701 Total 2,090 2s055 2,032 Irrigated Areas Flood-prone 40 57 69 Flood-free 1o 128 139 Total 150 185 208 TOTAL 2,240 2,240 2,240 Source: Mission Estimates. ANNEX 1 THE POTENTIAL FOR FOODGRAINS PRODUCTION Table of Contents Page no. A. BACKGROUND 1 B. PRESENT PRACTICES AND PRODUCTION 2 Cropping Seasons, Rotations and Intensity 2 Standards of Husbandry 3 Draught Power, Implements and Input Use 4 Yields and Production 5 C. PRODUCTION Pu,rENTIAL AND CONSTRAINTS 6 Increasing the Area under Cultivation 6 Increasing Crop Yields 6 Increasing Cropping Intensity 7 The Role of Irrigation 8 Causes of Low Production 9 D. PRODUCTION DEVELOPMENT 11 Strategy 11 Production Potential 12 Incremental Input Requirements 15 TABLES 1-6 APPENDIX: Method of Calculation of Foodgrain Production and Input Requirements ANNEX 1 Page 1 THE POTENTIAL FOR FOODGRAINS PRODUCTION A. Background 1. By far the most important foodgrain of Assam is rice. In 1974/75 it constituted about 80% of the total area under annual crops in the state, 92% of the foodgrain area and contributed 94% of foodgrain tonnage; area figures for the main annual crops are shown below. Typical cropping patterns for rainfed farms in different districts are shown in Annex 4, figure 4. Crop Area ('000 ha) Rice 2,058 Wheat 61 Coarse grains 26 1 ulses 97 Oilseeds 183 Jute 120 Sugarcane 42 Potato 26 Source: Dept. of Economics and Statistics. Rice production is almost totally confined to the plains, which consist of a strip approximately 850 km by 60 to 120 km along the Brahmaputra Valley and an area of about 80 x 60 km in Cachar District, lying in the south of the state and separated from the Brahmaputra Valley by the Cachar Hills. Almost the whole foodgrain area is rainfed, only an estimated 5% (150,000 ha) being irrigated. 2. The summer rainfall and temperatures in the plains of Assam are particularly favorable for the rainfed production of rice, in contrast to much of India. The 75% probable monthly rainfall exceeds the upper limit of rice evapotranspiration from the onset of pre-monsoon showers in early May until the end of October in most places (see Annex 4 figure 2); during this period average daily temperatures range from between 22 and 320C. Two rainfed rice crops are therefore theoretically possible. Due to humid and relatively cool conditions during the rest of the year redsidual moisture is only slowly depleted so that rabi crops of wheat and pulses can be grown; rabi rice is also possible, provided supplmentary irrigation is available and cold-tolerant varieties are used. Representative monthly rainfall and temperature data are given in table 1. ANNEX I Page 2 3. The soils of the plains areas are alluvial and, especially in the flood-prone areas which receive annual deposits of silt, are relatively fer- tile. The new alluvial soils, which cover the greater part of the Brahma- putra Valley, are predominantly sandy or loamy soils of neutral reaction having moderate levels of available phosphorus and potash. They can be worked with draught animals even in the dry season. The older alluvial soils on the south side of the valley and in upper Assam are somewhat acidic, poorer in available phosphorus and, having a heavier texture, they cannot be ploughed when dry using the local draught animals. The mountain valley alluvial soils of Cachar district are more acidic than the other two groups, intermediate in texture and have a nutrient status similar to the old alluvial soils. There are no significant problems of salinity, and drainage is generally adequate except in limited low-lying areas. Extensive reserves of good quality ground- water exist below much of the plains areas, often at a depth of less than 5 meters (see Annex 4). 4. Despite protection works, flooding remains a feature of the Brahma- putra Valley during the peak monsoon period from mid-June to mid-August. The area of crops damaged varies widely but has averaged above 200,000 ha over the last six years and it is estimated that some 400,000 ha of land area are at risk from flooding each year. Floods usually rise and fall rapidly and unpre- dictably. Floating rice varieties are of little value in this situation and on flood-prone land it is usually necessary to avoid the flood risk by delay- ing planting until late in the monsoon. The possibility of flooding and local variations in soil type and the reliability of pre- and post-monsoon rainfall', effectively create a number of agroclimactic regions in Assam with different potential cropping patterns, intensities and yields. 5. The average size of operational holding in Assam is less than 1.5 ha and 90% of the farmers, operating 56% of the land, have holdings of less than 3 hectares. Further details are given in Table 3 of the general report. It is estimated that some 30% of cultivators, operating about 20% of the land, are sharecroppers. Despite recent laws which limit the landlord's share to 25% or less, the traditional 50% of produce is still given in most cases. B. Present Practices and Production Cropping seasons, rotations and intensity 6. There are three rice growing seasons in Assam. The main rice crop, known as sali, is transplanted in July and harvested in November or December. It receives the full monsoon rain. Second in importance is the ahu crop, which is traditionally direct seeded a, the onset of pre-monsoon showers in March or April and harvested in June or July. The rabi rice crop, known as boro, is of only minor importance; it is transplanted into low-lying areas from January to March, harvested in May, and usually receives some irrigation by traditional methods. The timings of the three crops therefore overlap and in practice far- mers tend to concentrate on the sali crop because its water supply is more assured. On flood-prone land sali rice is planted in September on the receding flood. Rice areas in 1974-75 were as follows: ANNMX 1 Page 3 Crop Area ('000 ha) Ahu (pre-monsoon) 587 Sali (monsoon) 1,431 Boro (rabi season) 40 Source: Dept of Economics and Statistics 7. Wheat, pulses and coarse grains are grown on residual moisture as rabi crops. They are sown in November, December or January after harvest of sali rice. The present traditional sali varieties mature rather too late to allow rabi crops to be planted at the optimum time. If grown, rabi crops may therefore suffer water stress which limits yield or can cause total failure . For wheat, delayed planting results in harvest during the pre-monsoon showers of April. Nevertheless the wheat area has increased from a few hundred hectares ten years ago to 61,000 ha, at the expense of traditional rabi crops such as rape and mustard. Among the pulses there is a recent move from grams and len- tils, which require September planting, towards peas, which can be planted as late as De_t...ber and outyield the traditional pulses. 8. The other major annual crops of Assam are oilseeds and jute. Some 120,000 ha of jute were grown in 1974-75, principally on flood-prone land. Jute is sown in April and harvested in July and therefore cannot readily be accommodated in rotation with ahu rice or rabi wheat. Oilseeds are grown in the rabi. 9. Despite the many possible cropping patterns available the state average cropping intensity is only 125%. The present intensity of foodgrain cropping is estimated at 70% on the flood-prone areas, and about 105% on areas which are not flooded (see Table 2). Standards of husbandry 10. Crop husbandry practices are generally traditional. Land is prepared by time-consuming methods using numerous shallow passes of the traditional chisel (desi) plough, alternating with laddering. For dry-sow crops clods may be broken by hand, using long-handled mallets. Incorporation of perennial weeds is poor and land levelling for paddy and irrigated crops is uneven. Rainfed fields are only lightly bunded. No drainage channels are provided for rainfed or irrigated fields and the efficiency of water utilization on irrig,ted areas appears to be low. 11. Direct-seeded ahu paddy, wheat and pulses are almost universally broadcast. Annual weeds are very numerous in these crops and, due to the incidence of water stress, are potentially highly damaging. Since the crops are not line-sown, control measures are confined to cross-harrowing of ahu paddy (which severely disturbs the crop as well as the weeds) and infrequent ANNEX 1 Page 4 hand pulling of weeds in the other crops. Yield losses due to weed competi- tion are therefore considerable, and for high-yielding rice varieties, which are shorter statured and less tolerant of harrowing, potential losses are even greater. For transplanted paddy the planting points are often too widely spaced and too many seedlings are planted per hole. Yields may therefore be limited by sub-optimal plant populations and weeds are again given ample opportunity to compete. 12. Harvesting, threshing and storage practices are also traditional. The climate of Assam poses special problems for the ahu paddy crop which comes to harvest at the height of the monsoon and to a lesser extent for wheat. Damp and cloudy conditions may make it impossible to dry these crops to a level where they can be safely stored. Spoilage is therefore frequent. Saved seed often shows poor germination for the same reason, although many farmers appear to have accepted a recent Department of Agriculture recommendation for storage of saved seed in polythene bags, with a period of sun-drying every three months. 13. Except in the sali season (when almost all farmers have a crop on the ground) grazing livestock are often permitted to wander during the day with consequent damage to standing crops. 14. The benefits of organic manuring are well known to farmers but the average FYM application rate appears to be only about 1 ton/ha. This is very low in relation to official statistics for the number of domestics animals, which suggest that it would not be difficult to double this dose. Manure that is collected is frequently stored in the open where it is leached by rains before spreading. Draught power, implements and input use 15. The local bullocks are small and capable of a sustained draught of only some 35 kg per pair. A 3-inch iron mouldboard plough has been developed by the Assam Agricultural University and gives some soil inversion and a better rate of work than the desi plough, but barely one farmer in a hundred owns an improved plough. Bullock-drawn or hand-operated row seeders are vir- tually unknown, and a recent survey shows only one tractor per 5,500 hectares of cropping. Powered sprayers and threshers are even less numerous. 16. Use of purchased inputs is of the same low order. Fertilizer use on foodgrains in 1974-75 is estimated at only some 4,500 tons nutrients (an average of about 2 kg/ha), after reaching a peak in 1972-73. Only about 10% of rice is under improved local or highyielding varieties. Seed sales in 1974-75 totalled about 5,000 -ons and most saved seed is sown without fungicide dressing. Use of other pesticides is also rare. Institutional production credit totalled only 4,000 loans in 1974-75. The cash resources available to finance production appear for the average farmer to be very slender. A sample survey by the Assam Agricultural University in the Jorhat area showed that traditional farmers operating up to 3 hectares spent less than Rs 50 per farm per year. ANNEX 1 PaZ 5 Yields and production 17. Foodgrain yields in Assam are summarized .below. They are among the lowest in India and have shown little increase over the last five years. Foodgrain yields, tons/ha Crop 1970-71 1971-72 1972-73 1973-74 1974-75 /a Rice 1.05 0.99 1.07 1.01 0.98 Wheat 0.58 1.20 1.43 1.15 1.26 Maize 0.55 0.55 0.55 0.55 0.54 Other cereals 0.50 0.49 0.50 0.50 0.51 Gram 0.54 0.55 0.49 0.49 0.49 Tur 0.71 0.71 0.71 0.91 0.40 Other pulses 0.36 0.34 0.48 0.46 0.39 /a as clean rice. Source: P- -+ of Economics and Statistics. Since the areas under foodgrains have increased only slightly during the same period, total production also shows little change. Total foodgrains production ('000 tons) Crop 1970-71. 1971-72 1972-73 1973-74 1974-75 Rice /a 1,980 1,908 2,177 2,066 1,984 Wheat 12 48 160 48 78 Maize 7 6 6 8 8 Other cereals 3 3 5 4 5 Pulses 32 31 48 45 40 Total 2,034 1,996 2,396 2,171 2,115 /a As clean rice Source: Dept. of Economics & Statisti.' ANNEX 1 Page 6 The relative yields, areas and production derived from the three rice crops in 1974-75 are shown below: Crop Area Yield /a Total Production /a ('000 ha) (tons/ha) ('000 tons) Ahu (pre monsoon) 587 0.71 397 Sali 1,431 1.09 1,540 Boro (rabi season) 40 1.21 47 Total 2,058 - 1,984 /a As clean rice Source: Dept. of Economics & Statistics C. Production Potential and Constraints 18. There are three ways in which foodgrain production might be in- creased; by increasing the area under cultivation, by raising crop yields or by raising croppping intensity. Increasing the area under cultivation 19. There is little scope for bringing new land under foodgrain cultiva- tion. Although only 28% of the geographical area is devoted to annual crop- ping, most of the remainder is either unsuitable due to slope or rockiness (33%), already under perennial crops such as tea (2%) or scheduled as forest reserves (27%). Only some 180,000 ha (2%) are classified as cultivable waste. Even if all this could be brought under cultivation it would add only 8% to the present area available for annual cropping. A significant increase in the area under cultivation could only be achieved by reallocation of forest land, which is assumed not to be acceptable. Increasing crop yields 20. There is ample scope for increasing crop yields. 1/ The potential for HYVs combined with high fertilizer doses can be seen from a series of 57 supervised farmer trials on rainfed sali rice in 1975; yields averaged. approximately 3.5 tons/ha at 100 kg N + 48 kg P205 + 50 kg K20 per hectare. A similar sequence of 21 supervised farmer trials in 1974 gave an average sali 1/ Rice yields are expressed in terms of clean rice throughout this annex. Where necessary, a conversion ratio of 0.66 has been used to derive them from yields of paddy. ANNEX 1 Page 7 rice yield of 3.3 tons/ha. with HYVs at a nutrient dose of 80:40:40 kg/ha, and 19 of the same farmers who also grew HYVs in the following ahu season at 60:30:30 kg nutrients/ha obtained an average rice yield of 3.1 tons/ha. Yields were therefore about three times the present .state average. 21. The potential for HYVs without fertilizer can be judged from 160 crop cutting experiments on rainfed ahu rice in 1975. In the absence of fertilizer the HYVs averaged 2.1 tons rice/ha while the traditional varieties, at 1.3 tons/ha, yielded somewhere near the state average. In these trials the HYVs failed to show any improvement in yield when relatively low N:P:K doses of 45:25:20 and 25:10:10 were applied, even though the higher dose was combined with irrigation. This lack of response to low doses of fertilizer has also been seen in other farmer trials. But in research trials at the Assam Agricultural University, by contrast, nitrogen response ratios by HYVs ranged from 7:1 to over 20:1 at 40 kg N/ha in the presence of 50 to 80 kg P205 and 50 kg K20/ha. The optimum dose of N at 1975 rice fertilizer prices was calculated from these trials as 36 kg/ha. 22. Information on the potential benefits of-weed control in sali rice comes from a further AAU trial in which the unweeded control yielded 1.1 tons/ha, compared with 2.3 tons for handweeding and 2.7 tons for the most effective herbiciae treatment. The benefits to the ahu crop coud be ex- pected to '_ even greater. 23. In rabi 1974/75 in a series of 13 supervised farmer trials on wheat, some of which were droughted, yield averaged 1.7 tons/ha with a range from 1.1 to 2.6 tons/ha at a fertilizer dose of 40:20:20. These figures compare with AAU variety trials in which wheat yields averaged about 1.9 tons/ha. Increasing cropping intensity 24. The theoretical scope for raising cropping intensity is considerable (see para 2). Since most farmers take a full sali rice crop, to increase cropping intensity in practice means growing larger areas of ahu rice and/or rabi crops. 25. Supervised trials have demonstrated the practical possibility of triple rainfed cropping by small farmers in the Jorhat area, with double cropping on the flood-prone areas. Of 25 farmers involved, 21 took a suc- cessful sali rice crop, 21 took a rabi crop of wheat, mustard or pulses and 19 secured an ahu rice crop. Yields are included among those quoted in paras 20 and 23. Compared with this very high cropping intensity, farmers in a number of areas are already achieving-some 170% on their own initiative. 26. However, in deciding a state-wide strategy to increase rainfed cropping intensity it is necesary to decide on the balance between the ahu and rabi seasons. Ahu cropping, despite the availability of good quick-maturing rice varieties, will always depend on variable pre-monsoon showers and there- fore involve some risk. To take full advantage of early rainfall speedy ANNEX 1 Page 8 seedbed preparation is necessary and land must often be broken when dry, both of which are constrained by existing draught power and implements. Even if more ahu rice is sown it will still mature at the height of the monsoon with attendant drying and storage problems; the desirability of generating a surplus of.food grains at that time of year is therefore questionable. For these reasons, major emphasis on increasing ahu intensity may only be justi- fied in areas where flooding makes it difficult to raise intensity at any other time of the year. 27. Increased rabi cropping intensity, since it relies on residual moisture, does not require soil to be ploughed when dry and it is easier for the farmer to assess the risk of subsequent water shortage (in some areas water may remain within a few centimeters of the surface throughout the year by capillary rise from the water table). However, planting of rabi crops needs to be earlier than at present if establishment and yields are to be more reliable, which in turn imposes a need for quicker land preparation or, preferably, an earlier sali harvest. Traditional sali varieties are photoperiod sensitive so that earlier planting will have little effect. The quicker-maturing dwarf HYVs, while insensitive to photoperiod, are more likely to suffer from the excessive water depths which are a feature of the sali season even in areas which are not classified as flood-prone. Nonetheless these disadvantages are minor compared with the problems of ahu rice; in- creased rabi cropping, especially with wheat, is the most practical means for increasing overall cropping intensity. The role of irrigation 28. Considerable emphasis has been laid in the past on increasing the extent of irrigation in Assam. Irrigation can facilitate land preparation by softening the heavier soils and can eliminate the risks o' moisture stress to pre-monsoon and rabi crops. It can thus contribute to the attainment of both potential yield and cropping intensity and is particularly applicable to the flood-prone areas, where the requirement to avoid cropping at the height of the monsoon pushes the available cropping periods either earlier into the pre- monsoon season or later into the rabi. It is here that irrigation develop- ment merits the greatest priority and since the amount of water and number of irrigations needed in the climate of Assam are small, cheap methods of supplementary irrigation would be adequate. High priority should be given to the development of hand or animal-powered systems for raising groundwater, designed to provided supplementary irrigation to a 1.5 ha holding or just to permit the establishment of a paddy nursery. Their cost should be within the resources of the smaller farmers, and unlike existing mechanically-powered shal- low tubewells, the smallest of which irrigate an area equivalent to three average-sized Assamese holdings, they would obviate the need for group ownership or the selling of surplus water. 29. The installation of full-scale irrigation facilities is less easy to justify on the grounds of water requirements alone. But there would be addi- tional yield gains from the sali rice crop from the controlled drainage with which such irrigation would presumably be associated. Nevertheless the extent ANNEX 1 Page 9 of irrigation now (5% of cropped area) and in the near future will remain small. Hence in the short term the major boost to foodgrain production must come from the rainfed areas simply because of their larger extent, whatever the approach to irrigation development. Causes of low production 30. These may be grouped under five headings. (i) Constraints over which the farmer has no direct control. These include flooding, which compels him to plant at times of increased drought risk, and the heavy rainfall and low effective solar radia- tion of the monsoon season which predispose the ahu crop to post- harvest spoilage and limit the growth of the sali crop. Variability of rainfall, especially of pre-monsoon showers, is a further con- straint to rainfed yields and, through its interaction with ease of land preparation, to cropping intensity. As a source of risk it appears to deter many rainfed farmers from attempting to grow any crop outside the monsoon. (ii) Bad husbandry practices. These include inadequate weed control, in- correct crop spacing, incorrect timing of operations to take advan- tage of favorable conditions (usually due to poor management of crop rotations), insufficient organic manuring and failure to exclude grazing animals from crops. These items are grouped because the farmer could generally remedy them himself at low cash cost if guided in the more effective use of his present resources, especially family labor. (iii) Inadequate draught power and implements. Slow land preparation given by the present combination of poor draught animals with traditional implements both limits cropping intensity and delays the time of crop planting. Improved implements from elsewhere in India are for the most part too heavy for local cattle, and development of miniaturised versions which could increase the rate of work of Assamese cattle has only recently begun to make progress. Programs for improvement of rearing practices and upgrading of stock are also at a very early stage. Line sowing, which permits weed control by inter-row cultivation, although possible with tra- ditional equipment, is limited by the lack of specialized seeders. In addition, few farmers have any equipment for inter-row weeding apart from the traditional hoe. (iv) Non-adoption of modern inputs. High-yielding or local improved varieties, fertilizers and pesticides have generally been promoted in the past as a complete package, the adoption of which involves a cash outlay of some Rs. 500 to over 1,000 per hectare. When com- pared with a total annual cash investment as low as Rs. 50 per farm ANNEX 1 Page 10 it is clear that cost alone has been a major obstacle to their adoption. Few farmers have been prepared to risk borrowing the cash and fewer still can provide it from their own resources. Another major disincentive to adoption has been the low general standard of husbandry referred to in (ii); for their success these inputs require that basic standards of husbandry - time of planting, weed control, plant population and the like - should be adequate. The supervised trials quoted (paras 20 and 23) show what yield increases are possible with inputs under good management. Rarely is this achieved by farmers. More often fer- tilizer, when not mistimed so that it is rendered inactive by in- adequate rainfall or lost due to an excess, has exacerbated weed competition rather than benefitting the crop. HYVs, being shorter statured, are poor competitors with weeds and their earlier maturi- ty has made them a conspicuous target for wandering livestock or wild birds at a time when no other crops are in ear. Pesticides have been applied too late to prevent damage or with inadequate equip- ment. In these circumstances the results achieved by most farmers have been disappointing and it appears that significant numbers have reverted to traditional practices after experimenting with modern inputs. (v) Institutional factors. The principal institutional-related constraint in the past has been the failure of extension to raise basic husbandry standards to the point where farmers could obtain reliable results for modern inputs - see (iv) above. In addition the institutions concerned with input supply and sea- sonal credit are not particularly effective (Anrexes 7,8 and 9). However, with the present low demand for inputs and/or unwilling- ness to borrow money to finance cropping, the defects of these institutions are not an immediate constraint to production. Al- though the use of inputs must rise eventually, recommendations for high doses are not advocated as the initial means of raising pro- duction (para 33). The defects of these institutions would there- fore only become a constraint if left unremedied in the medium to long term. Finally there is the possible influence of sharecropping. Some 20% of land appears to be share-cropped 1/ but the mission found no evidence that cultivators were at present neglecting sharecropped land at the expense of land which they owned. For the future, it was suggested that landlords might insist on cultivators maintaining adequate production on sharecropped land, or face eviction. Hence improved practices which require little cash, and are therefore not linked via credit to a requirement for title to land, seem likely to be taken up by sharecroppers. 1/ This is a mission estimate arrived at principally from field discussions with farmers. Official figures .suggest only a very few percent of land to be sharecropped. ANNEX I Page 11 D. Production Development Strategy 31. The gap between potential and actual production is as great in Assam as in any state in India. The starting point for bridging this gap, as elsewhere, is the reorganization of agricultural extension as described in Annex 2. This has already been started by GOA. However, the impact of an extension service on production is only as good as the technical recommendations which are made. 32. Extension recommendations should reflect the level of skills of farmers and the resources available to them at the time. The majority of Assamese farmers are not very skilled; they may have an excess of family labor but have very little cash to invest in production. Hence extension in Assam should concentrate initially on the improvement of basic husbandry standards, principally by more effective use of family labor. Modern inputs should only be recommended later, when skills have reached a level sufficient to benefit from them, and then only at levels which the farmer can afford. Pending resolution of the uncertainties surrounding the effectivenes of low doses of t-,fLilizer under Assamese conditions, the first modern inputs to be emphasized could be HYVs and seed treatment, with higher doses of fertilizer being promoted later. A sequence of extension packages can therefore be en- visaged, characterised by the requirement for increasing levels of skill, increasing cash cost and increasing net returns both to cash and family labor. 33. For convenience of calculating production potential the following package sequence has been assumed. Package 0. Traditional practices and varieties, 1/ minimal cash inputs, poor husbandry standards. Package 1. Improved land preparation and levelling, optimum plant populations and weed control but still with traditional varieties; seed treatment and pest control on paddy seedbeds. Package 2. Package 1 combined with HYV rice, composite maize and low doses of fertilizer - say 25 kg total nutrients per hectare 2/. Additional pesticides not actively promoted, and use confined to "fire brigade" situations. Pulses stop here. 1/ Except for wheat, all of which is already under HYVs. 2/ In practice HYVs need not be invariably associated with fertilizer. In some areas HYVs can be recommended alone as a low-cost version of this package, and can be expected to give large yield gains (see para 21). ANNEX 1 Page 12 Package 3. Package 2 with a higher fertilizer dose - say 50 kg total nutrients per hectare 1/ - and recommendations for regular use of pesticides as appropraite to safeguard yields. It is accepted that some cultivators will use, and in cases are already using, higher doses of purchased inputs but the above sequence is aimed at the majority of traditional farmers. Production potential 34. In calculating yields attainable with the different packages the results of the supervised farmer trials described in paras. 20 and 21 have been used, but the yield gains reported there have been somewhat reduced. The responses to fertilizers and pesticides reported from research station trials have been approximately halved in making projections of the responses attainable by farmers. Principal assumptions are a 30% yield increase from the improved practices in Package 1, except for irrigated ahu rice for which a change to transplanting is assumed, giving total gain of 40%; a 40% increase for the change to HYVs in Package 2; fertilizer reponse ratios between 5:1 (rainfed) and 10:1 (irrigated) for a maximum of 50 kg total nutrients/ha, and a 15% gain from foliar pesticides in Package 3. Projected yields are shown below. 1/ In practice this package may also be split - for instance by recommending 100 kg total nutrients for crops with controlled irrigation. ANNEX 1 Page 13 /a Projected yields -for extension packages (tons/ha) ..............Package............. Crop 0 1 2 3 Rainfed Ahu rice 0.6 0.8 1.2 1.5 /b Sali and boro rice 1.0 1.3 1.9 2.3 Wheat 1.1 1.45 1.55 1.9 Coarse grains 0.5 0.65 1.05 1.3 Pulses 0.4 0.55 0.8 - /c Irrigated Ahu rice 0.8 1.1 1.8 2.3 Sali and boro ric. 1.2 1.6 2.4 3.0 Wheat 1.5 2.0 2.2 2.8 Coarse grains 0.8 1.1 1.75 2.2 Pulses 0.5 0.7 1.0 - /a Rice as clean grain. /l Boro with minimal supplementary irrigation by traditional methods only. /c Irrigated yields assume 75% as supplementary irrigation at average figures slightly below those shown and 25% as full irrigation with drainage, at yields above those shown. 35. The impact of extension on production over time will be related to the rate at which reorganization can be implemented, combined with the pattern of uptake of the package recommendations and the success of extension in raising cropping intensity. The detailed assumptions made for computational purposes are given in Tables 3 (extension coverage 1/), 4 (uptake of packages) and 5 (cropping intensity). For the enthusiast, a fuller account of the steps involved in the production calculation and some of the intermediate tables are given in Appendix 1. Main features of the assumptions are: - coverage of the whole state by the reorganized extension service to be phased over a five-yeL-- period, initiated the year before any World Bank financing; 1/ Compared with Annex 2, table 2, a somewhat lower rate of implementation is assumed in the third year, followed by recovery in the fourth. ANNEX 1 Page 14 - production benefits from extension in a given area to begin in the year after extension reorganization and reach full development after 6 years of exposure to the new extension system; - initial uptake of packages and rise in cropping intensity to be rapid after the reorganization of extension in a given area, 45% of the changes projected at full development being reached afer 2 years; - a residue of farmers to remain on Package 0 at full development, ranging from 15% for irrigated wheat, 20% for rainfed wheat and irrigated rice, 40% for rainfed rice and coarse grains to 60% for rainfed pulses; - an overall change in foodgrain cropping intensity from approximately 70% to 100% on flood-prone rainfed land, 75% to 130% on flood-prone irrigated land, 105% to 130% on non-flooding rainfed land, and 120% to 180% on non-flooding irrigated land. - The assumptions are biassed towards the development of rabi cropping intensity, especialy wheat, rather than further large-scale development of ahu rice (see para 27). 36. Calculated foodgrain production for the present situation, year 3, year 6 and at full development of a potential intensification project is shown in Table 6.6 The following incremental production is indicated in the short and medium term. ......Incremental production.......... Year 3 Year 6 Crop '000 tons % increase '000 tons %increase Ahu rice 59 15 213 53 Sali and boro rice 128 8 490 31 Wheat 117 150 405 514 Coarse grains 7 52 27 205 Pulses 12 31 37 95 Total foodgrains 323 15 1,168 56 37. Allowing for population growth and 1% annual increase in per capita consumption, these figures, based on fairly conservative assumptions, indicate the possibility of generating a -t surplus of over 200,000 tons by 1982/83 (year 6), after allowing for seed and grain losses (see General Report, Table 2). ANNEX I Page 15 Incremental input requirements 38. Due to the extension strategy proposed the incremental fertilizer requirement is only 2,800 tons total nutrients (a 60% increase on present use) by year 3, but this rises to 18,500 nutrient tons in year 6. 39. Incremental requirements for germination tested or certified seed have been calculated on the following assumptions: - average seed rates of 25 kg/ha for transplanted rice, 100 kg/ha for wheat, 20 kg/ha for coarse grains and 30 kg/ha for pulses; - annual replacement rates of 40% for wheat and 20% for high-yielding or improved varieties of the remaining crops; - remaining seed of high-yielding or improved varieties and all seed of traditional or unimproved varieties to be.farmer-saved. Seed requirements aL years 3 and 6 are indicated below. Estimated requirements for germination tested or certified seed (tons) Year 3 Year 6 Crops Total Increment % Total Increment % /a Ahu rice 280 (270) (50) 820 280 50 Sali and boro rice 650 200 45 1,780 1,330 300 Wheat 5,400 2,950 120 12,150 9,710 400 Coarse grains 7 7 n.a. 40 40 n.a. Pulses 30 30 n.a. 120 115 n.a. Total seed 6,367 3,187 14,910 11,475 /a Reduced by change to transplanting. IIDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEl (A,SAP) Rainfall (mm) for representative locations in Assam J F M A M J J A S 0 N D Total )HUBRI (Lower Asam) 4ean monthly rainfall 11 19 45 1 54 V. 644 448 305 328 145 12 1 2593 30% probable monthly rainfall 0 2.1 1.9 76.2 30 .7 418.3 232.8 200.3 190.9 44.2 0 0 2216.9 lumber days with-7 1 mm 1.1 2.1 3.2 8.9 18.0 20.5 17.9 16.3 13.0 6.3 1.0 0.2 lo8.5 3AUHATI (Mid Assam) Aean monthly rainfall 11 18 3 171 274 292 301 263 190 90 11 5 1679 30% probable monthly rainfall 0 o.1 10.8 98.8 181.6 205.? 206.1 172.9 124.9 35.5 0 0 103 lumber days with? 1 mm 1.3 2' .1 1001 17.0 17.1 17.0 14.7 12.2 6.1 1.8 0.9 106.2 3ILCHAR (Cachar District) .Aean monthly rainfall 15 46 131 313 493 59h 547 488 378 207 44 7 3263 B0% probable monthly rainfall 0 8.7 36.8 178.3 347.1 492.8 414.3 306.3 234.3 108.6 0.5 0 2950.7 lumber days with 7 1 mm 1.6 4.1 8.0 14.0 19.7 23.6 26.1 23.9 18.2 10.2 2.3 0.9 152.6 DIBRUGARH (Upper Assam) lumber days with 7 1 mm 4.9 7.9 10.2 14.6 18.4 21.5 22.8 20.0 17.1 10.0 3.1 2.7 153.2 o Temperatures ( C) for representative locations Mean 3auhati - mean 17.6 19.9 23.5 26.4 26.8 28.4 28.9 29.2 28.2 26.2 22.3 19.0 24.7 Silchar - mean 18.5 20.3 23.7 26.3 26.9 27.8 28.0 28.4 28.1 26.7 23.2 19.9 24.8 A.ssam - mean maximm 23.9 25.6 28.3 29.4 30.6 31.1 31.7 31.7 31.1 3b.6 27.2 24.4 - mean minimum 10.6 12.2 16.1 20.0 22.2 25.0 25.0 25.6 24.4 21.7 16.1 11.7 Source: FAO April 27, 1976 INDIA: EASTERI REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Estimated present cropped areas (000's ha) and foodgrain cropping intensity Rainfed Irrigated FLOOD-PRONE AREAS (360,OUO ha) (40,000 ha) Total (400,000 ha total croppable land) area CI area CI area CI Ahu rice 88 24.4 12 30.0 100 25.0 Sali, and boro rice 115 31.9 16 ho.0 131 32.8 Wheat 13.5 3.7 2.5 6.0 16 4.0 Coarse grains - - - - - - Pulses 31.6 8.8 0.4 1.0 32 8.0 Total foodgrain cropping intensity 68. 77.0 69,0 Rainfed Irrigated NON-FLOODING AREAS (1,730,000 ha) (110,000 ha) Total (1,840000 3 total croppab,e land) area CI area CI area CI Ahu rice h8.5 25.9 38.5 35.0 487 26.5 Sali and boro rice 1257.5 72.7 82.5 75.0 1340 72.8 Wheat 36.2 2.1 8.8 8.0 45 2.4 Coarse grains 25.4 1.5 0.6 0.5 26 1.4 Pulses 63.3 3.7 1.7 1.5 65 3.5 Total foodgrain cropping intensity 105.9 120.0 106.6 Source: mission estimates 1/ There are no official statistics showing the distribution of cropped areas in this form. The apparent precision of the figures is spurious, resulting only from the need to make totals match the published total crop areas for Assam. April 27, 1976 Cr~ INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Assumed phasing of coverage by reorganized extension service (% of croppable area taken up each year) -------------------------- Year ----------------- Pre-project 1 2 3 4 5 Area taken up (%) 9.2 24.5 25.9 30.6 4.8 April 27, 1976 FJ INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Assumed uptake of extension recommendations (% of crop area) Year of benefit ----- Recommendation package ----- RAINFED LAND from extension 0 1 2 3 Rice Present 86.5 8 3.5 2 1st 68 25 5 2 2nd 54 35 8 3 3rd 46 40 10 4 4th 42 35 15. 8 5th 40 30 18 12 6th 40 25 20 15 Wheat Present 78 10 10 2 1st 53 27 15 5 2nd 33 39 20 8 3rd 32 31 25 12 4th 30 30 25 15 5th 25 28 27 20 6th 20 25 30 25 Coarse grains Present 100 0 0 0 1st 75 21 3 1 2nd 60 32 6 2 3rd 45 42 10 3 4th 43 40 12 5 5th 41 39 12 8 6th 40 36 12 12 Pulses Present 100 0 0 - 1st 75 24 1 - 2nd 70 28 2 - 3rd 65 31 4 - 4th 63 31 6 - 5th 61 31 8 - 6th 60 30 10 - April 27, 1976 INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Assumed uptake of extension recommendations (% of crop area) Year of benefit Recommendation package----- IRRIGATED LAND from extension 0 1 2 3 Rice Present 75 12 8 5 1st 45 40 10 5 2nd 33 49 12 6 3rd 32 47 15 6 4th 30 30 25 15 5th 25 28 27 20 6th 20 25 30 25 Wheat Present 67 15 15 3 1st 45 19 30 6 2nd 30 25 35 10 3rd 25 27 30 18 4th 22 25 28 25 5th 20 23 27 30 6th 15 20 30 35 Cop se grains Present 100 0 0 0 1st 60 35 4 1 2nd 40 48 8 4 3rd 36 40 18 6 4th 34 33 25 8 5th 32 33 23 12 6th 30 30 22 18 Pulses Present 100 0 0 - 1st 60 38 2 - 2nd 50 44 6 - 3rd 45 43 12 - 4th 42 40 18 - 5th 40 40 20 - 6th 40 35 25 - April 27, 1976 0 CLr_ INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Assumed development of foodgrain cropping intensity (%) in response to extension Year of benefit Ahu Sali and Coarse Total RAINFED LAND from extension Rice boro rice Wheat Grains Pulses Foodgrains Flood-prone Present 1/ 24.4 31.9 3.7 - 8.8 68.8 1st 27 33 6 1 10 77 2nd 29 34 9 1 11 84 3rd 31 35 11 2 11 90 4th 32 35 13 2 12 94 5th 33 35 14 3 13 98 6th 34 35 15 3 13 100 Non-flooding Present 1/ 25.9 72.7 2.1 1.5 3.7 105.9 let 27 73 5 2 5 112 2nd 28 74 8 2 5 117 3rd 29 74 10 2 6 121 4th 29 75 12 3 6 125 5th 30 75 14 3 7 129 6th 30 75 15 3 7 130 I/ from table 2 April 27, 1976 HLZJ ID H INDiA: EASTERN RMION FOODGRAINS PRODUCTION REVIEW (ASSAM) Assumed development of foodgrain cropping intensity (%) in response to extension Year of benefit Abu Sali and Coarse Total IRRIGATED LAND from extension ice boro rice Weat Grains Pulses Foodgre s Flood-prone Present 30 40 6 - 1 77 1st 34 41 12 1 2 90 2nd 37 42 17 1 4 101 3rd 39 43 20 2 5 109 4th 41 44 24 2 6 117 5th 43 44 27 3 7 124 64 _) 45 :30 3 7 130 Non-flooding Present 1/ 35 75 8 0.5 1.5 120 1st 37 77 17 1 3 135 2nd 39 79 24 1 4 147 3rd 41 81 30 2 5 159 4th 43 83 35 2 6 169 5th 44 84 38 3 7 176 6th 45 85 40 3 7 180 1/ from table 2 April 27, 1976 CL ANNEX 1 Tabl e 6 INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Total foodgrain production (000ts tons) Present Year 3 Year 6 Full Development AHU RICE flood-prone area: rainfed 57.2 64.1 86.4 101.2 irrigated 12.1 21.4 348.9 sub-total 12.7 15.1 non-flooding area: rainfed 291.5 321.2 407.7 h59.2 irrigated 38.9 52.1 79.8 98.1 sub-total 33O.T 373.3 U7* *7 Total 399.7 458.8 612.2 707.7 SALI and BORO RICE flood-prone area: rainfed 121.9 127.0 151.8 166.7 irrigated 22.6 35.9 55.2 6L.4 sub-total U7 162.9 207.0 232.1 non-flooding area: rainfed 1,332.9 1,409.8 1,667.1 1,836.8 irrigated 163492210.024. sub-total 1,h19.2 1,559-0 1,777.1 ,6. Total 1,593.7 1,721.9 2,084.1 2,317.5 WHEAT flood-prone area: rainfed 16.1 28.4 59.2 75.4 irrigated 4.3 12.9 34.6 47.2, sub-total 20.1 I. 9-.7 1227. non-flooding area: rainfed 43.1 114.5 289.3 387.8 irrigated 15.2 40.2 100.3 126.h sub-total 58.3 1I77 39 . .2 Total 78.7 196.0 483.4 636.8 COARSE GRAINS flood-prone area: rainfed - 1.4 5.0 7.1 irrigated 0.3 2.0 2.8 sub-total - 1.7 7.0 9.9 non-flooding area: rainfed 12.7 17.3 29.5 36.7 irrigated 0.5 1.1 3.8 .6 sub-total 13.2 18.7 33.3 82.3 Total 13.2 20.1 40.3 52.2 PULSES flood-prone area: rainfed 12.6 14.5 18.4 20.6 irrigated 0.2 0.8 2.7 3.3 sub-total 12. 153 21.1 23.9 non-flooding area: rainfed 25.3 33.6 49.4 57.1 irrigated 0.9 2.1 .- 6.7 sub-total =2.3 3.7 . Tr. Total 39.0 51.0 75.9 87. 7 GRAND TOTAL FOODGRAINS 2,124.3 2,447.8 3,295.9 3,801.9 1/ Minor discrepancies from text figures arise from cumulative rounding errors. April 28, 1976 ANNEX 1 Appendix 1 Page 1 METHOD OF CALCULATION OF FOODGRAIN .PRODUCTION AND INPUT REQUIREMENTS 1. The calculation was made in four stages: (a) allocation of land use into rainfed and irrigated categories for flood-prone and non-flooding areas; (b) calculation of crop areas in each of these land use categories; (c) application of weighted mean yields per hectare to these areas to obtain production tonnage; (d) application of weighted mean input quantities per hectare to these areas to obtain aggregate input requirements. Two stages of deve'opment were selected for the calculation - year 3 of a potential development project, representing the short-term impact, and year 6 represeating the medium term. Production was also calculated for full development (year 11). 2. Because of the lengthy arithmetic involved the calculations are liable to large cumulative rounding errors. The need to work to three signi- ficant figures so as to minimize these effects should not be confused with accuracy: the production and input calculation is simply a means of quantify- ing a large number of informed estimates, all of which have uncertainties attached to them, and of assessing the likely impact of various strategies. A. Allocation of land use 3. i) Define present land use, categorizing total croppable land ("net sown area") into flood-prone or non-flooding, irrigated or non- irrigated. ii) Define the present annual areas for each crop within these four land use categories, then calculate present foodgrain cropping intensity (see table 2 of Annex ). iii) Define the area to be brought under new irrigation by year 3 and year 6 and its allocation between flood-prone and non-flooding areas. Add this to the present irrigated totals ((i) above); subtract an equal area from the present rainfed totals. B. Calculation of Crop areas 4. i) Define the percentage of total croppable land on which re- organization of extension is to be initiated each year (table 3 of Annex). ANNEX I Appendix 1 Page 2 ii) Define expected change of cropping intensity in response to exten- sion, starting from the present intensity as defined in A (ii) and proceeding to full development (assumed in this case at 6 years after exposure to reorganized extension for a given location). Potential cropping intensity depends on the presence or absence of a flood risk and on the availability of irrigation; hence there will be four series of crop intensity assumptions, one for each of the four land use categories defined in A. In addition to these technical constraints, the assumptions will also reflect development objectives - e.g. to promote increased rabi cropping in preference to ahu rice. The figures used in the calculation are shown in Annex table 5. iii) Using the projected phasing for the reorganization of extension (B(i)), split the total croppable land area for year 3 and year 6 (A(iii)) according to whether they are not yet exposed to exten- sion, in the first year of exposure, the second year, etc. iv) Multiply each of these subdivisions of total croppable area by the expected cropping intensity for that duration of exposure to exten- sion (B(ii)), to arrive at the (gross) annual cropped area within that subdivision. 5. The outcome of this sequence of calculations is shown in appendix tables 1 and 2. A one-year lag was assumed between the initiation of the reorganization of extension - phasing shown in Annex table 3 - and the deriva- tion of benfits in the form of increased cropping intensity. The same lag is assumed for yield benefits, the calculation of which is described in the next section. C. Calculation of production 6. i) Define crop yields for each extension package of practices (yields are shown in rounded form in Annex para 34). ii) Define present percentage uptake of packages and expected change in uptake pattern from present to full development (year 6 of exposure) in response to extension. Figures should refer to the percentage of crop area under a given package of practices, not the percent of farmers who adopt that package. Since response to fertilizer and reliability of return from cash inputs will be greater where irri- gation is available, two series of assumptions are needed, one for rainfed and one for irrigated land. The figures should also reflect the relative attractiveness of different crops to the farmer - pro-. gressive practices are assumed more likely to be adopted for the more important subsistence.crops or for those which offer better. cash returns. The figures used in the calculation are given in Annex table 4. ANNEX 1 Appendix 1 Page 3 iii) Combine the assumed yields for each package (C(i)) with the assumed uptake pattern for each year of benefit from extension (C(ii)) to derive weighted mean yields for each crop for each year of benefit from extension. For instance, 20% of area on package 0 at 1.0 tons/ha plus 25% of area on package 1 at 1.3 tons/ha plus 30% of area on package 2 at 1.9 tons/ha plus the remaining 25% on package 3 at 2.3 tons/ha gives a weighted mean yield of 0.2 x 1.0 + 0.25 x 1.3 + 0.3 x 1.9 + 0.25 x 2.3 = 1.67 tons/ha for that crop in that year of benefit from extension. The weighted mean yields used in the calculation are shown in Appendix table 3. iv) Multiply annual cropped areas (B(iv), Appendix tables 1 and 2) by weighted mean yields ((iii) above) for the appropriate years of benefit from extension to derive projected production tonnage for project year 3 and year 6. For full development, assuming no further increase in irrigated area, multiply total area per crop by the full development (year 6 of benefit) yield. The figures derived are given ii, Annex table 6. D. Calculation of input requirements 7. i) Define input quantities per ha for each package of practices on each crop. Assumptions used in the calculation are shown in Appendix tables 4 and 5. ii) Using the assumed uptake of packages over time (step C(ii), Annex table 4), derive weighted mean figures for input use per ha for each year of benefit from extension, in the same way as weighted means were calcualted for yields in C(iii). The figures derived are given in Appendix table 6. iii) Multiply the crop area figures in Appendix tables 1 and 2 by the appropriate weighted mean input requirements. The figures derived are shown in Annex paras 38 and 39. Limitations 8. The calcuation presented here highlights, first of all, the weakness in the present data base for Assam. DtJinitive figures are not avialable on the extent of the flood-prone area (as opposed to the annual extent of inun- dation), the extent of land served by irrigation, the seasonal area of different crops which receive irrigation and the cropping intensity breakdown expressed under the four land-use categories which were adopted. ANNEX 1 Appendix 1 Page 4 9. Some important generalizations which have been incorporated in the calculation are worth noting. Sali and boro rice production are aggre- gated on the grounds of the small extent of boro, which obscures its much greater potential yield due to higher effective solar radiation in the rabi. The allocation of crop area implies that almost as much irrigation water is available for ahu rice and rabi crops combined as for sali rice, whereas for surface irrigation, which forms the great majority of present installed capacity, the area commandable in rabi is probably only about a quarter of the sali area. It could also be questioned, in the rainfall of Assam, whether yield gains of the the sort claimed from irrigation of sali rice can be justified unless drainage is also provided - which it is not in most of the present installed capacity. The assumption of a full year's lag in the emergence of production benefits from extension - again adopted as a simpli- fication - may be rather pessimistic; for input requirements, at least, a separate calculation assuming no lag might be a more useful forecasting tool. There is also scope for expanding the present range of packages, which were compressed for simplicity from an original six, to provide for use of HYV's without fertilizer (which seems to be justified in Assam) and for the use of higher fertilizer doses at least under irrigation. 10. Such refinements could be incorporated at project preparation. They may achieve more precise answers from the specific assumptions made, but it is the uncertainties surrounding the assumptions themselves which determine the worth of the projections. It is doubtful whether these uncertainties can' in the short term be reduced sufficiently to justify such an increase in complexity. INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSA4) Areas Cropped and Extent of Benefits from Extension Service, Year 3 FLOOD-BRONE AREAS Status of Extension - -Cropped Area ('000 hectares) ------ Rainfed: Total Croppable Year of % of Ahu Sali & Coarse Land Benefit Area Rics Boro Rice Wheat Grains Pulses 342,500 ha none 40.4 33.6 44.1 5.1 - 12.2 lst 25.9 24.0 29.2 5.3 0.9 8.9 2nd 24.5 24.3 28.5 7.6 0.8 9.3 Ord 9.2 1..0 Irrigated: Total Croppable Land 1/ 57,500 ha- none 40.4 7.0 9.3 1.4 - 0.2 1st 25.9 5.1 6.1 1.8 0.1 0.3 2nd 24.5 5.2 5.9 2.4 0.1 0.6 3rd 9.2 2.1 2.3 1.1 0.1 0.2 NON-FLOODING1 AIiAS Rainfed: Total Croppable Lan6 1,712,500 ha none 40.4 179.2 503.0 14.5 10.4 25.6 1st 25.9 119.8 323.8 22.1 8.9 22.2 2nd 24.5 117.4 310.5 33.6 8.4 21.0 3rd 9.2 45.7 116.5 15.7 3.2 9.5 Irrigated: Total Croppable Land 127,500 haY none 40.4 18.0 38.6 4.1 0.3 0.8 lst 25.9 12.3 25.4 5.6 0.3 1.0 2nd 24.5 12.2 24.7 7.5 0.3 1.2 3rd 9.2 4.8 9.5 3.6 0.2 0.6 1/ Assumes that half of irrigation installed under the project (35,000 ha STW's by year 3) is put onto flood-prone land and the balance onto non-flood areas. April 27, 1976. aj N INDIA: EASTERN REGION FOODG:RAINS FRODUCTION REVIEW (ASSA4) Areas Cropped and Extent of Benefits frora Extension Service, Year 6 FLOOD-PROM AREAS Status of Extension ---- Cropped Area ('000 hectares) ------- Rainfed: Total Croppable Year of % of Ahu Sali & Coarse Land Benefit Area Rice Boro Rice Wheat Grains Pulses 330,750 ha 2nd 9.d 9.4 11.0 2.9 0.3 3.6 3rd 30.6 31.4 35.4 11.1 2.1. 11.1 4th 25.9 27.4 30.0 11.1 1.7 10.3 5th 24.5 26.7 28.4 11.4 2.4 10.5 6th 9.2 10. 10.7 4.5 0.9 .0 Irrigated: Total Croppable Land 69,250 hal/ 2nd 9.8 2.5 2.9 1.1 0.1 0.3 3rd 30.6 8.3 9.1 4.2 0.4 1.1 4th 25.9 7.3 7.9 4.3 0.4 1.1 5th 24.5 7.3 7.4 4.6 0.5 1.2 6th 9.2 2.9 2.9 1.9 0.2 0.4 NON-FLOODING AREAS Rainfed: Total Croppable Land 1,700,750 ha 2nd 9.8 46.7 123.3 13.3 3.4 8*3 3rd 30.6 150.9 385.1 52.0 10.4 31.3 4th 25.9 127.7 330.4 52.9 13.2 26.4 5th 24.5 125.0 312.5 58.3 12.5 29.2 6th 9.2 46.9 117.4 23.5 4.7 10.9 Irrigated: Total Croppable Land 139,250 hal-/ 2nd 9.8 5.3 10.3 3.3 0.1 0.6 3rd 30.6 17.5 34.5 12.8 0.9 2.1 4th 25.9 15.5 29.9 12.6 0.7 2.2 5th 24.5 15.0 28.7 12.9 1.0 2.4 6th 9.2 5.8 10.9 5.1 0.4 0.9 1/ Assunes that half of irrigation installed under the project (52,500 ha STW's, 3,000 ha filter points, 3,000 ha CAD) is put onto flood-prone land and the balance on non-flooding areas. April 27, 1976. INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSAM) Progression of Weighted Mean Yields (tons/Aa) in Response to Extension-1/ --------------------------- Crop ----------------- Year of Benefit Sali or Coarse from Extension Ahu Rice Boro Rice Wheat Grains Pulses RAINED LAND Present 0.65 1 06 1.19 0.50 0.40 1st 0.69 1.12 1.30 0.56 0.44 2nd 0,714 1 1.38 0.60 01 3rd 0.77 1.24 1.41 0.64 0.46 4th 0.83 1.33 1.143 0.67 0.47 5th 0.87 1.39 1.48 0.69 0.47 6th 0.90 1.44 1.52 0.72 0.48 IRRIGATED LAND Present 1.01 1.41 1.73 0.83 0.52 1st 1.12 1.54 1.89 0.96 0.59 2nd 1.18 1.62 2.01 1.07 0.61 3rd 1.20 1.65 2.08 1.17 0.64 4th 1.38 1.87 2.15 1.24 0.67 5th 1.47 1.98 2.20 1.28 0.68 6th 1.57 2.10 2.27 1.34 0.69 1/ Derived from a combination of assumed yield per extension package x assumed pattern of uptake of packages. April 27, 1976. FCZ ANIEX 1 Appendix 1 Table 4 INIKA: EASTERN REGION FOODGRAINS PRODUCTION REVIEW (ASSM) Assumed Fertilizer Dose (kg Total Nutrients per hectare) with Different Extension Packages ---------Package ---------- Crop 0 1 2 3 Rice (all crop) 0 0 25 50 Wheat 0 0 25 50 Coarse Grains 0 0 25 50 Pulses 0 0 25 - April 27, 1976. INDIA: EASTERN REGION FOODGRAINS PRODUCTION REVIBW (ASSA4) Assumed Purchases of Gernination-Tested or Certified Seed (kg/ha) of Improved or High-Yielding Varieties Under Dil"erent Extension Packages Total Seed Annual Replacement kg Purchased/ha Under Packages... Crop Requirement (kg/ha) Rate (%) 0 1 2 Ahu Rice 252/ 20 0 0 5 5 Sali or Boro Rice 25 20 0 o 5 5 Weat 100 40 40 40 0 40 Coarse Grains 20 20 0 0 4 4 Pulses 30 2/ 0 1 6 - 1/ Rate for i'mproved and high-yielding varieties since a change to transplanting is assumed in conjunction with these. 2/ 3% assued under package 1. April 27, 1976. INDIA: EASTERN REGION FOODGRAINS FRODUCTION REVIEW (ASSAM) Average Purchased Input Doses (kg/ha): Progression in Response to Extension Year of Benefit ---------------- Weighted Mean Application (kga) --------- From Ahu RiceY Sali or Boro Rice Wheat Coarse Grains Pulses Extension Fertilizer Seed Fertilizer Seed Fertilizer Seed Fertilizer Seed Fertilizer Seed RAINFED CROPS Present 1.88 0.28 1.88 0.28 3.50 40 0 0 0 0 1st 2.25 0.35 2.25 0.35 6.25 40 1.25 0.16 0.25 0.30 2nd 3.50 0.55 3.50 0.55 9.00 40 2.50 0.32 0.50 0.40 3rd 4.50 0.70 4.50 0.70 12.25 40 4.00 0.52 1.00 0.55 4th 7.75 1.15 7.75 1.15 13.75 40 5.50 0.68 1.50 0.67 5th 10.50 1.50 10.50 1.50 16.75 40 7.00 0.80 2.00 0.79 6th 12.50 1.75 12.50 1.75 20.00 40 9.00 0.96 2.50 0.90 IRRIGATED CROPS Present 4.50 0.65 4.50 0.65 5.25 40 0 0 0 0 1st 5.00 0.75 5.00 0.75 10.50 40 1.50 0.20 0.50 0.50 2nd 6.00 0.90 6.oo 0.90 13.75 40 4.oo 0.48 1.50 0.80 3rd 6.75 1.05 6.75 1.05 16.50 40 7.50 0.96 3.00 1.15 4th 13.75 2.00 13.75 2.00 19.50 40 10.25 1.32 4.50 1.48 5th 16.75 2.35 16.75 2.35 21.75 40 11.75 1.40 5.00 1.60 6th 20.00 2.75 20.00 2.75 25.00 40 14.50 1.60 6.25 1.85 1/ Assmes a change to transplanting for all ahu crops grown from purchased seed. April 27, 1976. 4. ' ANNEX 2 AGRICULTURAL EXTENSION Table of Contents Page no. INTRODUCTION 1 SECTION I: THE PRESENT SYSTEM 1 Size and Organization of Present Extension Services 2 Training 3 Problems 3 SECTION II: THE PROPOSED INTENSIVE STATE EXTENSION SERVICE 4 Underlying Principles 4 The System of Training and Visits: Organization and Management 6 Links with Research 10 Field Trials 11 Other Extension Methods 11 Othe3 :aining 12 Evaluation 12 Incentives 13 Phasing 13 SECTION III: PERSONNEL, PHYSICAL AND FINANCIAL REQUIREMENTS 14 VLEW Level 14 AEO Level 15 Subdivisional Level 16 District Level 16 Zonal Level and Headquarters 17 Cost Estimates 17 Financing, Procurement and Disbursement 18 Project Benefits and Justification 19 SECTION IV: OUTSTANDING POINTS 19 TABLES I - VIII CHARTS I - V APPENDIX 1: Notice Establishing Techucal. Committee ANNEX 2 Page 1 AGRICULTURAL EXTENSION IN ASSAM INTRODUCTION 1. The Government or Assam (GOA) has recognized that a modern profes- sional extension service can rapidly and inexpensively help Assam's 2 mil- lion farm families raise their yields and incomes. As indicated in detail in Annex 1, the potential for such increases in Assam is great. State-wide production increases of about 7% p.a. over the next 6-7 years are feasible. The farmers of Assam do respond to changes which can clearly increase their standard of living. This has been demonstrated by both the growing use of high yielding varieties and the increasing importance of wheat as a crop. But the spread of new technology has been slow and has reached too few far- mers. Moreover, the standards of cultivation of many farmers are so low that without improvement in basic management practices they cannot reap the full benefits of modern technology. An efficient extension service is needed to help farmers improve their practices, adopt new technology and increase their incomes. 2. The GOA nas therefore decided to reorganize its extension service to meet ti task by creating an Intensive State Extension Service (IES). The GOA will rely primarily on existing staff and facilities. Nevertheless addi- tional staff, training programs, vehicles, housing and other facilities will be required. The GOA has requested Bank Group assistance in financing the incremental requirements. This Annex analyses the present extension system in Assam (Section I), describes the underlying principles and operating techniques of the proposed Intensive State Extension Service (Section II), quantifies the personnel, physical and financial requirements (Section III), and concludes by summarizing outstanding matters to be resolved (Section IV). SECTION I: THE PRESENT SYSTEM 3. Assam can be divided administratively and topographically into plains areas and hills areas. There are 8 districts in the plains areas and 2 in the hilly areas. The plains districts include 95% of the state's foodgrain area. Since there are certain significant administrative differences between the hills and the plains, the GOA has decided for the present to confine the reorganization of extension to the plains districts. This description of the present system is therefore confined to the plains districts. Each district is further subdivided into two or three administrative units called sub- divisions. There are 20 subdivisions in the plains districts. Each sub- division is also divided administratively into 3 to 10 blocks. There are 120 blocks in the plains districts. A 1,zw odministrative unit, the Gaon Panchayat (GP) was established by GOA in 1973. There are about 660 such units in the plains, or about 5-6 in each block. ANNEX 2 Page 2 Size and Organization of Present Extension Services 4. At present, field level extension work is supposed to be the prim- ary responsibility of the Village Level Worker (VLW), a multipurpose worker employed by the Department of Community Development and Panchayats and directly responsible to that Department representative at the block level, the Block Development Officer (BDO). The BDO is responsible to the District Deputy Commissioner, the chief administrative officer at the District level. The Deputy Commissioner's responsibilities cover all matters of government in his District. There are normally 10 VLWs in each block, giving a total of about 1,200 in the plains area, or an average of one VLW per 1,700 farm families. The VLW is supposed to receive technical guidance from the Agricultural Extension Officer (AEO), an employee of the Department of Agri- culture. The AEO, however, is administratively responsible to the BDO. There are about two AEOs per block. The AEOs are responsible on matters of substance to the Sub-divisional Agricultural Officer (SDAO) (one per subdivision) who in turn reports to the District Agricultural Officer (DAO) (one per district). 1/ The DAO is backed up by a number of Subject Matter Specialists (SMSs) (normally at least one each for agronomy, plant protec- tion and horticulture), District Agricultural Information Officers and other specialists. In the plains districts there are about 64 such supporting staff. 5. Most DAOs in the plains district report to one of two zonal Joint Directors of Agriculture. One JDA covers the eastern end of the Brahmaputra valley and is stationed at Jorhat; the other covers the western end and is stationed at Gauhati. The exception is the DAO of the IADP district Cachar who reports to a special JJDA for the Intensive Program. This JDA is also responsible for several other functions. These three JDAs, together with other JDAs and Deputy Directors of Agriculture responsible for special crops (e.g. jute) or special agricultural programs (e.g. multiple cropping) would normally report to an Additional Director of Agriculture (General). 6. In addition to the staff outlined above, in selected blocks additional staff have been posted in support of special schemes. In the plains districts there are some 756 field level Agricultural Demonstrators with similar training to the VLWs but employed directly by the Department of Agriculture. At approximately the same level there are 270 Assistant Agricultural Inspectors, also employed by the Department of Agriculture. In addition to the 210-220 AEOs in the normal chain of command, there are about an additional 200 AEOs or AEO-level staff associated with various special schemes or regulatory functions. Table I shows the present distri- bution of extension staff by district and subdivision. Chart I shows the organizational pattern. 1/ One subdivision, Barpeta has been designated as an agricultural district and hence has a DAO. ANNEX 2 Page 3 Training 7. VLWs receive pre-service training in a two-year course at one of two Gram Sevak (Village Worker) Training Centers (GSTCs). One GSTC has 100 student places and the other, which is soon to be relocated, will also have 100 places. In addition to the pre-service training, the GSTCs also offer a one-year in-service training coursse. The courses taught have some agri- cultural concentration but also cover a wide range of other subjects in line with the VLW's present multipurpose role. 8. The Assam Agricultural University (AAU) offers pre-service and limited in-service training for higher level extension personnel. (See Annex 3 for a discussion of the AAU's research program.) Under an IDA-financed education project (Cr. No. 342-IN), the University facilities are being ex- panded and improved and staff are being trained both in India and abroad. Through its College of Agriculture, the University offers training for B. Sc. and M. Sc. degrees. Currently about 70-80 students receive B. Sc. degrees annually and about 15 receive M. Sc. degrees. In addition, the College of Veterinary Science provides Bachelor and Masters degrees in Veterinary Science. The AAU's Directorate of Extension Education also has the capa- bility of ;fering intensive short in-service courses to extension personnel. In practice these courses have been largely limited to pre-Kharif and pre- Rabi season workshops of 2-3 days duration during which the package of prac- tices agreed upon by the AAU and the Department of Agriculture are discussed and explained. The workshop is very large (70 to 140 participants). Normally staff from the subdivision level and higher attend. Problems 9. The present extension service has a number of serious problems which the GOA is determined to overcome. Perhaps most serious is the lack of a single line of control of the extension service. With the VLW, the founda- tion of the service, under the control of another agency, it is inevitable that non-agricultural tasks dominate his work. While agricultural activities are supposed to consume 80% of his time, field studies suggest that perhaps only 20-30% of his time is spent on agriculture. Even then his activities are likely to be confined to non-productive report writing and regulatory work, so that the amount of time spent on helping farmers in the field is insignificant. Closely related to this problem is the diffusion of the VLW's responsibilities by designating him as a multipurpose worker. Since he is responsible for virtually all aspects of rural development, collection of statistics, regulatory work etc., he becomes responsible for virtually nothing. His responsibilities in one sphere becowe a. excuse to avoid responsibilities in another and vice versa. Strong incentives exist for him to do only those tasks which are now most clearly defined and supervised (e.g. writing reports). 10. Special schemes based on particular crops or aspects of agriculture have been adopted in the past in an attempt to overcome the weaknesses of the basic system. Over time a fairly large number of such schemes have emerged. These special schemes have only served to weaken the extension ANNEX 2 Page 4 effort further by dissipating efforts in many uncoordinated directions and obscuring the need for a fundamental reform of the extension service. 11. In addition to the VLWs' efforts being spread too thinly over too many subjects, they are also spread too thinly over too many farmers. More- over, their work in extension is neither planned systematically nor super- vised adequately. At all levels the extension staff lack mobility necessary for effectively carrying out their work. 12. The training of extension staff at all levels is inadequate and often outdated. Most extension staff from VLW on up had their agricultural training more than ten years ago. Many new developments in agriculture since then have passed them by. In-service training has been inadequate, sporadic and often irrelevant. The linkages with research have been weak. About the only contact has been the semi-annual, two-day workshop mentioned above. A regular flow of information from the field to research and back again has not been established. Among other problems, this lack of contact means that the recommendations developed by research and passed on to farmers by the extension service are often inappropriate both for farmers' needs and for their technical and financial abilities. The recommendations usually focus on high levels of use of expensive purchased inputs such as fertilizer, rather than on improved cultivation practices (such as weeding) which cost little, bring sure results, and in any case are necessary to use purchased inputs effectively. This particular problem is dealt with in detail in Annex 3. SECTION II: THE PROPOSED INTENSIVE STATE EXTENSION SERVICE Underlying principles 13. One of the fundamental principles of the proposed IES is to es- tablish a single line of command from the Department of Agriculture to the field level extension worker. The need for this is clear from the des- cription of the present system given above: the VLW's line of control is confused and consequently it is impossible to direct him or supervise him adequately. Combined with this is the need for the VLWs to concentrate exclusively on agricultural extension rather than on the numerous social service, administrative and regulatory functions that now take up most of their time but produce little result. To meet this problem the GOA has decided to transfer 80% of the VLWs to the Department of Agriculture. To emphasize their new exclusive extension role, their designation will be changed to Village Level Extension Worker (VLEW). The transfer is to take place in a phased manner as the reorganization is spread from sub- division to subdivision. Chart II shows the organizational structure of the new service. ANNEX 2 Page 5 14. All extension programs and special schemes will be combined into one unified extension service. The intention is to create a modern pro- fessional service capable of giving farmer sound technical advice on their entire farming operation. If the service does this, there is no need for any special schemes. If it is not able to do this, it should be strengthened and improved until it can. 15. Once a clear line of command is established the work of the exten- sion service is to be organized in a systematic time-bound program of train- ing and visits. The operating details of this system are presented in para- graphs 19 to 32 below. An important principle of the system is that sche- dules, duties and responsibilities are clearly specified and closely super- vised at all levels. 16. The approach is to concentrate efforts in all respects in order to achieve a clear visible success. The VLEWs will work exclusively on agricul- tural extension and not be involved with a wide range of other activities. Concentration will be placed on the training and visit system as the primary extension tool. Recommendations will focus only on the few most important crops, not all croj-. For those few crops, the recommendations will con- centrate (,'- on a few practices which bring the best economic results. The VLEWs concentrate on selected contact farmers. Training sessions focus only on the most important and most relevant points. This overall concentra- tion of efforts helps generate an almost immediate impact which will give farmers confidence in the VLEWs and the VLEWs confidence in themselves and pride in their work. Once an initial success is achieved farmers will ex- pect more help from the VLEW and the VLEW will be motivated to work hard to provide help. 17. A basic concept underlying the new system is to teach farmers to make the best use of available resources. Initially the concentration will be on improved farm management practices which may require more labor (which most of Assam's small farmers have in abundance) but little cash outlay. Such practices (discussed in more detail in Annex 1) would include better land preparation, seed bed and nursery maintenance, use of good seed, seed treatment, timely operations, weeding, proper spacing of plants, etc. These practices are known to produce sure results with little risk. The VLEW will recommend such practices be followed only on a part, perhaps only 10%, of the farmers' fields initially. This reduces the farmers' risk and also allows the results of the improved practices to be compared with trad- itional practices in the farmers' own fields. With these practices farmers can substantially increase yields and incomes. They then become confident and financially secure enough to adopt w !re expensive (e.g. fertilizer) or more dramatic (e.g. new varieties or cropping patterns) changes. 18. It is the goal of.the extension service to increase farmers' in- comes by closing the gap between what the farmers do now and what they could achieve with better technology. The gap now is large. There are basic ANNEX 2 Page 6 improved management practices which farmers can adopt. There is a back-log of research findings which are waiting for an effective extension service to bring them to the farmers. But within a few years many of these gaps will be closed. To remain effective, extension must be linked to a vigorous research program, well-tuned to the needs of the farmers. Without a con- tinued flow of recommendations from research to the fields and continuous feedback to research from the field, any extension service would soon stop having any impact. For this reason the GOA is also taking steps to strengthen agricultural research activities in Assam (Annex 3). The System of Training and Visits: Organization and Management 19. The reorganization of the extension service will support the establishment of a system of training and visits. This system will enable the VLEW to visit each of the relatively small groups of farmers he works with once each fortnight after he has received intensive training in those agricultural practices and recommendations which relate directly to farm operations during that fortnight. The fixed scheduled visits enable close supervision. The training and visit system is the most important extension method to be used by the reorganized extension service and the job des- criptions at each level in the extension hierarchy will be geared to this system. Accordingly it is useful to describe for each level how the system works and what the responsibilities of the extension staff are in some detail. 20. VLEW level: The entire system is based on the number of farm families which one VLEW can reasonably expect to cover. This number can vary from place to place depending, among other things, on the density of popula- tion, the intensity of cropping and the diversity of crops grown. In Assam, where the population density is high, with many small farmers living close together, where the cropping intensity is low and where one crop, paddy, dominates agriculture, a ratio of one VLEW for about 800 farm families will be adequate. The farm family is taken as the denominator of this ratio since the farm family is normally the basic farm decision-making unit. (The number of farmers will, of course, be substantially larger than the number of farm families). 21. All the farm families in a given area (say a block) are divided into groups of about 100 families (depending on considerations of geography, ease of communication etc., the number may vary from 80 to 120). A VLEW is assigned to a circle of eight such groups. He will live in the circle. From each group, the VLEW, in consultation with village leaders, will select 10 contact farmers on whom he will concentrate his efforts. The contact farmers should be good average farmers who are respected as farmers by their neighbors. The contact farmers should not be only the biggest and richest farmers, for these are often not particularly good farmers. The VLEW will ANNEX 2 Page 7 focus his efforts on these contact farmers not only to help these farmers but to. use them to convince all farmers in the group of what they can achieve. The VLEW can designate new contact farmers if he discovers that one or more of the initially selected farmers are not well suited as contact farmers. 22. The VLEW will visit each of the eight groups in his circle for a full day at least once each fortnight. He will always visit a given group on the same day of the week so the group will always know when he should be with them. In each visit he will be certain to visit at least the contact farmers. In the morning he will visit farmers' fields, demonstrating the recommendations for that fortnight, checking progress and observing any technical problems the farmers may be having. If he is sure he knows the answer to such problems he may give it. Otherwise he should bring it up at his next training session. (In case of an emergency such as a virulent pest attack, he may notify the AEO for action immediately.) In the afternoon, the VLEW will hold a group discussion in a convenient location in the closest village. Just as any of the local farmers can follow the VLEW in the field, so also are they invited to these group discussions. With this intensive series of physical visits on a fixed schedule known to all farmers, the farmers themselves begin to act as supervisers of the VLEW. 23. Each week, the VLEW will make four such visits so he covers his entire circle in a fortnight. One of the two remaining working days each week will be devoted to in-service training. This in-service training is crucial to the program for through these training sessions the VLEW learns what to recommend to the farmers in the following fortnight. He also has an opportunity to bring any farmer's problems to the attention of the trainers. 24. One of the training sessions each fortnight will be conducted by the team of Subject Matter Specialists (SMS) responsible for the area. This will be the most important training session. The session is scheduled so that the VLEWs are trained for a full day in groups of 30-40. Efforts are concentrated and the sessions prepared so that only three or four crucial points are covered, but these are covered well. No more than a third of the time should be spent on lectures, the remainder should be spent on practical field demonstrations of what is taught, and on dis- cussions. The VLEW should be required at the end of the session to re- state the lessons as he would present them to the farmers. This will help the VLEWs learn to talk with farmers effectively. The VLEWs will be given pamphlets summarizing the recommendations as well as samples or other visual aids as required. The goal is to make the VLEW a subject matter specialist on the few points of particu±ar relevance during the coming fortnight. 25. Once IES is established, the VLEWs will no longer be responsible for distributing inputs or for monitoring their use. This responsibility will fall wholly on the specialized input supply agencies. Thus it will be ANNEX 2 Page 8 important for the input supply agencies, as well as credit and other insti- tutions serving the agricultural sector, to know what inputs and services farmers are likely to demand. Conversely, it will also be necessary for the agricultural extension staff to know what inputs and services will be avail- able. For these reasons the representatives of credit and input supply agencies should be invited to the fortnightly training sessions conducted by the subdivisional SMSs. Such matters should normally not take up more than one hour of the training session. 26. The other weekly training session during the fortnight will be conducted by the AEO for his circle of VLEWs. During this session the points raised in the previous week's training session will be reinforced and any problems encountered by the VLEWs will be discussed and either resolved or taken up at the following week's training session. This schedule of visits and training takes up 10 of the 12 working days in the fortnight. During the remaining two days the VLEW will make extra visits to supervise field trials, arrange field days or other special activities, make up visits missed because of illness or holidays, and complete whatever office work is neces- sary. Each VLEW will maintain a chart showing his fixed days for visiting each group, as well as the time and place of the meeting. The AEO will keep such charts for all the VLEWs he supervises. An example of such a chart is shown as Chart III. 27. AEO Level: The AEO will support and supervise the VLEW. One AEO can supervise about 8 VLEWs. There will be several AEOs in each block (the exact number depending on the number of farm families in that block) each responsible for a circle of 8 VLEWs. In a fortnight the AEO will spend two days in training sessions (the one he conducts and the one conducted by the SMSs) and eight days in the field supervising and assisting the VLEWs. He should have sufficient mobility to visit two VLEWs with their farmer group in a day. His visits should be prescheduled and timed so that over a period of several months he sees each of his VLEWs in each of their groups. 28. Subdivisional Level: The Subdivisional Agricultural Officer (SDAO) supervises the AEOs and VLEWs under his jurisdiction and is in overall charge of the training programs. One SDAO can supervise effectively about 6-8 AEOs. Given the large farming populations in most of Assam's subdivisions, there will frequently be 2-3 times this number of AEOs. Consequently the SDAO will normally need support from one or more Assistant SDAOs (ASDAO). Each ASDAO should supervise a circle of 6-8 AEOs, leaving the SDAO to supervise about 4-5 AEOs directly. In addition the SDAO would supervise the work of the ASDAOs. The ASDAOs would be locaL2d within their AEO circle. Both the SDAO and ASDAO would spend more than half of their working time in field super- vision of the extension service and the training program. They would be guided by a chart of AEOs visits similar to the chart of VLEW visits used by the AEO. ANNEX 2 Page 9 29. The SDAO would be back-stopped by a team (or teams) of Subject Matter Specialists (SMS). Each team would have one specialist for agronomy, one for plant protection and one training officer. The SMSs would devote one-third of their time to training sessions, one-third of their time to field visits (assisting VLEWs in field trials, responding to problems raised by farmers, etc.) and one-third of their time visiting research facilities to maintain close contact with the latest research findings. This division of duties means that in a fortnight a team of SMSs has 4-5 days available for VLEW training sessions. Since the class size of the fortnightly sessions should not exceed 30-40, this means that one team of SMSs can train about 120-160 VLEWs. If there are more VLEWs than this in a subdivision, then additional teams of SMSs will be required. 30. District Level: At the District level, the District Agricultural Officer (DAO) will supervise the SDAOs. He will also make random checks at other levels in the system. He will be supported by a team of Subject Matter Specialists in fields of specialization not yet required at the sub- divisional level. These might include specialists in farm management, water management or farm implements, or specialists in crops of special relevance to that district (r-rhaps jute). These SMSs would be involved in the regular training sessions as and when needed. They would also provide training to subdivisiona-L level staff and, together with them, screen and develop the recommendations to be taught to the VLEWs in the training program. 31. Zonal Level and Above: The Zonal Joint Directors of Agriculture will act as assistants to the Director of Agriculture in ensuring the smooth implementation of the reorganization in their respective zones. The detailed organization of the extension service at the state or headquarters level has not yet been worked out. The following pattern is a suggestion for fur- ther discussion and elaboration. The Director of Agriculture would be in overall charge of the extension service. He would be assisted by a Deputy (or Additional) Director of Agriculture (Extension) who could relieve some of the administrative burden from the Director. Under him would be two cells. One would monitor and evaluate the general performance of the extension system. Its work would be mainly statistical and investigative, involving crop cutting experiments, etc. The other cell would be a group of senior subject matter specialists who would have responsibility for (a) arranging for in-service training for extension personnel (and particularly Subject Matter Specialists) in their field of specialization both within Assam, in other states, and abroad and (b) maintaining close contact with researchers in Assam, India and other countries in their fields so that new ideas can be rapidly fed into the research system (Annex 3) for checking before being recommended by exten- sion. 32. The impact of this system of training and visits can be assessed by calculating the numbers of farmers who will be reached directly by the service when it covers the state. Since there are about 2 million farm families in Assam, a ratio of 1 VLEW for 800 implies about 2500 VLEWs. Each VLEW will be in direct contact (in the fields and in the group discussions) with about ANNEX 2 Page 10 10-15 farmers (the contact farmers and other interested farmers) during his visit to a given group. Since he visits eight groups in a fortnight, each VLEW trains about 80-120 farmers every two weeks. When this number is mul- tiplied by the total number of VLEWs (2,500) this means that about a quarter of a million farmers will learn directly from the VLEW the recommendations for the fortnight. Moreover, this is done within only two weeks of the VLEW's training session. The indirect impact on other farmers would be even more widespread. It is clear that this system of training and visits provides a powerful tool for reaching large numbers of farmers very quickly. Links with Research 33. As noted above, an extension service cannot function for long unless there is an effective research program. In Assam, agricultural research is a function of the Assam Agricultural University (AAU). It is therefore ne- cessary to ensure close contact between the AAU and the extension service. There have been some links in the past: the Rabi and Kharif packages of practices have been produced jointly by the Agricultural Department and the AAU. But by and large the contacts have not been very frequent or close. In part this arises from the physical distancce between the Agricultural Depart- ment at Gauhati and the AAU in Jorhat. In part it arises from the different conceptions the two organizations have of their purpose. Recognizing the need for more regular contact between AAU's researchers and the Departmental extension staff, the GOA on March 15, 1976 constituted a ten-member Technical Committee, chaired by the Director of Agriculture and including six represen- tatives from AAU, charged with responsibility for developing recommendations for the extension service to transmit to farmers, evaluating past experi- mental data and designing a program of field trials to check out possible recommendations. 34. It is far too early to evaluate the effectiveness of this Technical Committee, but an organization with such functions was and is vitally needed. It is doubtful, however, that the officials and scientists on the committee (a list of members is given in Appendix I to this Annex) will have sufficient time to do all the work and analysis required. Perhaps the cell of senior subject matter specialists referred to above (paragraph 31) could act as a secretariat to the Technical Committee, analysing alternative recommendations and presenting them to the committee for consideration. 35. While it is important to have a state level committee of this sort to develop general guidelines and recommendations, it will also be necessary to have a decentralized capability to select the recommendations relevant to a given area or to modify recommendations to suit local conditions. For this reason it would be useful, -ce the extension service has been reor- ganized, to establish District-level research and extension committees with functions identical to the State-level Technical Committee, applied to the particular district. The membership of the District-level research and ex- tension committee, which would be chaired by the DAO, would be drawn from the SMSs in that District and its Subdivisions, and from AAU staff .at the nearest research sub-station. ANNEX 2 Page 11 36. In addition to this formal committee at the District level, the SMSs would, as part of their routine work program, spend about one-third of their time visiting the nearest research substation and .other research facilities. Their role would be (a) to keep informed of the latest developments in re- search (by to bring the practical field problems of the farmers to the attention of the research workers; and (c) together with the research workers design and carry out a program of field trials on farmers' fields as des- cribed below (paragraph 37). Chart IV shows one possible way in which re- search and extension could be administratively and functionally linked at both the State and District levels. Field Trials 37. After the second or third season, by which time he will have gained the confidence of the farmer, the VLEW will begin to carry out, under the direction of the SMSs and research workers from the research sub-station, a pro- gram of field trials on farmers' fields. These field trials will contribute directly to the adaptive research effort. The trials should be very simple with no replications, or at least no replications on the same farmer's field. Since some risk is involved, the plot size should be small - not more than one-tenth of a hecLare. Generally no subsidies would be provided to the farmer un"._-s a completely new, unknown input or implement was required. While the farmer faces some risk in a field trials, the risk is small because most of the time the recommendation being tested will produce better results and in any case the test covers only a small area. The risk is further off- set by the fact that the farmer will benefit from extra attention from the VLEW and will be in a better position than most farmers to adopt a successful practice more widely in the following years. Since the trial would need to be closely monitored by the VLEW, about four such trials is the most he should undertake in a season. If the field trial is successful the VLEW can make it a demonstration. Other Extension Methods 38. While the VLEW's efforts will be concentrated on the system of training and visits since it is the most powerful vechicle for bringing tech- nical recommendations to the farmers, other extension techniques such as demonstrations and field days can be used to complement the main program. The demonstrations, however, should not be confined to the conventional concept of a crop nurtured carefully from seed to seed, given every possible subsidy and benefit from the government and protected when possible from the whims of nature. Farmers tend to be skeptical about such demonstrations for they see no relevance between them and their own situation. Moreover, even after the best efforts such demonstratih.:s frequently fail and hence are a waste. Rather the VLEW should look for farmers' fields that demonstrate a particular point he wants to make at a particular time. That field then be- comes a demonstration field. Farmers will find it more convincing to see a practice successfully followed on an ordinary farmers' field and explained to them by that farmer. ANNEX 2 Page 12 39. Other training programs, such as those carried out by the Farmers' Training Centers (FTCs) should be closely coordinated with the extension ser- vice and draw when necessary on extension personnel (VLEWs, AEOs, etc.) to provide training. Administration of the FTCs (e.g. maintenance, etc.), however, should not be the responsibility of the regular extension personnel for it would be a relatively unproductive burden on their already busy sched- ules. Where convenient, it might be possible to use the FTC facilities for the fortnightly training sessions taught by the SMSs. Other Training 40. In addition to the fortnightly one-day training sessions described earlier, other modes of in-service training have an important role. First, as the reorganization of extension spreads, the staff in the new areas should receive an intensive orientation course in the new system, the principles upon which it is based, the procedures by which it operates, and the message it is to convey initially. Such orientation should have as a main goal developing enthusiasm at all levels for the new approach. Second, longer terms courses should be developed. One or two-week courses for VLEWs before each season would provide them with an opportunity to integrate the discrete fortnightly messages they have been delivering and would enhance their over- all understanding of their job. Other levels of the extension hierarchy could benefit from various types of training as well. Such training could enable them to do their own jobs better and also prepare them for possible promotion. Training of the SMSs will be of particular importance given their central role in the entire training program. Training programs for them should be arranged at the institution best suited to their particular needs - be it in Assam, India or abroad. Evaluation 41. Continuous evaluation and monitoring is essential for the extension system both to make sure it is functioning as intended and to see if modi- fications are needed to meet changed conditions. The most essential part of evaluation is the self-evaluation built into the system of training and visits itself. The close personal contact established between the contact farmers, the VLEWs and the AEOs should provide a sensitive instrument to gauge farmers' reactions to particular methods and recommendations. Supervision is relatively simple: farmers can be asked if they know the name of their VLEW, the day of his visit and the three or four recommendations made that fortnight. If the farmers know these, the VLEW is doing his job. If they do not, there is a problem to be -hecked. The statistical and investigative cell in the Department of Agriculture described above (para 31) would provide a statistical check on levels of production and returns. Such evaluation would be based more on the desire to improve than on the need to supervise. It should be based primarily on first hand information gathered from the field rather than on written reports. ANNEX 2 Page 13 42. In addition to continuous internal self-evaluation it would be useful for an external evaluation to be carried out either yearly or at the end of each season. Such evaluation would provide another, independent check on the system. The organization to carry out this evaluation has not yet been determined but two broad choices have emerged: (a) a cell within the Agricultural Secretariat but responsible to the Secretary of Agriculture or the Agricultural Production Commissioner rather than to the Director of Agriculture; or (b) an evaluation unit in another Department (such as the Directorate of Evaluation and Monitoring in the Planning and Development Department). Incentives 43. Under the reorganized system, the entire extension staff and es- pecially the VLEWs will be called upon to work much more intensively than in the past. In part they will be compensated for this by increased job satisfaction: experience in other states indicates that the VLEW is rapidly transformed into a respected member of the rural community. But to attract the best possible candidates into extension work and to maintain the morale of the existing st"ff, salaries at all levels, but especially at the VLEW level, ne-d to be carefully reviewed and where necessary adjustments made. Moreover, promotion policies should also be reviewed to provide the exten- sion staff with a reasonable chance of progressing professionally and finan- cially. Phasing 44. The Government of Assam has decided to phase the introduction of the Intensive State Extension Service over a period of several years. At this stage it is difficult to predict how rapidly the IES can spread. By mid- 1976 the new system had been introduced in two subdivisions - Nowgong and Barpeta, and by the end of 1976 it is expected to include Kokrajah Subdivision. After reorganizing these three agriculturally important subdivisions, the GOA intends to cover the whole of the three districts containing these sub- divisions. 45. A tentative schedule for the phased introduction of the IES is shown in Table II. The table shows both the year and season in which each subdivision is covered and the percentage of the total plains foodgrain area in each subdivision. Over 9% of the area will be covered by the next kharif crop and nearly 25% will be covered by next rabi season. Given this start, it is possible that this phasing, which covers the entire state in about four years, is conservative. The GOA',; own assessment is that it could cover the state in three years. Pending a more detailed check on the reorganization undertaken so far, however, it seems more prudent to use the somewhat slower phasing given in Table II as a basis for computing personnel and financial requirements and for estimating the impact on production. ANNEX 2 Page 14 SECTION III: PERSONNEL, PHYSICAL AND FINANCIAL REQUIREMENTS 46. The establishment of the Intensive State Extension Service will require additional personnel, vehicles, facilities and financial resources. Table III shows the personnel required by subdivision. Table IV, which shows the year-wise phasing of the numbers of existing and new staff covered by the IES, is obtained by applying the subdivision-wise phasing given in Table II to the personnel requirements shown in Table III. Table V shows the fixed and recurring unit costs associated with each level of staff. I/ Table VI, which shows the incremental project costs over the 1977-1981 2/ period, is calculated by applying the unit costs from Table V to the numbers of staff brought under the IES as shown in Table IV. While Table VI shows the costs broken down by levels in the extension service, Table VII shows the costs broken down by conventional cost categories. The following paragraphs de- scribe the personnel and financial requirements at each level. VLEW Level 47. As shown in Table III there are approximately 1.9 million farm families in the plains districts, implying a need for about 2400 VLEWs (at a ratio of one VLEW per 800 farm families). Assuming 80% of the VLWs, 60% of the Assistant Agricultural Inspectors and 100% of the Agricultural Demonstra- tors are transferred to the IES, the number of VLEWs would still be about 560 short of requirements. Initially, while waiting for additional VLEWs to be recruited and trained, there will be a shortage of staff. Rather than attempting to overcome this shortage by spreading the existing VLEWs too thinly or by transferring existing VLEWs from one subdivision to another, it would be best simply to leave a number of VLEW circles unfilled until staff are available. For example, Barpeta Subdivision would have about 194 VLEW circles, but at present there are only 110 VLEWs available. Consequently, 84 VLEW circles would not be staffed initially. 48. To train the required new VLEWs rapidly and efficiently, a new training program needs to be developed. Unlike the present pre-service training given to the multipurpose VLWs, the new program would concentrate exclusively on agriculture. Moreover, the intensive fortnightly training sessions (reinforced by the AEO on alternative weeks), can be relied on to give specific guidance to the new VLEWs. Accordingly the present two-year pre-service training course can be considerably shortened. The new VLEW 1/ The cost figures of Table V are tentative and need further checking. 2/ Refers to April 1 - March 31 fiscal years. By the end of this period the USES will cover the state and most of the new VLEWs will be trained. Con- sequently this seems to be an appropriate project period. ANNEX 2 Page 15 recruits should be drawn from high school graduates with practical agricul- tural backgrounds. It is suggested that the new VLEW receives an intensive three-month training course followed by 9 months work in the field in his VLEW circle. This pattern would be repeated each year for four years so that at the end of the period the VLEW trainee would have had 12 months of training and 3 years of practical field experience. There would be ample opportunity to assess the trainee's performance, to give close guidance and supervision, and to weed out those not well suited for the job. 49. The present Gram Sevak Training Centers (GSTC) would be utilized for this training. The two GSTCs together have facilities and staff for training about 20 students at one time. By running three three-month courses a year it would be possible to produce new trainees at about the rate re- quired by the phasing shown in Table II. Table VIII presents a proposed scheduling of training sessions and shows numbers to be trained in each session. Chart V shows that this scheduling provides a very close match over time between the number of new VLEWs required and the output of the training program. This program enables the gap between the number of VLEWs required and the number available to be closed rapidly. 50. All VLEWs will need to be mobile enough to reach all their groups on schedule. Consequently each VLEW will be provided with a loan to pur- chase a bicycle. The bicycle will be the VLEW's property and he will be responsible for maintaining it. An adequate travel allowance will be needed to meet the cost of maintaining the bicycle. The allowance should also cover meals taken in the field. 51. The VLEW is to live in his circle. Most VLEWs will be able to find rented quarters and will be provided with a housing allowance to cover the cost of rent. In areas where it is not possible to rent housing, funds can be provided to construct a modest house compatible with village standards. As a rough estimate, it is assumed that only about 10% of the VLEWs will need to have.a house constructed. 52. Budgetary provisions will also be made for extension operations. This includes field trials and demonstrations.conducted by the VLEW. Funds will be needed for preparing visual aids, and obtaining samples to be shown to farmers, etc. Provision is also made for in-service training of existing staff. AEO Level 53. No new AEOs are needed. Thei- are over 400 AEOs in the state compared with the fewer than 300 required by the extension system (Table III). AEOs will need to be very mobile so they can visit two VLEWs per day. Con- sequently each AEO will be provided with a loan for purchasing a motorcycle ANNEX 2 Page 16 and with a travel allowance to help cover the costs of operation, repair and maintenance. Maintenance of the motorcyle will be the AEO's responsibility. AEOs will be provided a housing allowance and, where necessary (assumed about 10% of the cases), appropriate housing will be constructed. Finan- cial provisions for in-service training and extension operations are also made. Subdivisional Level 54. No new SDAOs are required, but all the ASDAOs will be new. Since there appear to be surplus AEOs, a good way to fill the ASDAO posts might be to select and train up some of the best AEOs. The requirements for SMSs will be more difficult to meet. A careful analysis needs to be made of the quali- fications and fields of specialization of the present staff of approximately 64 SMSs (Table I). As a rough estimate it is assumed that only about half of these will be deployed at the subdivisional level. It is further assumed that these existing SMSs will be deployed primarily.in those subdivisions which are covered in the first years of the project. This will allow time for new SMSs to be recruited and trained. The numbers involved are small and training them is within the capability of institutions both in Assam and in other states in India. A detailed training program related to the specialization of each SMS needs to be developed and arrangements made for their in-service training. 55. Mobility is crucial for the subdivision level staff if they are to carry out their responsibilities for supervision (SDAOs and ASDAOs) and research and training (SMSs). Accordingly a suitable motor vehicle will be provided for each professional staff member at the subdivision level. The vehicle will be government property but used exclusively for extension. In addition to a travel allowance, provision will be made for the operation and maintenance costs of the vehicles. Government housing will be provided to all new staff at the subdivisional level (and to the ASDAOs in their AEO circles). It is assumed that existing staff already have adequate housing. In-service training will be provided for. This is particularly important for the SMSs who need to keep abreast of the latest developments in their field. Finally funds are also required for extension operations and train- ing aids, including charts, pamphlets, books, and samples. District Level 56. Sufficient DAOs are already in position. A total of 24 district level SMSs are needed in the specializations described earlier. Of the 64 SMSs deployed in the state now, it is assumed that 32 will become sub- divisional SMSs. Twelve of the remaining 32 are assumed to become district- level SMSs. The specialities and qualifications of the existing SMSs need to be reviewed to check these assumptions and to develop a detailed program of ANNEX 2 Page 17 deploying existing staff and recruiting and training new SMSs. For the moment it is assumed that existing district SMSs will be deployed primarily in the districts covered in the early years of the project. There will therefore be time to recruit and train new SMSs for other districts. A program of pre- service and in-service training similar to the one mentioned for subdivisional SMSs should be prepared for district level SMSs. 57. Staff at the district level would be allocated vehicles to enable them to make continuous visits to the field. Travel allowances and vehicle operating costs would also be provided. Where needed for posting new staff, housing will be constructed. Funds for extension operations and in-service training will be provided. Zonal Level and Headquarters 58. The two Zonal JDAs will be provided with vehicles. To strengthen the ability of the Headquarters staff to monitor the extension service and provide technical support and review (through the two cells described in para 31 above or some similar arrangement), it is assumed that about 10 staff will be needed in addition to those that might already be available. At this stage this is merely a rough estimate. The GOA needs to consider carefully the functions of the headquarters staff and develop a specific staffing pattern to fulfill these functions. Office space, office equipment, calculators, vehicles will be needed and a budget for these and for the operations of the cells and publication of their reports will be provided. Cost Estimates 59. Tables I through VII provide the basis for calculating the incre- mental costs of providing the personnel and facilities described above. These tables are summarized below: ANNEX 2 Page 18 INCREMENTAL COSTS OF IES BY ADMINISTRATIVE LEVEL (in '000 US $) April 1-March 31 fiscal year 1976 1977 1978 1979 1980 1981 Total 1. VLEW level 3 316 507 634 609 575 2644 2. AEO level 1 93 128 144 117 98 581 3. Subdivision level 317 358 423 304 173 1575 4. District level 73 117 110 81 50 431 5. Headquarters level 92 84 53 51 51 331 Total 4 891 1194 1364 1162 947 5562 + 10% Physical contingency 4 980 1313 1500 1278 1042 6117 + 5% p.a. price contingency 4 1029 1448 1736 1553 1330 7100 60. The following table shows the incremental costs broken down by category (excluding contingencies). INCREMENTAL COSTS BY CATEGORY (in '000 US $) 1. Capital costs 1737 2. Training costs - 543 3. Special allowances 1849 4. Headquarters operations 115 5. Salaries (new staff) 1318 Total 5562 Financing, Procurement and Disbursement 61. A financing plan has yet to be developed. The plan will depend in part on which cost components the Bank Group selects for financing. 62. Virtually all the goods and services procured under the project would be procured locally. Organizational arrangements for construction of houses in Assam will need to be checked for their effectiveness, but it is most unlikely that the small number of houses which might be constructed (less than 500) scattered throughout the countryside and constructed over a five-year period would attract international bidders. Bicycles for-VLEWs and motorcyles for AEOs would be procured locally by the VLEWs and AEOs themselves. Pro- curement procedures for vehicles need to be checked, 63. Suitable arrangements need to be developed for documentation for withdrawal applications and disbursements as well as for accounting and auditing of project expenditures. ANNEX 2 Page 19 Project Benefits and Justification 64. The project would reach some 2 million farm families cultivating about 2.1 -million hectares of foodgrains. Experience in other areas suggests while virtually all farmers benefit from this type of extension service, small farmers tend to benefit the most. This is because the extension service will focus first on improved practices of cultivation and farm management. These practices normally involve more labor - which small farmers generally have in abundance - and little cash expenditure. 65. Total project: costs (including contingencies) amount to about US$3.55 per farm family or about US$0.70 per year. The incremental operating costs following project: completion would, in current prices, be about US$0.50 per farm family and per hectare. No attempt has been made to calculate an economic rate of return since the project is in the services category and is primarily intended to support an improved organization of agricultural ex- tension. Nevertheless, the following calculation suggests that if a rate of return were calculated, it would be satisfactory. To cover the incre- mental post-project operating costs (US$0.50 per hectare) would require a yield increase of .:bout 4-5 kgs of grain per year per hectare (based on a paddy procurement price of Rs 72 per quintal or about US$120 per ton of grain). Just the minimum package of improved management practices described in Annex 1 would generate yield increases of about 200-300 kgs per hectare per crop on rainfed areas (or about $30 per hectare).. Since many farmers grow two crops of foodgrains a year, the increase for them would be even higher. More ad- vanced practices and higher input use would, in time, generate even higher crop yields. These calculations indicate the project's high priority. SECTION IV: OUTSTANDING POINTS 66. The Government of Assam has made considerable progress in initiating the Intensive State Extension Service. While a detailed agreement on the phased transfer of VLWs has not yet been developed, the GOA has agreed in principle to transfer 80% of the VLWs (8 per block) to the Agriculture Department as required. The orders for the transfer in the first three subdivisions to be covered (Nowgong, Barpeta and Kokrajhar) were issued on April 15, 1976. The extension system has reportedly been introduced in the Nowgong and Barpeta Subdivisions already. Nevertheless, as the above paragraphs suggest, there are some areas which need to be developed further. Some of the most important areas are listed briefly below. 67. Training programs need to be prepared for all levels of staff, both to orient existing staff to the new syc-em and to update their technical knowledge. For this training program a set of technical recommendations to be transmitted to farmers needs to be developed as soon as possible. The training course for new VLEWs needs to be developed and appropriate adminis- trative arrangements made to start the first group of trainees. The training needs for SMSs should be assessed and arrangements to recruit and/or train the required staff. ANNEX 2 Page 20 68. The staffing pattern for headquarters staff needs to be developed more precisely and functions clearly delineated. For those headquarters staff dealing with the self-evaluation of the extension service, a plan for evaluation needs to be prepared. External evaluation procedures and methods need to be developed. 69. The administrative and functional relationships linking research activities and extension need to be elaborated. 70. A financing plan needs to be developed, together with procurement and disbursement procedures. ANEX 2 EXTENSION TABLE I ASSAM DEPLOYMENT OF PRESENT EXTENSION PERSONNEL (Plains Districts) Agricul- Asst. tural Agri. Agri. Name of Demons- Inspec- Inspec- District/Subdivision VLWE trators tors tors2/ AJE,2/ SDAO SMS DAO GOALAPARA DISTRICT 1. Dhubri 70 70 15 5 13 1 5 2. Goalapara 60 40 8 4 10 1 2 3. Kokrajah 70 35 10 6 11 1 1 KAMRUP DISTRICT 4. Barpeta 80 40 10 3 14 1 3 1 5. Nalbari 70 30 10 2 11 1 0 6. Gauhati 100 70 25 9 15 2 13 1 NOWGONG DISTRICT 7. Morigaon 30 25 6 3 5 1 0 8. Nowgong 100 55 20 6 20 1 8 1 SIBSAGAR DISTRICT 9. Jorhat 60 45 12 4 10 1 9 1 10. Golaghat 50 29 10 7 9 1 0 11. Sibsagar 60 30 10 5 12 1 0 DIBRUGARH DISTRICT 12. Dibrugarh 50 40 15 6 9 1 5 1 13. Tinsukia5/ 50 20 8 5 5 1 0 N. LAKHIMPUR DISTRICT 14. Dhemaji 30 12 5 3 6 1 0 15. N. Lakhimpur 40 25 7 5 7 1 4 DARRANG DISTRICT 16. Tezpur 71) 40 13 6 14 1 7 1 17. Mangaldoi 60 50 20 4 12 1 0 CACHAR DISTRICT 18. Silchar 70 50 20 6 16 1 7 1 19. Karimganj 50 25 10 4 10 1 0 20. Hailakandi 30 25 10 5 6 1 0 TOTAL 1200 756 244 98 217 21 64 9 ANNEX 2 EXTENSION 1/ Assumed to be 10 per block. Certain blocks, however, have 11. 21 In addition to the AEOs and Agricultural Inspectors shown here there are about 70-80 other AEO-level staff serving special schemes. 3/ Includes Subject Matter Specialists in selected crops, plant protection, training officers, information officers and others. 4/ Barpeta is an agricultural district. 5/ Tinsukia is a new subdivision. April 1976 ANNEX 2 EXTENSION TABLE II ASSAM PHASING OF INTRODUCTION OF INTENSIVE STATE EXTENSION SERVICE (Tentative) % Total Plains Food- grain 1976 1977 1978 1979 1980 Area Kharif Rabi Kharif Rabi Kharif Rabi Kharif Rabi Kharif Nowgong S.D. 9.2 9.2 Barpeta 8.8 8.8 Kokrajah 6.0 6.0 Dhubri 7.2 7.2 Morigaon 2.5 2.5 Goalapura 5.1 5.1 Nalbari 7.7 7.7 Gauhatit 6.6 6.6 Dibrugarhl/ 6.5 6.5 Tezpur 5.6 5.6 Mangaldai 8.1 8.1 Golaghat 3.2 3.2 Jorhat 4.1 4.1 Sibsagar 4.2 4.2 N. Lakhimpur 3.1 3.1 Dhemaji 2.3 2.3 Silchar 4.7 4.7 Karimganj 3.3 3.3 Hailankandi 1.8 1.8 Percent of Area newly covered 9.2 14.8 9.7 19.4 12.1 8.1 16.9 9.8 Yearly Total 9.2 24.5 31.5 25.0 9.8 Cumulative Total 9.2 33.7 65.2 90.2 100.0 ANNEX 2 EXTENSION TABLE III ASSAM PERSONNEL REQUIREMENTS FOR THE INTENSIVE STATE EXTENSION SERVICE New Number Number Number Dis- Dis- of of of New New trict trict farm VLEW VLEW VLEW AEOs SDAO New SMS SMS SMS DAO SMS SMS fami- re- availa- re- re- re- ASDAO re- ava a-re- re- re- re- 9 Subdivision lies!/ quired ble-2/ _gire&I _uiredt/ oired5/ needed6/ Quired bl17 Quired quired8.'uired Quired- ('000) Nowgong 16410/ 205 139 66 26 1 3 6 6 0 1 3 1 Barpeta 155 194 110 84 24 1 3 6 6 0 1 Kokrajah 94 117 97 20 15 1 2 3 3 0 Dhubri 110 137 135 2 17 1 2 3 2 1 Morigaon 7310/ 91 60 31 11 1 1 3 2 1 Goalpara 86 107 93 14 13 1 1 3 2 1 1 3 1 Nalbari 95 119 92 27 15 1 2 3 2 1 Gauhati 137 171 165 6 21 1 3 3 2 1 1 3 1 Dibrugarhl 140 175 154 21 22 2 2 3 2 1 1 3 1 Tezpur 156 195 104 91 24 1 3 6 1 2 1 3 2 Mangaldai 195 243 110 133 30 1 3 6 0 3 Golaghat 74 92 75 17 11 1 1 3 1 2 Jorhat 74 92 100 (8) 11 1 1 3 3 0 1 3 2 Sibsagar 74 92 84 8 11 1 1 3 0 3 N. Lakhimpur 59 74 61 13 9 1 1) 3 0 3 1 3 2 Dhemaji 54 67 47 20 8 1 0) 0 3 Silchar 81 101 118 (17) 12 1 1 3 0 3 1 3 2 Karimganj 62 77 71 6 9 1 1 ) 3 0 3 Hailankandi 17 46 55 (9) 6 1 0) 0 3 Total 1920 2395 1870 559 295 20 31 63 32 31 9 24 12 1/ Taken as number of farms as published in AssAm Agricultural Census. 2/ Taken from Table I : 80% of VLWs, 100% of Agricultural Demonstrators, and 60% of Assistant Agricultural Inspectors. 3/ Figures in brackets indicate surplus VLEWs. These will redeployed within their present subdivisions which will retain a higher concentration of VLEWs. For this reason column 2 less column 3 does not equal column 4. 4/ Combining the AEOs, Agricultural Inspectors and other AEO level staff there are a total of about 390-400 AEOs in > the state. Hence no new AEOs are required. 5/ There is one SDAO posted at each subdivision, hence no new SDAOs are needed. CD 6/ All the ASDAOs will be new. F ANNEX 2 EXTENSION TABLE III contd. ./ Assumes 32 of the 64 SMS shown in Table I are redeployed to subdivisions. 8/ Sufficient DAOs are already in position. 9/ Assumes 12 District SMS are selected from the 64 SMS already in position. 10/ Only District level figure is available. Farms are allocated to these two subdivisions proportionally to the number of blocks in each. 11/ Includes the recently created Tinsukia subdivision. 0H\ ANNEX 2 EXTENSION TABLE IV EX:ISTING AND IJEW-DF SY!yD2 BI_TTENI VE STATE EXTENSION SERVICE 1976 1977 1978 1979 1980 1981 VLEW LEVEL 1. Existing staff 139 402 608 477 244 0 - cumulative 541 1149 1626 1870 1870 2. New staff/ trainees 0 200 200 170 0 0 - cumulative total 200 400 570 570 570 AEO LEVEL 1. Existing staff 26 67 95 80 27 - cumulative 93 188 268 295 295 SUBDIVISION LEVEL 1. Existing SDAO 1 4 6 6 3 - cumulative 5 11 17 20 20 2. New ASDAO 3 8 11 7 2 - cumulative 11 22 29 31 31 3. Existing SMS 6 13 9 4 0 - cumulative 19 28 32 32 32 4. New SMS 0 2 6 14 9 - cumulative 2 8 22 31 31 DISTRICT LEVEL 1. Existing DAO 1 2 3 2 1 - cumulative 3 6 8 9 9 2. Existing SMS 2 2 5 2 1 - cumulative 4 9 11 12 12 3. New SMS 1 1 4 4 2 - cumulative 2 6 10 12 12 NOTE: Years refer to April 1-March 31 fiscal years. EXTENSION TABLE V UNIT COSTS AND COSTING ASSUMPTIONS Recurring costs (US $ per year) Fixed costs (US ) Hou- Exten- Vehicle In- Pre- Travel sing sion opera- service service Allow- Allow- Opera- ting train- train- Salary ance ance tions2/costs ing ing Vehicle House 1. VLEW LEVEL a.Incremental n.a. 271/. 30 40 - 20 203/ 55 650 allowances for existing staff b.Costs of new 400 67 30 40 - 55 650 staff 2. AEO LEVEL a.Incremental n.a. 200 50 40 - 40 2021 560 1000 allowances for existing staff 3. S.j8DIVISIONAL LEVEL 6/ 3/ a.Incremental 270 - 200 400 60 20- 5500 allowances for existing staff b.costs of new 1133 270 200 400 60 250 5500 45007Y staff 4. DISTRICT LEVEL a.Incremental 270 71 200 400 80 20- 5500 allowances for existing staff b.costs of new 1600 270 200 400 80 250 5500 50007 staff 5. HEADQUARTERS a.New staff and 1800 270 100 400 40 250 5500 facilities 1/ Increment over present travel 3llowarce. 2/ Includes samples, visual aids, pamphlecs, 1ooks, demonstrations. 3/ Orientation course. 4/ For the estimated 10% of VLEW and AEOs who cannot find rented housing. 5/ Cost of new VLEW training taken at.a total of $ 50,000 per year, based on existing budget of training centers. 6/ For costing purposes, salaries and allowances of all subdivisional staff are assumed to be roughly equal. 7/ Housing already provided for all existing staff and to be provided for new staff. NOTE: These cost figures are tentative and subject to revision. ANNEX 2 EXTENSION TABLE VI ASSAM INCREMENTAL COSTS OF INTENSIVE STATE EXTENSION SERVICE BY LEVEL (in 000 of US $) 19761/ 1977 1978 1979 1980 1981 TOTAL 1. VLEW LEVEL - Existing staff Allowances 2/ 29 65 93 107 107 401 Extension operations 22 46 65 75 75 283 Training 3/ 3 19 35 43 42 37 179 Vehicles 30 33 26 13 0 102 Construction of housing 35 39 31 16 0 121 - New staff Salary 80 160 228 228 228 924 Allowances 19 39 55 55 55 223 Extension operations 8 16 23 23 23 93 Training 50 50 50 50 50 250 Vehi-1-s 11 11 9 0 0 31 Construction of housing 13 13 11 0 0 37 - Subtotal VLEW Level 3 216 507 634 609 575 2644 2. AEO LEVEL Allowances 23 47 67 74 74 285 Extension operations 4 8 11 12 12 47 Training 3/ 1 5 10 13 13 12 54 Vehicles 52 53 45 15 0 165 Construction of wousing 9 10 8 3 0 30 - Subtotal, AEO-Level 1 93 128 144 117 98 581 1/ Assumes most allowances not in effec. an! new staff not employed until 1977. 2/ Includes Housing and Travel allowances. 3/ Includes pre-service and in-service. NOTE: Years refer toApril 1-March 31 fiscal years. ANNEX 2 EXTENSION Table VI continned TABLE VI continued 1976 1977 1978 1979 1980 1981 TOTAL 3. SUBDIVISIONAL LEVEL - Existing SDA0 Allowances 1 3 5 5 5 19 Extension operations 1 2 3 4 4 14 Vehicle operating costs 2 4 7 8 8 29 Training 1 1 1 1 1 5 Vehicles 28 33 33 17 0 111 - New ASDAO Salary 12 25 33 35 35 140 Allowances 3 6 8 8 8 33 Extension operations 2 4 6 6 6 24 Vehicle operating costs 4 8 12 12 12 48 Training 4 4 4 3 2 17 Vehicles 61 61 40 11 0 173 Construction of housing 50 50 32 9 0 141 - Existing SMS Allowances S 8 9 9 9 40 Extension operations 4 6 6 6 0 28 Vehicle operating costs 8 12 12 12 12 56 Training 2 2 2 2 2 10 Vehicles 104 50 22 0 0 176 - New SMS Salary 2 9 25 35 35 106 Allowances 1 2 6 8 8 25 Extension operations - 2 1 6 6 18 Vehicle operating costs 1 4 8 12 12 37 Training 1 2 5 4 2 14 Vehicles 11 33 77 50 0 171 Construction of housing 9 27 63 41 0 140 - Subtotal, Subdivision level 317 358 423 304 173 1575 ANNEX 2 EXTENSION TABLE VI continued Table VI continued 1976 1977 1978 1979 1980 1981 TOTAL 4. DISTRICT LEVEL Existing DAO Allowances 1 2. 2 2 2 9 Extension operations 1 1 2 2 2 8 Vehicle operating costs 2 2 4 4 4 16 Training 0 1 1 1 1 4 Vehicles 16 16 11 5 0 48 Existing SMS Allowances 1 2 3 3 3 12 Extension operations 1 2 2 2 2 9 Vehicle operating costs 2 4 4 5 5 20 Training 0 1 1 1 1 4 Vehicles 22 28 11 5 0 66 New SMS Salary 3 10 16 19 19 67 Allowances 1 2 3 3 3 12 Extension operations - 1 2 2 2 7 Vehicle operating costs 1 2 4 5 5 17 Training 1 1 2 1 1 6 Vehiclo 11 22 22 11 0 66 Construction of housing 10 20 20 10 0 60 - Subtotal, District Level 73 117 110 81 50 431 5. HEADQUARTERS New staff 4/ Salaries 9 18 18 18 18 81 Allowances 2 .4 4 4 4 18 Vehicle operating costs 2 4 4 4 4 18 Office operatiAg costs 15 25 25 25 25 115 Vehicles 5/ 29 28 0 0 0 67 Equipment 10 5 2 0 0 17 Office space 15 0 0 0 0 15 Subtotal, Headquarters 92 84 53 51 51 331 4/ Ten new staff (5 in FY 77, 5 in FY 78) for evaluation unit and senior SMS cell. 5/ Twelve vehicles: Two for Zonal JDAs, Five for Headquarters in FY 77 and five in FY 78. ANNEX 2 EXTENSION Table VI continued TABLE VI continued 1976 1977 1978 1979 1980 1981 TOTAL 6. TOTALS VLEW Level 3 316 507 634 609 575 2644 AEO Level 1 93 128 144 117 98 581 Subdivision Level 317 358 423 304 173 1575 District Level 73 117 110 81 50 431 Headquarters Level 92 84 53 51 51 331 Total 4 891 1194 1364 1162 947 5562 + 10% physical contingency 4 980 1313 1500 1278 1042 6117 + 5% pa price contingency 4 1029 1448 1736 1553 1330 7100 ANNEX 2 EXTENSION TABLE VII ASSAM INCREMENTAL COSTS OF INTENSIVE STATE EXTENSION SERVICE BY COST CATEGORY (in '000 US $) 1976 1977 1978 1979 1980 1981 TOTAL A. CAPITAL COSTS 1. House construction 529 2. Vehicles 1176 3. Equipment 17 4. Office space 15 B. TRAINING COSTS 543 C. SPECIAL ALLOWANCES 1. Housing and travel 1077 2. Vehicle operating costs 241 3. Extension operacions 531 D. HEADQUARTERS OPERATING COST 115 E. SALARIES 1318 TOTAL 5562 ANNEX 2 EXTENSION TABLE VIII ASSAM SCHEDULING OF NEW VLEW TRAINING PROGRAM Numbers of Trainees Training Session (April 1-March 31 August- December- April- fiscal year) October February June 1977 YEAR I 50 100 50 1978 YEAR II 50 100 50 YEAR I 50 50 100 1979 YEAR III 50 100 50 YEAR II 50 50 100 YEAR I 90 40 40 1980 YEAR IV 50 100 50 YEAR 1II 50 50 100 YEAR II 90 40 40 1981 YEAR IV 50 50 100 YEAR III 90 40 40 1982 YEAR IV 90 40 40 ANNEX 2 EXTENSION CHART i ASSAM PRESENT ORGANIZATION OF EXTENSION ADMINISTRATIVE LEVEL GOVENOR HEADQUARTERS LCHIEF SECRETARY DEPARTMENT O AG RICULTU DEPARTMENT OF PANCHAYATS ANDCOIIUNITY DEVELOPMENT.. COMMISSIONER JDA JDA JDA WESTERN EASTERN INTENSIVE ZONE 0NE_ ZONE PROGRAM - DEPIUTY COMMISSIONE DISTRICT SM r DAOJ SUBDIVISION OFFICERO BLOCK' [DEVELOPM ENT BLOCK .OFFICER . AEO VL.W ANNEX 2 EXTENSION CHART II ASSAM ORGANIZATIONAL CHART OF PROPOSED IES DEPARTMENT OF AGRICULTURE STATE JDA JDA ZONE WESTERN EASTERN -PNE ZONE DISTRICT DAO lDAO DAO! [DAO 1 SD ,SUBDIVISION - DSD A DA1 SDAO SMS ASDAO ASDA AEO AEBLOCK V V E L EW LEW VLEW CIRCLE FARM FARM ARMAR AM FARM LEVEL GROUP GROUP GROU, GROU M M GROUP GRCIP GROUP ANNEX 2 EXTENSION CHART III ASSAM FORTNIGHTLY SCHEDULE FOR TYPICAL VLEW DAY TIME TASK Monday a.m. Visit fields of farmers in Group 1 p.m. Group Discussion with Group 1 Tuesday a.m. Visit fields of farmers in Group 2 p.m. Group Discussion with Group 2 Wednesday a.m. Visit fields of farmers in Group 3 p.m. Group Discussions with Group 3 Thursday a.m. Visit fields of farmers in Group 4 p.m. Group Discussion with Group 4 Friday a.m.) All-Day-Training conducted by SMS p.m.) Saturday a.m. Extra visits for checking field trials, office work, p.m. make up visits due to holidays or illness, etc. Sunday a.m.) HOLIDAY p.m.) Monday a.m. Visit fields of farmers in Group 5 p.m. Group Discussion with Group 5 Tuesday a.m. Visit fields of farmers in Group 6 p.m. Group Discussion with Group 6 Wednesday a.m. , Visit fields of farmers in Group 7 p.m. Group Discussion with Group 7 Thursday a.m. Visit fields of farmers in Group 8 p.m. Group Discussion with Group 8 Friday a.m.) Training conducted by AEO p.m.) Saturday , a.m. Extra visits for checking field trials, office work, p.m. . make up visits due to holidays, illness, etc. Sunday a.m.) HOLIDAY p.m.) Monday etc. a.m. Visit fields of farmers in Group I p.m. Group Discussion with Group 1 NOTE: This schedule will not be identical for all VLEWs. For attending training sessions by SMS, VLEWs will be grouped in four batches of 30-40 with each batch trained by SMS on a different day. ANNEX 2 EXTENSION CHART IV AS SAM LINKAGES BETWEEN EXTENSION SERVICE AND RESEARCH DEPARTMENT TECHNICAL A AM OF COMMITTEE OF ~~~(STATE RESEARCH. ARCLUA AGRICULTURE AND EXTENS ION UNIVERSITY - ~OMMITFE DAO DISTRICT- SMS SDISTRICT RESEARCH DESIGNATED AND EXTENSIONCOMMITTEE SUBSTATION SDAO SUBDI SMS AEO/ VLEW 神詞權胤州一 轟秀 一不不－一手一一兩寫－----－一’&．蒲，必－－一千一一一一不森不一一→一－－一一不石訐一一干一 APPENDIX I to ANNEX 2 EXTENSION ASSAM NOTICE ESTABLISRING TECHNICAL COWITTEE CR"R BY TsM9 OOVERIDR 40ICtMR.PE D RI MNP sss is s GRiIC'U UMM RRANCH Dated Dispur, the 15 March, 1976. So. OI4. 730/75/29 - The rovernor of Assam is-pleased to constitute a Technical"Mmmittei to evolve a technology suitable for improving a rate of production of paddy in Assam in the ftokest possible tiqe, as follows t- 1. Director of kgriculture, Assam - airman 2. Director of-Research Assam, I kricultkiral University - Member. 3. Mrector/Associate Director of *9tension .ducat1Qn, .psam: 487ril*r UMiversitys- Me mboer, 4. Frzfessor of 4grohomy, Asshn 4..1. University - Membar, p. Professor of kgrili.Roonomicit Assam AgMl University. 'Membor. 6. Professor of Entomology, O sam Agril. University. - Momber. 7. Professor of Plint Pathology, 4ssam Aril..University. - Member. 8. Add1. drector of Agriculture (General), Assam - Memb Y. 9. J3int !Director of. Ari.cltutre(IP) - Member. io. Res-A!ch Officer-(Stat! sties),-. N Directorate of 4griculture, Assam - Mamber Secy. Punctions 2f thd .CbMMittee i 1. To dusign trial plots as .regards number B!fTe, replications, and distribution on sub-dl vision. Block-and Zone-wise basis. 2. To finalise the varieties, fertiliter doses '15lant protection measures vatermanagement pradtices under rainfed condRions, -oltural practices and economics of production and to prescribe the time of sawing most sited to the conditions In the State. 3. To finalise selection of: caltivators satdprocedure thereof . for adoptive trials on-cult:-atnrs' plots. 4. To finalise allotments of trials in the Uhiversity farms, departmental farms and Seeds Corpor¶tinn farms. 5. To finalise the procedure and amount of dath to be collected an the schedule for collectiin tf-data. 6. To compile and analyse data 9nd arrive at recommenations of the Technology for increased production of sali paldy in the quickest possible time. Cont-d... 2/_ m (2)- arking o f the Ebmmi t4q 1. The office of the"-bPmittee shall be located in tho Uirectorfte of Agriculture at Khn-nap-ri fhA the 'Research Officer (Statistics) of the Directoratdof-Agricultdre shall be the.Socretary .of' the Committ6b. H6 shall keep records of the discussions of the -C-mittee meetings, receive field data sent by-the field officers bnducting the traitls, compile these data as per schedule and put before the committee for discussi-n at its meetings. He shall be assisted by a Technical kssistant of the .rectorate. 2. The committee shall meet on Ist Monay-of every, month in the office of the 'qXrectwr of .ensidn Education it Jorhat and in the Directorate of Agriculture at Khanapara on alternate occassion. 3. The field trails will be conducted by th-AgriculturrAl "xtension Officers in the Blocks by. thtmsalvesin-the cultivatorst fields and also by the Fa-rt Managers/ Researa Assistants themselves in the farms of the Vnivorsity, Department ad-Saads Corporati-n. The results of trials-as per schedule will ba sent by the 4 0/Farm Manger/Research %sstt. lirect t! the Rpsesrch Officer (Statistics), Khanapara, Gquhati- 781002., 4. The trials will be supervised on the fiel_ds by the- vnbject atter Speclialists of the ')partment and of Thiversity. The Committee Members also will inspect the trials from time to time as decidei in the meeting. 5. The cost of inputs of-the trials will'bU borne by the hopartment from the Demonstration- Scheme* 6. The Committee willj start fumctioning-immediatR1y and thie first meetingshal.l 'b held at.Jorthat -on 15th March, '976 and therefter:,on Ist honday every month-. 7. The Committee. may. recommenc names of' field workers ultose works de-srVe.af$reciatioiby Govte Thl)-term of the-Committee shall be one year for the present f'om its first moeting. (B. Bar )a- Secretary to the Govt.-of Assam, Agriculture_et6. Departments. ANNEX 3 AN EAXPANDED PROGRAM OF ADAPTIVE RESEARCH Table of Contents Page no. Present Status of Agricultural Research 1 The Concept of Adaptive Research 2 Project Proposal Location Facilities Staffing Organization and Management 4 Costs Adaptive Research Topics ANNEX 3 Page 1 AN EXPANDED PROGRAM. OF ADAPTIVE RESEARCH Present Status of Agricultural Research 1. Agricultural research in Assam is principally the responsibility of the Assam Agricultural University (AAU), Jorhat. The Research Wing of AAU is responsible for state financed research projects and for local implemen- tation of the centrally financed projects of the Indian Council for Agricul- tural Research (ICAR). Some research, principally in the form of post grad- uate studies is also carried out in the Teaching Wing of AAU in which the departments relevant to foodgrains include Agronomy, Agricultural Chemistry and Soil Science, Botany and Plant Pathology, Zoology and Entomology, and Genetics and Plant Breeding. Teaching staff in these departments devote about a third of their time to research. 2. The principal experimental programs of the Research Wing are on rice (agronomy, varietal improvement, entomology and pathology), wheat (agronomy, varietal testing ar4 seed storage), maize (agronomy), pulse crops (agronomy and varietal imorovement) and water management. AAU has two instructional-cum- research farms and eight research stations. The research stations are in most cases limited in their range of crops - for instance to jute and pulses (Nowgong District) or citrus (Kamrup District). Rice research is located at Jorhat (Sibsagar District) and Karimganj (Cachar District) and there is no location for AAU rice research in lower Assam. 3. In addition to these experimental programs, the Department of Agricultural Engineering is concerned with the development of improved animal- drawn implements. In the Department of Agricultural Economics and Farm Management centrally funded cost-of-production studies are being carried out, and the AAU campus is also the location of the centrally financed Agroeconomic Research Centre for North East India. 4. The Department of Agriculture, by recent agreements, has no research function. Its development activites are confined to supervized trials of extension recommendations on farmers' field and to the "mini-kit" evaluation of new varieties by farners. 1/ 5. The conduct of the research has been somewhat retarded by lack of staff or their absence on training courses. Despite these drawbacks a conven- tional experimental program is being implemented at AAU. Several key research- ers will return from training soon and facilities on the campus will shortly 1/ The Extension Education Wing of AAU is also actively involved in supervized trials, particularly in Sibsagar District adjacent to AAU. In addition it is responsible for the ICAR National Demonstration Scheme for multiple cropping which is being implemented on farmers' fields in Sibsagar, Kamrup and Cachar Districts. ANNEX 3 Page 2 be much improved by IDA financing, although the problem of recruiting capable staff to the research stations, and the very low standard of buildings and equipment at the research stations, will remain. The supervised trials pro- gam has been successful, in that when presented with HYVs and high levels of inputs, supervised farmers have consistently achieved yields roughly three times the state average (Annex 1). Cost-of-production studies, on the other hand, have yielded little recent information due to the failure of the central processing system to analyze the field data which have been gathered. 6. In view of these generally satisfactory achievements it is fair to ask why rice and wheat yields in Assam have remained static for a decade at scarcely above 1 ton/ha, why only some 10% of rice is under local improved varieties or HYVs and why fertilizer use averages about 2 kg nutrients per hectare. The answer seems to lie in the omission of an essential step between the research activites of AAU, which have succeeded in showing what is techni- cally possible, and the farmer. The main thrust of extension so far has been towards persuading the farmer to adopt the practices which have given optimum returns in research trials. Implicit in this approach is the assumption that crops will receive the same level of skilled management as on the research station and that quantities of purchased inputs are limited only by the de- clining ratio of benefits to cost. It has not been adequately recognized that the farmers of Assam are at present mostly traditonal in outlook, not very skilled and short of cash. For such farmers the sudden change to "full package" technology represents a risk which they are reluctant to accept. Until research findings have been adapted so that they are acceptable to this category of farmer, the process of technical development is not complete. The facilities and attitudes of mind needed for the necessary adaptive research require substantial reinforcement. Without reinforcement the task for which the reorganized extension service will be responsible, of lifting yields off their present plateau, will be extremely difficult. The Concept of Adaptive Research 7. The term Adaptive Research is used here to describe the examination from the farmer's viewpoint of the technical opportunities to increase pro- duction which emerge from "conventional" agricultural research. The aim of adaptive research is to evolve extension recommendations tailored to the needs of farmers at particular times and in specific locations. Because they take full account of the skills and resources available, these recommendations are readily accepted. It follows that as technical competence and output rise over time, recommendations are upgraded to match the farmer's progress. An example of such a sequence of recommendations is given in Annex 1, para 33. In addition adaptive research is concerned, as is the farmer, with the total annual production of the farm rather than with optimizing the yield of a single crop in the cycle. ANNEX 3 Page 3 8. Adaptive research differs from conventional research, to which it is complementary, as much in the underlying attitude of mind as in anything else. The following specific procedures are fundamental. (i) Constraint indentification. It is essential before doing any trial work to establish the capability, resources and attitudes of the farmer. The questions asked must be few in number, highly specific and capable of rapid analysis. Information which emerges too late to be used in designing the next experimental program is useless. (ii) Field trials. These must always be related to the constraints which face the farmer and his current level of expertise. While systems, risks or implements may be evaluated by University researchers on the research station in the early stages of developing a new recommendation, the methods and inputs used should relate fully to those which are expected to be at the far- mer's disposal. The provisional recommendations which emerge from thiF phase should be evaluated by farmers themselves on their own fields under the eye of the extension service as soon as soon as is practicable. (iii) Evaluation. In additon to evaluating trials in technical and micro-economic terms, farmers' reactions and attitudes to new developments must be systematically recorded from the moment of their first exposure to a new technique, and their preferences incorporated into the next cycle of trials. Project Proposal. 9. To add the necessary extra dimension to agriculutral research at AAU an adaptive research component is proposed, as a complement to and to be financed simultaneously with the reorganization of agricultural extension proposed in Annex 2. In view of the differences between agroclimatic zones (Annex 1, para 4) it is proposed that a number of sub-stations should be established in representaive areas by supplementation of existing facilties or de novo. Each should be concerned with the range of major crops grown by farmers in the area and staffed by a multidisciplinary team. As well as forming the link between conventional research and agricultural extension in the experimental sense, the sub-stations would act as centers for the monthly training of subject matter specialisLs (SMSs), for the demonstration of new techniques and as a base from which trials on farmers' fields would be conducted by the extension service. ANNEX 3 Page 4 Location 10. In deciding on the number and location of sub-stations it would be necessary to balance the need to cover a wide range of agroclimatic condi- tions against GOA implementation capacity and the need to avoid fragmentation of effort. For this reason not more than four sub-stations are suggested initially, perhaps located at Jorhat (representing the upper Brahmaputra Valley), Nowgong (representing areas of lower rainfall), Barpeta (repre- senting lower Assam with the emphasis on flood-prone areas) and Silchar (representing the Cachar Plain). Facilites 11. Each sub-station would require some 50 ha of arable land, at least a half of which would have irrigation. This would need to be assoc- ciated with simple laboratories, offices and stores, the necessary lab- oratory, field and farm equipment, and staff transport sufficient to service the off-station trials program. Extension training facilites would be needed, and to secure the services of good technical staff it is assumed that staff housing would be provided. Staffing 12. Sub-stations should be directed by a resident officer of Associate Professor or Professor status, assisted by an interdisciplinary team of grad- uates between them covering agronomy and soils, water management, plant path- ology and entomology, agricultural machinery, economics and farm management. No sub-station should be so small that it lacks a "critical mass" of technical manpower or becomes regarded as a place of exile from the ivory towers of con- ventional research. Rotation of staff between adaptive research sub-stations and both AAU and the Department of Agriculture should be established on a routine basis, and a spell in adaptive research must be recognized in both services as an advantage to an officer's career development. Organization and Management 13. Detailed proposals for organization and management would await full preparation, but it is suggested that they should incorporate the following principles. (i) In framing the objectives and priorities of the-adaptive research program the voices of AAU (representing the technical possibilities) and the Department of Agriculture (representing the extension ser- vice) should have equal weight. A zonal research and extension cell (Annex 2, para 31) is envisaged for each sub-station, with a central cell of senior specialists to ensure coordination at State level (Annex 2, para 34). ANNE: 3 Page 5 (ii) The same balance between research and extension should be preserved in the evaluation of results, and in the framing of recommendations for testing by farmers or for firm adoption. (iii) All adaptive research officers should be required to spend a part of their time (say 20%) in the field in company with SMSs or other extension staff, in direct contact with farmers. Costs 14. The cost per sub-station is estimated at about $0.5 million. This includes a land development charge of $50 per hectare; installation of a deep tubewell or river lift irrigation; four years' salary and associated costs for 6 full-time researchers with their assistants; senior staff housing; laboratory, office and store buildings; farm, field and office equipment; transport and operating expenses, and physical contingencies. Allowing for the training needed to familiarize staff with the concept of adaptive research, possible technical assistance, and some strengthening of linked facilities at AAU - particularly for micro-economic studies and for adaptation and testing of de- signs for animal-drawn machinery - a total cost of $2.5 million is envisaged. The adaptive research component would neither duplicate nor conflict with the ongoing IDA support for development of the AAU Jorhat campus. Adaptive Research Topics 15. The following list of topics is intended, in part, to further clarify the concept of adaptive research. Only a small number of the subjects would be included in the program at any one time and the priorities for the first phase of adaptive research would need to be established during preparation. Quantification of present practices. Availability and use of family and hired labor; cash expenditure on production in relation to farm size; sources of purchased inputs; sources and use of credit; attitudes to risk and indebtedness; current levels of indebtedness; subsistence requirements and capacity to meet them; breakdown of farm income (including non-crop) and sources of off-farm income; present planting dates and reasons for their adoption; crop spacing and population; weed densities; responses obtained to fertilizers and pesticides and farmers' assessment of acceptability; on-field measurements of water depth during the monsoon; incidence of water stress; water management practices, levelling and bunding; current intehsitv and efficiency of irrigation; present cropping intensity in relation to agro-climatic zone. Farming and irrigation equipment. Local adaptation, within specified maximum manufacturing costs and retail prices, of animal-drawn or hand- operating equipment: for primary and secondary tillage (wet or dry), line ANNEX 3 Page 6 sowing and row weeding; evaluation of technical perfomance and accep- tability in the hands of small farmers; development and/or evaluation of low cost hand-operated equipment for groundwater extraction (see Annex 4). Crop rotation. Development and evaluation of crop rotations to maximize total farm production at limited levels of farming skill and with re- stricted availability of labor, draught power or cash; determination of risks in high intensity cropping systems; development of production systems for very small farms (say below 0.5 ha). Varieties. Comparison of yields from traditional and improved crop varieties at different levels of weed competition (set by use of different methods of control at different intensitites), water stress and flooding. Fertilizers. Maximization of yield from sub-optimal fertilizer doses - say 25 and 50 kg total nutrients/ha; optimization of N:P:K ratio at these doses; fertilizer response of traditional vs improved varieties with or without weeds, water stress or flooding. Pesticides. Sensitivity of standard treatments to efficiency of appli- cation and timing. Evaluation of simplified or low-cost application techniques, especially for on-farm treatment of saved seed. Drying and storage. Development and evaluation of simple driers for communal or individual use, based on either optimal use of atmospheric drying or least-cost fuel. Development and evaluation of improved storage techniques for grain for consumption, both on-farm and by pro- curement agencies. ANNEX 4 GROUNDWATER DEVELOPMENT Table of Contents Page no. A. Background 1 B. Groundwater Hydrology 3 C. Issues in Tubewell Technology 5 Economies of Scale 6 Possible Changes to Existing Designs 8 Alternative Technologies 9 Effect of Changing to Other Crops 9 Oper,'.on and Maintenance 10 Financing 10 D. The Program 11 General Description 11 Cost Estimates 12 Financing 12 Disbursements 13 Organization and Management 13 Role of Equipment Suppliers 14 Food Production l Tables 1-3 Figures 1-7 Attachment 1: Field Trials,and Demonstration of Alternative Approaches Attachment 2: Observation Network and Pumping Tests Attachment 3: Cost Estimates Attachment 4: Assumed Changes in Cropping ANNEX 4 Page 1 ASSAM GROUNDWATER DEVELOPMENT A. Background 1. Assam is most simply characterized as that portion of the Brahma- putra valley which passes through India. (Fig. 1). About 850 km in total length from the East to the West and 75 to 120 km wide from North to South, it has been formed and remains dominated by this, one of the greatest of the world's rivers. Of approximately 20,000 sq km of land under rice, the most important food crop, about 18,000 sq. km are in the flood plain of the Brahmaputra, the remainder being Cachar District, adjacent to Bangladesh, in the south of Assam. Each year, the river, draining as if does most of Thibet and the entire Northern slope of the Himalayas, carries about 6 billion cubic meters of water to the Bay of Bengal. Contained in this quantity of water are, typically, 50 million cubic meters of sediment (enough to cover 1,000 sq km to a depth of 5 cm). Each year as the winter passes, the snow melt from the Himalayas, augmented by the torrential monsoons, causes the river to swell to ten times its normal winter flow. This quantity of water, requiring more room to pass, spreacis out across the valley floor. Repeated year after year, for millioi.6 of years, this process has built up the valley floor with layers of sand , silt and gravel until there are now alluvial deposits, over 50 sq km, more than 1000 m thick. The river and the rainfall keep these deposits effectively saturated; they must contain at least 5000 billion cubic meters of water, about thirty times the full capacity of the Bratsk Reservoir (U.S.S.R.), the biggest man-made lake in the world. About 2 billion cubic meters of this' quantity are within 5 m of the surface, easily reached by shallow wells. 2. The need for irrigation in this apparently well-watered land stems from two primary considerations: (a) although the average annual rainfall is very high (over 2000 mm in most places) it occurs during a concentrated 7 month monsoon season, leaving 5 months which are often too dry to sustain re- liable crop growth without supplemental watering (Fig. 2), and (b) annual flooding rules out the possibility of a monsoon crop on about 2,500 sq. km or 250,000 ha and make it risky on about a fur- ther 150,000 ha. For farmers in these areas the only way to ensure a food crop each year is by providing irrigation for the dry season. 3. The quantitites of irrigation uater required for the principal rice crops are presented in Table 1. Because these needs occur mainly during months of relatively low temperature and low levels of solar radiation, and because of the contributions of rainfall even outside the main body of the monsoon, these needs are slight indeed by the standards of most of the world's ANNEX 4 Page 2 irrigated areas. As indicated earlier, the water required to meet these needs is stored close to the surface of much of the Assam's cultivated land. One might thus expect irrigation to be a straight forward and inexpensive opera- tion. Of course, by the same world standards, it is, but the process of development here is complicated by the social and economic conditions which prevail on the surface a scant 3 meters - in most cases - above the precious water. 4. Excluding the tea gardens (180,000 ha) the cultivated area of Assam totals about 2.2 million ha. Of these about 1.8 million overlie the saturated alluvial deposits of the Brahmaputra. This area supports a popu- lation of about 12.5 million people of which about 1.15 million live in urban areas, leaving about 11.3 million (in perhaps 2 million families) working the land. In the agricultural census of 1971, there were 2.17 million "cultivators" and 397,000 farm laborers enumerated in the plains districts. Land holdings were found to average 1.46 ha, and these are fragmented to the point that the average parcel cultivated is less than 0.5 ha. Distribution of holdings were found to be as shown in Table 2 and Fig. 3. Cropping patterns are totally dominated by rice (more than 85%) though steadily increasing areas are now being sown to wheat. On the remaining land there is considerable diversity, with no other single crop amounting to more than about 2% of the cropped area (see Fig. 4). 5. The implications of these figures for groundwater development are that only about 325,000 (or 15%) of the farmers can afford to own a power pumped shallow tubewell of the current design without forming a group, or selling water to neighbors. These larger farmers do, however, operate 50% of the land. 6. Cooperation is not highly developed in the State, but there is a substantial tradition of joint ownership of land, and a number of examples of groups (frequently family groups) formed to install and use shallow tubewells. 7. Credit for tube-well installation has been available for some years, but those best qualified to take advantage of this have either been unaware of the benefits of irrigation or have not really needed to increase their incomes. Those most urgently needing to increase produc- tivity have been constrained by a variety of factors including: (a) lack of knowledge of the techniques, benefits and availability of tube-wells; (b) difficulties of group formation and previous reluctance of commercial banks to get involved with group loans; (c) reluctance to innovate or take risks; ANNEX 4 Pagz 3 (d) lack of priority in the programs of the Government and commercial banks, and (e) most recently, the requirements that loan applications should go through the Goan Panchayat Societies. 8. As a result, groundwater development has been insignificant in the State. To the present time, there are only about 30 deep wells and about 1000 shallow wells together irrigating substantially less than 4000 ha. The Government's strategy previously was more concerned with flood control than irrigation, and this together with limited opportunities for easy devel- opment of water sources, has also constrained surface irrigation development. As a result, less than 1.50,000 ha are presently irrigated. B. Groundwater Hydrology 9. Assam comprises three major physiographic areas that are also distinct hydrologic areas. Ther are: (a) the Brahmaputra Valley, which is part of the major hydrologic province of the Ganges-Brahmaputra region of alluvial flood plains; (b) the foothills region of the Himalayan Mountains lying north of the -rahn.aputra Valley; and (c) the North Cachar and Mikir Hills, and the Barak Valley lying south of the Brahamaputra Valley. The relatively small Barak Valley watershed is in the extreme southwest of the State. Its groundwater potential is not evaluated here. Administrative districts of the State having high potential for groundater development from shallow wells are in the active flood plains of the Brahmaputra River and in the low-lying areas of the valley floor, which is underlain by alluvial deposits of Holocene age. 10. The generally east-west trending Brahamaputra low-land, which is about 850 km in length and averages about 75 km in width, occupies a structural and erosional trough formed between the Himalayan mountains in the north and north-east, and the Shillong plateau in the south. The Him- alayan region is underlain mostly by folded, faulted and metamorphosed sedimentary rocks of Palezoic to Cenozoic age. The Shillong plateau, com- prised of Precambrian igneous and metamorphic rocks that are exposed in the Mikir Hills, forms a detached part of the stable peninsular shield of India. The southern and eastern flanks of the Mikir Hills are overlain by sedimentary rocks of Tertiary age. The Brahmaputra valley is cut through these dense bed- rocks, and is filled with mostly fine-grained alluvium to depths greater than 1500 m in its central parts. 11. The groundwater system of the Brahmaputra Valley is one of alluvial aquifers of great extent, hydraulically -onnected with a major perennial river and its tributary streams, and their adjoining and underlyng water saturated deposits. The aquifers are composed of unconsolidated alluvial materials that range from silts, clays and fine sand to gravel and boulders. In addition to. a surficial layer of clayey deposits generally less than five meters thick, lenses of clay and silt are intercalated sporadically within the unconsoli- dated formations. The aquifer materials of the upper 100 m generally consist ANNEX 4 Page 4 of fine to coarse sand. Few of the lenses of clay within a depth of 100 m are signficant hydraulically, except in localized areas, and water in the aquifers is generally under water table conditions. 12. The specific yield of the aquifer, which is equivalent to the ratio of extractable water per unit volume of aquifer, is estimated at 15 per cent. Groundwater storage in a typical saturated section five meters thick over the area of one hectare would thus be about 7.5 x 103 cubic meters. In a saturated section of alluvium two meters thick, which can be found throughout the valley at depths less than five meters below the surface, storage of water per hectare assuming a lower specific yield of 10 per cent is equivalent to about 0.2 x 104 cubic meters. This amounts to more than half the estimated dry season net crop requirement of about 0.36 meters per unit of irrigated land. The sandy aquifers yield water freely to large capacity wells with minimal drawdown. In general, as much as 150 m3/hr can be pumped from deep wells with drawdown usually less than five meters. Drawdown in shallow wells yielding about 35 m3/hr is typically about one meter. On the basis of typical specific capacities, limited aquifer testing, and comparison with data from a similar area in Bangladesh, the estimated range of transmissivity of the aquifers is from 1,000 to as much as 3,000 square meters per day. 13. The water table lies at shallow depths on the flood plain even during the dry pre-monsoon period, varying from zero depth to depths of two to five meters below the land surface. Depth to water on higher terraces may be as great as 20 meters but is generally less than 15 meters. Although water table gradients are generally towards the streams and down-valley to the west, they are virtually flat during the pre-monsoon period. Seasonal fluctuation of the water table is about two meters in the lowland, increasing to 10 m or more on higher terraces near the mountains. Recharge of the aquifer occurs during the monsoon season from direct infiltration of rainfall, deep percola- tion of flood water, and seepage from streams during peak runoff periods. The groundwater reservoir is quickly recharged after the rainy season has bcgun and great volumes of water are subsequently rejected by the acquifer. Natural ground water discharge during the dry season is by evaporation, transpiration and the slow seepage that sustains base flows of the perennial streams. 14. The potential for ground-water development throughout the Brahmaputra valley is enormous. Rainfall is far in excess of evapotrans- piration and potential recharge during the monsoon season. Furthermore, the aquifer materials are highly permeable, the water table is near the sur- face, and drawdown in response to pumping is minimal. Throughout the low- land, wells that penetrate 15 to 150 meters below land surface can pump water by suction lift at rates of 35 to 350 m3/hr. Depths of individual wells are determined by localized variatioas in the alluvium, and by the thickness of the surficial clay and silt. Typically this layer is less than five meters thick, though it does increase to 20 meters or more in some localities. 15. Because the ground water gradient is virtually flat water extracted during the dry season is largely from storage and without some well-spacing ANNEX 4 Pag- 5 guidelines, excessive drawdown could occur. A water table decline of more than one meter would cause a substantial loss of efficiency or even loss of supply at suction-pumped wells in some areas. On the basis of a specific yield of 10 per cent (the sediments close to the surface generally having lower storage capacities than the deeper aquifers) and an assumed drawdown of one meter spread evenly over an idealized irrigated area (100% efficiency of application at 4,000 m3/ ha per pumping season of 120 days), conservative well spacing guidelines are shown below: Idealized Area over which Radius, area of Pumping rate Irrigated area water table must influence (m3/hr) (ha) drawdown one m (ha) (m) 3.0 2 8 160 30.0 20 80 500 300.0 200 800 1600 Deep tube wells with turbine pumps could, of course, tolerate consider- ably more drawdown, and isolated instances of shallow well clusters would not cause interference problems. However, as larger areas become inten- sively irrigated from the ground water reservoir, patterns of well devel- opment -- location, spacing and rates of discharge -- should be carefully monitored for optimum utilization of the groundwater resources. In the meantime, considering that the present area irrigated by groundwater is less than two per cent of the State's total cultivated land, the above conservative criteria may be applied for shallow well spacing, with development and compre- hensive studies proceeding concurrently. C. Issues in Tubewell Technology 16. The Mission has confirmed the report on potential for groundwater development prepared by -the Central Groundwater Board, which indicated that there may be as many as .500,000 ha. in Assam with sufficient water to irri- gate a winter crop stored within 5 m. of the surface. 17. To move this water from the place of storage to the place of poten- tial use, i.e. vertically a distance averaging about 3.5 m., involves (as a min- imum) drilling a hole and pumping the water out. There are several conceivable ways of going at this, particularly in LErms of the size of well. The conven- tional wisdom has it that there are substantial economies of scale associated with the construction of larger wells. In fact, this is only true while tech- nology stays constant. Recent experience in Northeastern India and Bangladesh seems to suggest that, as wells get larger, more complex and costly technology ANNEX 4 Page 6 is used, so that the most economic solution may, in'fact, be that associated with the smallest possible well. 18. In addition to the possibly higher capital costs, it is clear that, in asetting involving many small landholdings, organizational problems increase exponentially with the size of the well. This section of the report is intended to draw together some of the current information on cost/size relationships, and outline the possible implications for Assam. Economies of Scale 19. A recent submission from the Government of Assam gives about Rs. 240,000/- as the cost of a deep tubewell designed to discharge about 300 m3/hr., and Rs. 16,000/- as the cost of a shallow power pumped tubewell designed to yeild about 30 m3/hr. These estimates seem high, but are not inconsistent with recent experience in neighboring States. By contrast, a manually pumped well designed to extract 3 m3/hr. can be installed for less than Rs. 500/-. 20. Due to the number of plots which must share the water from the larger wells (perhaps 200 in the case of the 300 m3/hr. wells, and 15 in the case of the 30 m3/hr. well) and the length of the field channels from the well to the irrigated plots (average 1500 m and 450 m, respectively) the water from the larger wells will certainly be used less efficiently. This lower efficiency of water use will, in all probability, be offset by longer working hours, with the following effects: Design discharge Seasonal Quantity of Distribution Quantity Area hours of water pro- losses delivered Irrig. (m3/hr.) operation duced (%) (m3 ) (ha) (m3 ) 3 750 2,250 0 2,250 0.3 30 1,000 30,000 10 27,000 3.6 300 1,500 450,000 25 337,500 45.0 ANNEX 4 Pag- 7 21. This afffects directly the unit capital investment as indicated below: Design discharge Capital cost Area irrigated Unit capital (m3/hr.) (Rs.) (ha) Investment (Rs./ha). 3 500 0.3 1,666 30 1.6,000 3.6 4,444 300 240,000 45.0 5,333 22. Annual costs of operating the larger wells are currently estimated at Rs. 1,800 and Rs. 8,500 respectively. The cost of operating the smallest well (120 man/days of labor) will depend on the approach taken to pricing family labor, but the range will be from 0 to about Rs. 360 (120 days at Rs. 3/- per day). on a per hectare basis these come to 0-1200, 500 and 190 Rs/ha/--. for the three sizes of wells. 23. Total costs can then be summarized as follows: Design Capital Approx. Annual Cost Discharge cost useful Amortiza- (m3/hr) (Rs./ha) life tion factor Capital at 10% O&M Total (yrs) interest --Rs/ha/yr-- 3 1,666 5 .264 440 0-1200 440-1470 30 4,444 10 .162 720 500 1220 300 5,333 15 .131 700 190 890 24. From this it is clear that with (a) shifts in technology between the different sizes of wells and (b) low efficiency of energy and water use associated with .the larger wells, the traditionally accepted economies of scale are simply no longer true. It is also clear that, if the small farmer were to be charged economic rates for water from the big wells, but has sur- plus labor available within his own family, he would be subtantially better off with the smallest well. In this way, the financial attractiveness of the manual pumping approach to irrigation is biased towards the smallest farmers. ANNEX 4 Page 8 25. The above indications in favor of small wells are, of course, only meaningful where wells of all three sizes are technically feasible. In the case of the smallest wells, the practical requirement is that sufficient water to irrigate a winter crop must be in storage under the farmers' land, and within 5 m of the surface. (This seems to be the case in most of the Plains area of Assam). Possible Changes to Existing Designs 26. After observing the current generation of shallow tubewells in operation, we find that although these are, by and large, uncomplicated, low cost and satisfactory units, there are at least three minor modifications which might make them more effective at relatively little cost. These are: (a) The present arrangement is typically from a vertically discharging centrifugal pump, through a 900 bend which directs the water out horizontally at a height of about 1 m. above the ground. With a dynamic lift seldom exceeding 4 m., the additional 1 m. repre-, sents an unnnecessay additonal 20% of lift, and thus 20% wastage of fuel for any given volume of water pumped. Turning the pump 900 to discharge horizontally, and attaching a 2 m. length of 110 mm. O.D. flexible tubing, would result in the water being discharged horizontally, and at ground level, effectively saving the necessary lift (see fig. 5); (b) The second useful change would be to require lighter pumpsets, mounted in such a way as to make them more easily moveable. The pumpsets currently in use weigh up to 300 kg. and are equipped only with small metal wheels. By contrast, it is possible to get 3.5 HP diesel engines which weigh under 100 kg, with direct coupled centrifugal pumps and , perhaps, one large diameter (60 cm) pneumatic balloon-tired wheel on the front, and two legs and two handles behind (like a wheelbarrow), the pumpset would be much easier to move and using one to pump several wells would become a more practical proposition; (c) Finally, while the built-up bamboo pipe and screen is most ingen- ious and economical, there have been many instances of unsatisfac- tory performance. Quality in manufacture is difficult to control, deterioration occurs in storage prior to installation, and damage in handling. Once installed, useful life is variable and unpre- dictable with reported examples from about two to ten years. As a result both banks and farmers remain hesitant about these components, though threv are being installed by farmers because of their great costs advantage over other previously available materials. By going to thin walled rigid PVC for the apper- well casing, and fine slotted very thin walled, corrugated PVC for the screen (Fig. 6), quality of construction would be assured, installation made easier, life predictable to 15-20 years, and costs hardly increased at all. ANNEX 4 Page 9 Alternative Technologies 27. The three types of wells compared in para. 19 above are of course only isolated examples from a very wide sectrum of technically feasible alter- natives. For instance, it may be possible, under the excellent groundwater conditions of Assam, to develop a well yeilding 300 m3/hr. for substantially less than the Rs. 200,000 cited above. Similarly, the wells presently pro- posed to yield a about 30 m3/hr. will in fact cost less than Rs 16,000 because a more economic design has been developed (see Fig. 7). For the lowest dis- charge wells, alternative designs, including the local "dhenki" can be installed for less than Rs. 300/-. Examples of these possibilities should be installed and field tested in the process of a comprehensive groundwater development program (see Attachment 1). 28. First, there is the possibility of promoting a "pump wallah" scheme in which an itinerant individual moves around between a group of farmers hav- ing wells, selling them pumping service on an hourly basis, with a portable diesel pumpset he has himself rented from the Irrigation Department. This would utilize far better the capacity of the pumpset which is, in the present approach, more than 70% of the cost of a complete installation. It would also relieve the Department of the problem of collecting water charges, and it will wo: -2ven where there is no rural electrification. Secondly, it appears that there is promise in taking an approach based on providing each farmer with just sufficient capacity to irrigate his own land, and no more. This line of reasoning leads to a design supply capacity of 15-20 m3/hr for a farmer operating 2.5 ha. As it happens, this quantity of water can be drawn though a 50 mm.. dia. pipe -- i.e. something very much like an average stalk of bamboo. Using recent advances in technology developed for slotting plastic pipe, it is possible that sufficiently fine slots (0.25 mm) could be cut in a single piece of bamboo to form an acceptable well screen or strainer. A well-point developed in this fashion would cost about $15, cheap enough so that one could be installed on every small parcel of land. Of course, the available slotting techniques will need to be tried on bamboo and the resulting screens tested thoroughly in the field before this becomes a firm alternative. 29. Where rural electrification is available, a farmer could own a 1 HP portable electric pump, and have a meter and electric outlet on a pole on each parcel of his land. This would represent maximum flexibility, minimum main- tenance and again, no problem with water charges. (The cost of the electric meter and outlet would be about $5.!). Where no electricity was available, or where the farmer has so little land (0.25 ha. or less) the same well-point could be pumped with a manual pump of new design. Here the total installation would cost about $50. Each of the approaches described above should be tested on a pilot scale, in the field. Effect of Changing to Other Crops: 30. As the irrigation requirements of the majority of non-rice crops (excluding sugarcane) are only 30-50% those of paddy, the effect ANNEX 4 Page 10 of a successful extension campaign promoting the cultivation of wheat and winter vegetables would be to substantially increase the potential coverage of any shallow tubewells or other irrigation facility. Of course, to the extent that the binding constraints on irrigated areas are related to land tenure and organization (as seems to be the case), it is possible that changes in cropping, other than to multiple cropping, would not significantly increase the area actually irrigated. In this the effect is simply to reduce the hours of use of the available stream of water. Operation and Maintenance 31. With respect to operation the case for Departmental involvement depends on the size of the operation. It seems that even for facilities yielding as little as 35 m3/hr., the size of the potential service areas is such that it involves too many cultivators for effective informal cooperation. Either the Department, or a more formal cooperative organization, is required; both these alternatives have been tried without much success, hence the present emphasis on small owner-operated units. For these, with minimal advice on operation and lubrication, any small farmer is perfectly able to cope. For maintenance, the Irrigation Department has developed a most logical expedient; requiring that the supplier of pumpsets for more than 50 units in any relatively compact area set up service facilities, including mechanics and an inventory of spare parts. Financing 32. In the past, most surface irrigation projects and many lift pro- jects have been highly subsidized. The GOA has now taken a firm stand on this issue, and impressive efforts are being made to enr;ure the collection of a standard water charge of Rs. 30/- bigha (Rs. 225/ha.) for winter paddy. This still involves a heavy subsidy, but the principle of discipline in pay- ment is being ectablished. 33. All of the shallow tubewells in existence have been financed through the commercial banks, but most have enjoyed GOA or SFDA subsidies of 25 to 50% of the initial cost. Operation and maintenance costs have been met by the owners. There has been some delinquency in terms of meeting installments on loans, and this needs to be tightened up, but overall it is clear that the farmers using shallow tubewells have been paying a substantial portion of the total irrigation cost. 34. It has been the mission's observation that with rice prices and cultivation standards at their present levels, farmers could afford to pay all costs of shallow tubewell Jrrigqtion, but without a great margin of profit. In order to make the groundwater development program a real success it will be important to: (a) ensure that first costs are minimized by economic design; ANNEX 4 Pag- 11 (b) extend the terms of repayment to the 7 years to minimize the amount of each installment; with the first payment.due after the harvest of the first irrigated crop; and (c) ensure good agricultural advice and ease of access to inputs, including production credit. D. The Program General Description 35. The initial program would involve supplying about 15,000 small pumpsets to irrigate a total area. of 52,500 ha. net. The majority of these (12,500) would be 3.5 HP units, mounted on 75 mm dia. wells averaging 30 m. deep, to irrigated about 3.3 ha. The remaining 2,500 units would be 3.5 pumpsets, used for pumping directly from streams and ponds. 36. Under a program administered by the Irrigation Department, the pumpsets and the wells (where these are required) would be financed entirely by the nationalized Banks, with repayment periods up to 7 years (14 equal bi-annual installments) at cormercial interest rates -- currently 13.5%. The Depart- ment's involvement would be limited to the pre-installation period, with operation being taken over by the owners, and maintenance by the equipment supplier. 37. The program would be localized in 4 project areas, comprising a total of 20 development blocks, distributed in the plains along virtually the entire length of Brahmaputra Valley as it passes through Assam (Map and Table 3). Covering a gross area of about 6,400 sq, km. (2,500 sq. miles), or 10% of the plains area in the valley, this represents a sufficient degree of concentration to simplify administration. At the same, time, the fact that the object of this project is to irrigate only 52,500 ha, or 7% of the gross area, means that the risk of interference between wells would be negligilble, while a positive response to the program would be required from only about 5% of the farmers in the project area. 38. Other program components would include: (a) installation, field testing and demonstration of a wide variety of alternative and possibly more appropriate approaches to groundwater development (Attachment) 1); (b) Installation of a valley wide groundwater observation net work and execution of pumping teste on deep and shallow tubewells (Attachment 2); (c) a training program comprising a series of short courses on irrigation and hydrology for lower level staff of the Irrigation Department; ANNEX 4 Page 12 (d) public information and staff incentives campaigns, to pub- licise the benefits of investment in irrigation, and to motivate GOA and bank officials to meet established targets in terms of pumpsets installed, areas irrigated, and loan pay- ments collected; (e) construction of Irrigation Service Centers, comprising offices and flats for block level irrigation overseers, facilities for pumpset repairs and spare parts storage, fuel and lubricant storage, and an office for the agent of the Commercial Bank where existing facilities are inadequate for these purposes; (f) provision of vehicles, and survey, drafting and laboratory equipment; and (g) a mapping program designed to provide a clean, up-to-date set of Mouza maps (16" - mile) for each block and single sheet 4" - 1 mile topo maps of each block, with 1 ft. contours, if these are not provided under.a separate state- wide project. Cost Estimates 39. Exclusive of allowance for price contingencies program costs as detailed in Attachment 3 would amount to Rs. 107.2 million (US$11.9 million) equivalent), made up as follows: A. Initial Investment Program 90.00 B. Groundwater Obs. Network, Pumping Tests Trials and Demonstrations of Alternative Approaches 0.70 C. Training, Public Information and Staff Incentive Campaigns 0.50 D. Vehicles, Survey, Drafting and Laboratory Equipment 0.20 E. Mapping Program 9.80 F. Irrigation Service Centers 6.00 Rs. 107.20 million Financing 40. The initial investment program would probably be entirely refinanced by ARDC. The other components, totalling Rs. 17.2 million, could be added to the general agricultural project -- now under preparation for possible IDA financing. ANNEX 4 Page 13 Disbursements 41. If a suitably energetic effort is made (on all sides) to get the project started, disbursements should be approximately as follows: Year 1 Year 2 Year 3 Year 4 Total Units intalled 2000 3500 4500 5000 15000 -------------(Rs. million)-------------- A. Irrigation Facilities 12.0 21.0 27.0 30.0 9.0 B. Groundwater survey, etc. 0.3 0.4 0.7 C. Training, etc. 0.4 0.1 0.5 D. Vehicles, etc. 0.2 0.2 E. Mapping Program 4.8 5.0 9.8 F. Irrig. Service Centers 2.0 4.0 6.0 19.7 30.5 27.0 30.0 107.2 Organization and Management 42. As indicated above, primary responsibility for administration of the program would be on the Irrigation Department which appears to be adequately staffed for this purpose. They would create and staff a new Planning and Monitoring Cell, and would appoint an experienced overseer to be responsible for implementation in each of the 20 project blocks. The Irrigation Department would in additon establish the Service Centers where necessary and would: (a) regulate the overall program, by preparing and maintain- ing irrigation maps of blocks, indicating areas believed to be suitable, marking locations of wells installed and approving locations of new wells; (b) administer installation process, including pre-season es- tablishment of rates by competitive bidding between local well-drillers, allocation of contracts, supervision of installation, recording sub-surface materials encountered, testing performance and certifying completion of wells; ANNEX 4 Page 14 (c) arrange for manufacture and/or supply , and maintain adequate supplies of down-well components (G.I. pipe or bamboo and/or PVC screens and casings); and, (d) monitor progress, in terms of numbers of wells installed and areas irrigated, and record changes in depths to water table at observation wells. 43. Organizational alternatives, with respect to installation of wells of the current design are either: (a) for the irrigation department to organize and administer installation contracts; or, (b) for the farmers to contract directly with well drillers. For the initial stages of the program there is a clear case for the first of these alternatives. The Irrigation Department has hundreds of engineers now, and as many more as may be required are available.. If there is any one thing the Assamese Government engineering organizations know better than anything else, it is contract administration. By the same token this is something of which the farmers have had virtually no experience. Perhaps later, when well drilling contractors are more widely available, and the farmers have had more chance to appreciate the simplicity of the operation of sinking a shallow well, it will be possible to let this process happen without Departmental intervention. Role of Equipment Suppliers 44. With respect to maintenance of pumpsets, the program would be supported by equipment suppliers who would be required (as a condition of their suppply contracts) to: (a) Instruct purchasers in the operation and lubrication of pumpsets; (b) maintain a supply of pumpsets and full inventory of spare parts; (c) maintan mechanics and workshop equipment to overhaul pumpsets brought in for repair; and (d) support field mechanics with motor-cycles to visit tubewells and lowlift pumpsets during irrigation season, and perform needed repairs. Food Production 45. The projected possible increase in food production from the implementation of the program described above is set forth in Attachment 4, with supporting assumptions relating to changes in cropping patterns and yields. Assam IRRIGATION WATER REQUIREMENTS J F M A M J J A S 0 N D Total BTO (mm) 32 40 60 76 78.5 80 78.5 72 64 56 40 32 Boro: Crop Growth stage (Kc) .50 1.05 1.15 1.00 203 Crop E.T. 16 42 69 76 300 Deep perc. 75 75 75 75 503 Total water reqt. 91 117 144 151 Effect Rainfall 10 15 25 75 125 Net. Irri. Reqt. (m) 81 102 119 76 378 Ahu: Crop growth (Kc) .50 1,15 1.20 1,00 Crop ST (am 30 80 95 80 285 Land preparations 150 Deep perc. 150 75 75 75 75 300 Total water reqt. 150 105 155 170 155 885 Effect rainfall 15 25 75 125 275 515 Net irri. reqt. (mm) 135 80 80 45 0 340 Sal: Crop growth (Kc) 0.50 1.15 1.20 1.15 0.50 Crop E.T. (m) 39 83 77 65 20 284 Deep perc. 75 75 75 75 75 375 Total water reqt. 114 158 152 140 95 659 Effect rainfall 287 300 200 60 45 892 Net irri. reqt. 0 0 0 80 50 130 (Dx ASSAM GROUNDWATER DEVELOPMENT RELATIONSHIPS BETWEEN PUP CAPACITY, HOURS OF OPERATION AND POTENTIAL AREA IRRIGATED Pump capacity Probable Distribution Potentially Hours of operation loss available at field 24 16 12 8 (Cusec) (Imp) (Imp) (m3/hr) (m3/day () (3/day) (m3/day) Potential Area Irrigated (GPM) (GPH) (ha) .03 11.6 636 3 72 0 0 72 1.4 .9 .7 .5 .15 55.4 3324 15 360 5 18 3W8 6.8 4.6 3.4 2.3 .30 110. 6600 30 720 10 72 648 12.9 8.6 6.5 4.3 1.0 360. 21600 100 2400 25 600 1800 36.0 24.0 18.0 12.0 3.0 1080. 64800 300 7200 33 2400 4800 96.0 64.0 48.0 32.0 (ssuming applications amounting to 5 mm/day at field.) P (D (D N H 4- ASSAM PERCENTAGE OF OPERATIONAL HOLDINGS BELOW SPECIFIED SIZE AND THE PERCENTAGE OF AREA COVERED BY THESE 1 hectare 2 hectares 3 hectares 5 hectares 10 Y -tares District Holding Area Holding Area Holding Area Holding Area Holdng Area 1 2 3 4 5 6 7 8 9 10 11 Dibrugarh 52.68 13.01 78.66 32.10 89.65 45.88 97.15 60.24 99.65 68.56 Sibsaaar 9h,7 790 3855 90.0 n717 96.99 1.8 Nowgong 58.21 20.27 81.66 45.61 90.81 62.59 96.92 80.31 99.58 93.45 Lakhimpur 46.23 13.66 74.36 37.57 86.60 55.23 95.56 75.51 99.29 89.75 Darrang 64.40 23.66 86.28 49.50 93.78 64.78 98.34 79.15 99.77 86.91 Kamrup 55.19 18.76 79.4o 43.97 89.78 62.52 97.07 82.63 99.73 95.08 Goalpara 55.61 17.67 78.27 40.12 88.22 57.00 95.86 77.14 99.45 93.68 Cachar 65.49 17.96 85.56 37.20 92.95 49.42 97.69 61.57 99.62 70.19 Mikir Hills 36.55 11.93 69.13 37.20 83.86 56.51 95.48 80.68 99.44 94.97 N.C. Hills 34.88 13.33 72.09 45.92 90.70 73.33 98.84 92.59 100.00 98.52 Assam 57.04 17.67 80.79 40.62 90.42 56.56 97,04 73.59 99.60 84.94 Annex 4 Table 3 ASSAM GROUNDWATER DEVELOPMENT PROGRAM PROJECT AREAS District Block Gross Area G,P, Societies (sq.miles) 1. Kamrup Mandia 242.4 5 Chenga 167.3 6 Barpeta 211.6 5 Rupsi 110.8 6 Barkhetri 173.3 7 305.4 29 2. Goalpara Mankachar 73.0 6 South Salmora 260.0 7 Lakhipur 226.8 7 Agomoni 100.0 5 Golokganj 110.0 5 Gauripur 135.0 7 304.8 37 3. Nowgong Lahorighat 162.0 11 Bhurbandha 154.9 6 Mayang 227.8 9 Juria 73.1 5 Batadroba 78,1 5 695.9 36 4. Dibrugarh Barbarua 157.3 3 Lahoal 269.7 3 Khowang 156.0 3 Panitola 227.6 3 810.6 12 Gross 2415 sq.miles = 6,18,240 ha. 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Gомрдsгь�ль..� aF рГ�Е� Е'tJ�' Q�D Р�аРоз��3 р�м�Р b�s�н��4� Ас�ед�...►�Ем�+�'�S 쓰프르즈스 - 臼‘· H勿ㅄ옭ㅢ ＾니 E．니＾TIV드． ＼遍 ／긷 Attachment 1 Page 1 ASSAM GROUNDWATER DEVELOPMENT Field Trials and Demonstrations of Alternative Approaches A. Small Electric Pumisets: 1. Rural electrification is now available in about 8.5% of the Project Areas, as indicated below: District Total No. of villages Electrified Number % Goalpara 3,819 90 2.35 Kamrup 2,144 225 7.16 Nowgong 1,961 240 12.24 Dibrugarh 2,081 385 18.50 11,005 940 8.5 2. In some of these areas, proceeding on the hypothesis that it is easier, cheaper and more efficient to distribute electricity than water, trials should be made of the feasibility of installing a bamboo wellpoint (Fig. 1) on every parcel requested by a farmer. As illustrated in Fig. 2, because poles on mainlines are spaced at 50 m intervals, and on service lines at 30 m intervals, the installation of an electrical network in any block of agricultural land would result in one pole, at least, being placed in almost every separately defined and cultivated parcel of agricultural land. If a bamboo wellpoint was then sunk near the electric pole, it would be possible to mount a meter and outlet socket on the pole, for the farmer to plug in a portable electric pumpset. 3. The costs to the State Electricity Board of this approach, on a 20 ha block, would be: Main line (3 phase 440V) with concrete poles at 50 m intervals 450 mi @ 16/- 7,200 Service lines (2 phase 220V) with concrete poles at 30 m intervals 1633 m @ 9/- 15,000 Meters 34 @ 35/- 1,200 Rs. 23,000 Attachment 1 Page 2 4. The costs of the irrigation equipment would be: 34 Bamboo wellpoints @ 150/- 5,100 8 1-HP electric Pumpsets @ 2000/- 16,000 Rs. 21,000 5. The total - of say Rs. 45,000 or Rs. 2,250 ha - is of the same order of magnitude as for standard shallow tubewells. The principal advan- tages would lie in more efficient water use, minimal maintenance requirements, no fuel supply problem, and no necessity for cooperation or joint ownership of facilities. The annual costs, to the farmer would also be substantially less, as shown below: Cost to average farmer (operating 1.5 ha in 3 fragments) Capital Investment: 3 Well points @ 150 = 450 3 connection charges @ 200= 600 Pumpset 1,800 Rs. 2,850 Annual costs: Installments (7 years - 13.5%) 645 Power: 350 hrs x 750 w 300 kwh at 0/18 49 Meter Rent 6 Repair and Lubrication 50 Rs. 750 on 1.5 ha = Rs. 500/ha 6. This may be compared with costs to the owner of a conventional shallow tubewell serving 3.3 ha a follows: Attachment 1 Page 3 Installments on Rs. 7,5000/-loan 2,000 Fuel 350 hrs - 350 litres x 1/20 420 Lubrication, spares and repairs 580 Rs. 3,000 on 3.3 ha = Rs. 909/ha 7. For farmers on a scheme like this, the problem of loan repayments could be handled by having the ownership of the pumpset remain with the State Electricty Board. Capital amortization would then be included in a charge per KWH of Rs. 2/50. The hourly cost would then work out at about Rs. 1/90. A stock of pumpsets in good repair would be maintained by the S.E.B. and when one broke down, the farmer would simply bring it in and get another (provided his account was not in default). His initial cash outlay would then be limited to Rs. 150/- for each well point - and Rs. 200 for each electrical connection. (A total of Rs. 1,050 for 1.5 ha in .3 fragments - with annual payments of Rs. 237 over 7 years @ 13.5%). B. Pendulum Pumps: 8. For the sub-marginal landowners, unable or reluctant to take an electrical connection, or in areas where no electrical network exists, the pendulum pump (Fig. 3) represents a possible alternative. This approach would still require him to get a loan of Rs. 500/-, which would have annual installments of about Rs. 113/-. Most of the real cost of irrigation would, however, still be in his own manual labor. Lifting 3 or 4 m3/hr. of water 3 or 4 m is, in the end, hard work no matter how cleverly mechanical prin- ciples are employed to reduce the effort required at each stroke, and during a dry spell in April - this work may be required 8 hours a day, 7 days a week. 9. It is not clear, at present, that many people in Assam are prepared to work this hard for a little extra food. For vegetables less water is re- quired, smaller areas would probably be planted, and produce prices are better, so this may be worth pushing through the extension program. 10. In the initial project it is proposed to install 20 of these units in each of four Project Areas and closely monitor their performance. For the present this is very much an unproven te-hnology - and the first 20 units should be installed free of charge on the plots of farmers indicating will- ingness to work them through a complete crop season. 11. The bamboo well point has been designed with a brick pedestal in- tended to be equally suitable for pendulum or portable electric pumps. Attachment 1 Page 4 C. Custom Service Scheme: 12. The Irrigation Department has for some years had diesel pumpsets available for custom irrigation service. Why this scheme has not worked particularly well in unclear, but it is likely that the pumps are just too heavy to move around easily and in response to relatively short periods of drought. Also they are intended primarily for pumping from streams and hills, not wells. 13. Under the scheme proposed here the Irrigation Department would at its own expense, sink up to 20 conventional (4") shallow wells in a relatively compact area, in each of the 4 project areas where farmers agreed to grow an early HYV ahu - and to pay for pumping on an hourly basis. 14. Light weight 5 HP Pumpsets would be purchased and mounted on trol- leys with one (20" minimum dia) pneumatic balloon tired wheel in front - two legs and two handles behind (like a wheel barrow). This way they would be easily moveable, and one pumpset could certainly serve four wells - average of 1.75 ha total 7.0 ha. 15. If these 7.ha. require 3 m of water during the season, this amounts to 21,000 m3. The pumpset producing 3 m3/hr. will have to run 700 hours. Annual Costs: 4 wells - Amortization 5000 x .226 1,130 Pumpset " 5000 x .226 1,130 Fuel 700 hrs - 700 litres @ 1/10 840 Lub. spares and repairs 600 Rs. 3,700 Cost per ha = 3700/7 528.5 Cost per hour = 3700/700 5.28 16. A farmer with 1.75 ha using this service would then end up paying Rs. 925/ year, only sightly higher than the small electric pumpset alter- native - and probably preferable, to the extent it represents proven technology and does not depend on the presence of rural electrification. There will still, however, be the problem of organizing farmers around each well. With average Attachment 1 Page 5 fragment sizes under 0.5ha. - it would be necessary to line up 3 or 4 farmers around each well to make the scheme work. WATER USE ASSUMPTIONS FOR WELLPOINT DEVELOPMENT 1. Max. rate of rice water use = 5.0 mm/day. 2. Farmer with 2.5 ha (in three fragments) has 25,000 m2 of land and must supply 25,000 x .005 = 125 m3/day. 3. If he pumped 24 hrs. his pumping rate would have to be 125/24 = 5.2 m3/hr. If he only pumps 8 hrs. per day, his pumping capacity should be 15.6 m3/hr. 4. If he wishes to apply 50 mm. at each irrigtion and the sizes of his fragments are 1.1, 0.8 and 0.6 ha, then the volumes to be pumped and the hours of operation of a 15 m3/hr. pumpset would be as follows: Fragment Area Vol. to be Hours pumping at applied 15m3/hr. (m2) (m) 1 11,000 550 36.6 2 8,000 400 26.6 3 6,000 240 16.0 79.2 5. He can make his own mind up whether he wants to do this in ten 8-hour days, or five 16-hour days; either way the water applied will last about 10 days. Attachment 1 Page 6 DESIGN OF BAMBOO STRAINER 1. For entrance velocity of 3 cm/ sec open area required to admit 15 m3/hr. = 1370 cm2(say 1500). 2. If typical 7.5 m length of bamboo has 25 internodes of average length 30 cm. and 20 cm. is the slotted portion of each iternode, then total slotted length in two 7.5 m sections of bamboo will be about 2x25x20 = 100 CM (10 m). With an average I.D. of 60 cm inside circumference will be about 18.8 cm and inside surface of slotted portion will be about 18,8000 cm2. 3. The open area will therefore need to be 1500/18,800 = 8% of the inside surface of the slotted portion. 4. To get 1500 cm2 of open area in 50 internodes means each must have 30 cm2 of open area ( on the inside surface). With slots only .025 cm wide this means the total length of slot must be 1200 cm. Inside circum- ference of bamboo is 18.8 cm but we must leave about 1/3 of this for strength, so slot the sum of lengths should not exceed 12.0 cm, i.e. We need 100 slots in each internode 0.025 CM. wide, each, they will together take up 2.5 cm of the 20 avialable for slotting. Remaining 17.5 cm divided by 100 means slots should be about .175 cm apart. Attachment 1 1 c4j G Fg. 1 3~S dMm.fo.o .uble stoh% 5 trbx -f . Foovave M....-o 5 it n1Lstraine.e -t)haeri&al 7.60 pe<geothl3 S _Coupotnigtio,. P-a,Otat 2 e1 dnt 9.10 -p6- 24D. ~I For þ r,^r 2.5 hx ian o ur af c.t : pumps&t 4. PAM &00 W/ELL D1417 ýtrAb O'tlbar€. -ýr mn n61 pimpin (3.5 ms/kr) or P*wer pumpmg~ (s mgJ hr). Attachment 1 Fig. 2 ó .40 1.6 6 c-Z n8 ( D~ 4.o Y-0 5 ý' 1a L20 1, 3 PxP-- .- I(j') ),8 0 e -3x Go 20.o 34.- Attachment I Fig. 3 UL U M F)Ulvi1P (3.,5 mb/hr') Wcdad An3Ic I,n Pump HeaLd Purnp do Wfr.\ý bearin') 150. rendutum Rod. b5m 15. Pr,~ C.od. '2mn 20. u-Sout T'e -T 7m Bbokmboboo 6e. Fei 34.5sidng-Sm Pedeatod. -ing-- O-- brète. ortar - . -- SuduNon Tube - -iu Samboo 50wo 5.D. Flexibfr P1e iP Attachment 2 Page OBSERVATION NETWORK AND PUMPING-TESTS Description and procedures I. OBSERVATION WELL NETWORK A. Numbers and pattern: The Brahmaputra plain may be amply covered for the purpose of a comprehensive groundwater investigation by a rectangular area 500 miles in length and 50 miles in width on a 100 square mile grid. Fewer than 250 wells would be required with wells located at 10 mile intervals along both the length and width of the valley. (Map 1) These wells in additon to the existing CGWB observation wells, would constitute the main observation well network. B. Standard Well description: (i) Depth: 150 feet (ii) Drilled diameter: 6 inches (iii) Method of drilling auger (tv) Casing: 1 1/2". PVC pipe, capped 1' above land surface (v) The finished well would be comprised of the following materials: (a) three 20' sections of pipe (60") (b) one 6' section of slotted pipe (slot size 1/16) (c) the casing would be gravel packed. C. Basic data and materials to be collected: (i) During drilling: (a) Samples of materials penetrated at 10' intervals; sample size, about 1 kg. (b) Detailed description of 7nterials collected: color, general composition, grain size (cardb with sand sizes for comparison should be available), sorting, compaction. Attachment 2 Page 2 (c) Depth to water: - Footage on tape held (F) - Water mark footage (F 2) - Water depth below measuring points (F =F -F 2 - Height of measuring point above ground (H) - Water depth below ground (D = F -H) (d) Change in water level since initial pre-pumping measurement. (e) Discharge rate, total pumpage. (vi) Pumped water would be transmitted by a pipe or lined channel beyond the area of the test, a distance of about 250 m, in order to avoid recirculating water during the test. D. Analysis: Aquifer characteristics (transmissivity and storage coefficient) would be determined using various solutions. Theis non-equilibrium formula, partial aquifer penetration modified formula, Jacob formula -- from which accurate well spacing requirements and projected aquifer yields would be made. II. SPECIAL PUMPING TESTS FOR DETERMINATION OF SHALLOW STORAGE COEFFICIENTS: A. Description of test: Four shallow wells placed 100 m apart on a square plot would be pumped simultaneously and continuously at 30 m 3/hr. for 60 hrs. Periodic water level meaurements would be made at nine piezometers as shown in Figure 2. B. Wells and materials: (i) Pumped wells (labelled a,b,c, and d): Same drilling specifications as described for the observation well network. The finished wells would be comprised of the following materials: (a) three 20 ft. sec- tions of 4" PVC pipe, (b) one 6 ft. section of brass-mesh perforated 4" G.I. pipe. The casing would be gravel packed. Attachment 2 Page 3 (ii) Peizometers: Number I - (as shown on accompanying diagram) - same as described for well (a) of the conventional deep well pumping test. Number 2 through 9 - same as described for wells 1-4 of the conventional deep well pumping tests. C. Measurement and equipment: Same as for deep well conventional pumping test, with the following modification: discharging wells will be equipped with four inch rather than six inch discharge meters, each with instantaneous and cumulative meters. D. Analysis: Discharge vs. volume of material dewatered would be compared in order to determine the coefficient of storage. The data could be utilized in existing math models for additional analysis, projection of results, and computation of hypc hetical stresses on the aquifer. IV. CONVENTIONAL PUMPING TESTS ON SRALLOW WELLS: A. Description of test: At each of the special pumping-test sites well (a) would be pumped at 30 m 3/hr. for 60 hours while periodic water level measurements were made at wells 1,7,8 and 9. B. Wells and materials: The same as set up for the special pumping tests. C. Measurements and equipment: The same as set up for the special pumping tests. D. Analysis: The same for the conventional deep well pumping tests. ooSom _o____Go ot,lo ~~- -- - - .-Q- - . ----------- - 3 0 c'c ~¤01 -s-d 1è 4- G~N Attachment 2 Fig. 2 -s, -i op4c uPL)JG s ø Pu.o-,5 klct 6~ rr±~r fi Attachment 3 Page 1 COST ESTIMATES (for details see following pages) Ra. A. Initial Project (Refinanceable by ARDC) 12,500 Shallow Tubevells 75.0 2,500 Lowlift pumps 15.0 90.0 million B. Groundwater SurveysProgram Development (i) Field Trials/Demonstrations Small Electric Pumpsets 143,000 ) Pendulum Pumps 40,000 ). 383,00.0 Custom Service 200,000 ) (ii) Groundwater Obs. Network 87,500.0 (iii) Pumping Tests Existing Wells 10,750 ) ) 98,250.0 Special Tests 87,500 ) Sub-total 568,750.0 Irrigation Dept 0/H and Admin (25%) 142,187.0 710.937.0 Say Re. 0.7 million C. Training, Public Information and Staff Incentive Campaimns Rs. 0.5 million D. Vehicles and Misc. Equipment Re. 0.2 million E. Irrigation Service Centers Re. 6.0 million Attachment 3 Pa-ge 2 F. Mapping Program (i) Irrig Development Maps 9.6 (ii) New Mouza Maps 0.2 Rs. 9.8 million Total Ra. 107.2 million Attachment 3 Page 3 A. INITIAL PROJECT Power Pumped Shallow Tubewell (3" disf3.5 HP) Upper well casing (3" PVC) ... 10 m @ 16/- 160 Screen (3" C.PVC) ... 15 m @ 20/- 300 Drilling and installation ... 25 m @ 15/- 375 Testing and development ... L.S. 115 Misc. fittings and priming pump L.S. 200 3.5 HP Diesel Engine or electric motor with direct coupled centrifugal pumps 4,800 Re. 5,950 Lowlift Pumpset 3.5 HP Diesel or Electric Pumpset 4,800 35 m. length of flexible 4" dia. delivery and suction pipe with inlet strainer and footvalve 1,150 Rs. 5,950 Cost Summary - Initial Project 12,500 Power Pumped shallow tubewells @ 6000 75.0 2,500 Lowlift pumpset @ 6000 15.0 Rs. 90.0 million Attachment 3 Page 4 B. GROUNDWATER SURVEYS AND PROGRAM DEVELOPMENT (1) Field Trial Demonstration Program (a) Small Electric Pumpset Schemes 20 ha. block 35 bamboo well points @ 150/- 5,250 9 1-HP electric pumpsets @ 2083/- 18,750 Electrification 23,666 47,666 Repeat in 3 project areas Rs. 143,000 (b) Pendulum Pump Schemes 20 bamboo well points @ 150/- 3,000 20 pendulum pumps @ 350/- 7,000 10,000 Repeat in 4 project areas Rs. 40,000 (c) Custom Service Schemes (Irrigation Department Pump Wallahs operating out of Service Center) 20 shallow wells PVC or bamboo @ 1250/- 25,000 5 3.5 HP diesel pumpsets on big wheels @ 5000/- 25,000 50,000 Repeat in 4 project areas Ra. 200,000 (d) Summary 3 Small Electilc himpset Schemes 143,000 4 Pendulum Pump Schemes 40,000 4 Custom Service Schemes 200,000 Rs. 383,000 Attachment 3 Page 5 (e) Ground water observation Network Permanent Observation Well Casing (40 mm 0.D. PVC) 20 m 80 Screen (40 mm O.D. PVC) 2 m 50 Bottom plug, couplings and screen cap on top 45 Installation (incl. gravel) 50 m 175 350 Instal 250 of these Rs. 87,500 (f) Pumping Tests (1) 6 tests on existing wells Ruseable materials : 1 - 40 mm GI pipe - 14 m @ 200/- 200 10 - 40 mm GI pipe - 7 m @ 100/- 1,000 11 - 40 mm GI/Brass mesh strainers each 2 m long @ 50/- 550 Rs. 1,750 Installation Drill 100 m and install incl. gravel @ 15/- 1,500 Repeat installation in 6 places 6 x 1500 ' Rs. 9,000 Total : materials and installation Rs.10,750 Attachment 3 Page 6 (ii) Special Pumping Tests to determine shallow specific yield (a) Reuseable materials': 4 - 5 HP Monoblock electric pumpsets @ 3000/- 12,000 4 - Pumping wells Casing (110 mm PVC) 20 m @ 35 700 Screen (110 MM PVC) 15 m @ 75 1125 4 @ 1825 7,300 4 lengths of 150 mm discharge pipe each 200 m 800 m @ 50/- 40,000 4 - Totalizing Water meters @ 400/- 1,600 7 - 7 m lengths of 40 mm GI pipe @ 100/- 700 7 - 2 m lengths of 40 mm GI/Brass screen @ 50/- 350 Misc. equipment of instruments 1,550 63,500 (b) Installation and set up Drill install & gravel 4 pumping wells 4 x 35 = 140 m @ 20/- 2,800 Drill install & gravel 7 obs. wells 7 x 9 = 63 m @ 15/- 945 Electrical connections etc. 3,255 Total at each location 6,000 Total 4 locations 24,000 (c) Total : Materials & Installation 87,500 Attachment 3 Page 7 C. TRAINING, PUBLIC INFORMATION AND STAFF INCENTIVE CAMPAIGNS- D. VEHICLES AND MISCELLANEOUS EQUIPMENT Attachment 3 Page 8 E. IRRIGATION SERVICE CENTERS Building - 3500 sq.ft. total (see Figs) 3500 @ Rs. 40/- sq.ft. 140,000 Tubewell, roof storage water tanks, Septic tank etc. 40,000 Land, roads & misc. 120,000 Total - 1 center 300,000 20 centers @ 300,000 Rs. 6 million F. MAPPING PROGRAM (i) Preparation of Irrigation Development Map for 20 blocks at 4" - 1 mill. with 1 ft. contours (1 sheet-per block) 640,000 ha @ 15/- Rs. 9.6 million (ii) Preparation of new Mouza maps ink tracings on mylar - 16" = 1 mile average 20 sheets per block = 400 sheets total Draftsman 2 weeks per sheet total 800 man/weeks @ 250/- 200,000 Supphis pens ink, mylar Rs. 15/- sheet x 400 sheets 6,000 5 Ozalid copies of each sheet Rs. 2/50 per sheet x 400 x 5 5,000 211,000 (iii) Total Mapping Rs. 9.811 million Attachment 4 Page 1 ASSUMED CHANGES IN CROPPING A. Flood prone Areas Crop Present Projected (with irrigation) Sali paddy (+boro) 0.30 0.43 Ahu paddy 0.20 0.45 Jute 0.03 0.02 Oilseeds 0.05 0.05 Wheat 0.05 0.30 Vegetables 0.02 0.05 Others 0.10 0.10 0.75 1.40 B. Flood-free Areas Sali paddy 0.70 0.85 Ahu paddy 0.25 0.45 Cilseeds 0.05 0.05 Wheat 0.05 0.40 Vegetables 0.05 0.05 Others 0.15 0.10 1.25 1.90 Groundwater Development PROJECTED UNIT INCREASES IN FOODGRAIN PRODUCTION 1/ A. Flood Prone Areas Crop Present Projected Incremental Fraction Yield Production Fraction: Yield 2/ Production Production (%) (00kg/ha) (kg) (%) (00kg/ha) (kg) (kg/ha) Sali paddy 3/ 0.30 10 300 o.43 24 1030 730 Ahu paddy 0.20 7 140 0.45 21 945 805 Wheat 0.05 12 60 0.30 24 720 660 500 2695 2195 E. Flood-free Areas Sali paddy 0.70 10 700 0.85 24 2040 1340 Ahu paddy 0.25 7 175 o.45 21 945 770 Wheat 0.05 12 60 0.40 24 960 900 935 3945 3010 1/ Rice yields a clean grain. 2/ Yields assume above-average intensity of irrigation usage plus drainage; they are therefore above the averages used in calculating total foodgrain production from irrigation in Annex 1, which assume mainly supplementary irrigation. 3/ Includes boro. C+ (D F0 0 (D~ c-i- Assam Groundwater Development PROJECTED INCREASES IN FOODGRAIN PRODUCTION Year 1 Year 2 Year 3 Year 4 Year 5 Totals Numbers of Units Installed 2000 3500 4500 5000 - 15,000 Mras Irrigated @ average 3.5 ha per unit 7000 12250 15750 17500 52,500 - cumulative (ha) 7000 19250 35000 52500 52500 - Eventual Incremental Foodgrain production (tons) I/ @ 2. 60 tons/ha average 18000 50000 91000 136500 136500 Probable Actual Increment 10000 30000 60000 100000 125000 325,000 Value of Increased Production US$ millions @ $200/- ton 2.0 6.0 12.0 20.0 25.0 65.0 1/ Assuming 3010 kg incr. in flood-fee and 2195 kg incr. in flood prone areas with pumpsets g about equally divided between these two types of areas. ~I C+ ANNEX COMMAND AREA DEVELOPMENT Table of Contents Page no. Background 1 Command Area Development 2 The Proposed Project 3 Preparation Needs Attachment 1: Pr6paration Needs - 600 ha Pilot Area Attachment 2: Preliminary Cost Estimates Attachment 3: Implementation Schedule ANNEX 5 Page 1 COMMAND AREA DEVELOPMENT Background 1. Despite the generally favorable prospects for increasing production on rainfed areas (see Annex 1), irrigation has an important role to play in a development strategy for Assam. In particular, only in the presence of irrigation will the full potential of high yield, all-year cropping be achievable. The potential for irrigation in Assam is very considerable. In terms of their topography and soils, nearly 2 million ha of land in the Brahmaputra Valley are potentially irrigable. They have topography and soils ranging from flat clay loams on the lower lands near the main rivers to the slightly more marked relief, sandy loams typical of the North Indian plains. Virtually all available flat land is already formed in small basins for paddy cultivation. With adequate drainage and progressive land management, these soils are suitable for increased HYV crop production under sustained irriga- tion. Soils are generally neutral-acidic and alkalinity hazards are minimal. 2. The larger flat areas near the main rivers were, prior to embankment construction, subject to frequent catastrophic flooding from the Brahmaputra and its tributary rivers. The completed embankments have reduced flood frequency but their influence on increased flood peaks and duration on the river system is not known. Because high .river levels prevail from mid-June through September gravity drainage of the lower floodplains remains poor throughout the summer monsoon period. In the absence of pumped drainage (which is not presently advocated) these flood-prone areas require.specialized cropping patterns designed to minimize risk in the monsoon and maximize the potential for production the rest of the year (see Annex 1). For this reason they have a special claim for small scale, private groundwater development (see Annex 4) but are not currently suitable for formal, public irrigation projects. 3. With the vast flow of the Brahmaputra and the generally flat topo- graphy of the valley, most of these soils could theoretically be brought under irrigation - at least in the Kharif season. Moreover, as indicated in Annex 4, the potential for groundwater possibilities seems almost limit- less. Yet in spite of this potential, irrigation has made less progress in Assam than in other northern or eastern Indian states. Official statistics vary, depending upon definitions of irrigated areas. The most conservative figures supplied to the mission show a total croppable area of 211,000 ha under Kharif (supplementary) irrigation and 84,000 under Rabi (full irrigation), of which 140,000 ha and 54,000 ha respeclively were on surface diversion schemes. Even these figures probably overestimate the area actually irrigated, and we have used a figure of 150,000 ha, of which probably only 20% is fully irrigated in the dry season. Moreover, even these limited areas which benefit from irrigation have done .little to develop the potential. Yields are low (about 14 qts per ha of rice) and cropping intensity is also very low (perhaps not much more than 100% for foodgrains). ANNEX 5 Page 2 4. Until about ten years ago, the main focus of Government policy and implementation was on flood control. In discussions with the mission, GOA indicated that it now wishes to put greater emphasis on the development of irrigation. Its major priorities, as expressed to the mission, are (i) to increase the low level of performance of existing surface irrigation schemes, and those which will come into operation during the Fifth Plan period, through a program of CAD, and (ii) to accelerate the development of groundwater, par- ticularly private tubewells (see Annex 4). Command Area Development 5. Provided other agricultural requirements such as extension, research, credit and input supply are met, the prospects for intensifying agricultural production on existing irrigation schemes through a program of CAD are good. Most surface (flow) schemes already have a proportion of the area (usually no more than 20%) which can be irrigated throughout the year, most lift schemes are perennial, and the conjunctive use of groundwater offers the possibility of extending year round irrigation to a much larger command area. Because of the predominance of paddy production in Assam, most cultivated land in the plains is already shaped, and on-farm development needs are therefore mainly limited to such infrastructure as improved field dikes and drains, irrigation distribution channels, and farm access roads. Additional land shaping needs for paddy are minimal and comprehensive property boundary adjustments would be needed only where farmer consent to channel wayleaves proves impossible. In the flatter areas multipurpose irrigation and controlled drainage field channels are feasible for water control for paddy. Many of the larger, progressive farmers had already carried out some of these improvements and were obtaining corresponding benefits in both increased crop yields and cropping intensity. 6. The mission considers the main deficiencies in irrigation to be: Lack of perennial water supply. Most surface schemes are not designed to offer year-round irrigation, except to a small fraction of the area. As indicated earlier, the conjunctive use of groundwater offers the prospect of increasing cropping intensity and has been suggested by GOA. However, existing public tubewells are costly and face considerable problems of organization and cost recovery, and there is presently no model which could be successfully replicated on a large scale. Lack of Infrastructure. The surface water projects visited by the mission, although generally in fair operating order, required channel rehabilitation, additional regulating - structures, improved canal operation and maintenance (0&M) and road access. Insufficient funds are allocated for regular O&M; staff and facilities are, therefore, deficient. Water allocation planning by seasons, on a rotational basis, ANNEX 5 Page 3 is not yet well developed. Below the outlet, the major needs are for field channels, drains, and structures to distribute water and drain off surplus. . Farmer Attitudes. The mass of small farmers have little experience of water management or of cooperative water use organization, nor has Government any experience of the extent to which farmers will accept systematic on-farm development, voluntary or compulsory co-operative water use, and the financial responsibility for CAD improvements. Legislation. GOA presently has no legislation which would enable it to implement a CAD program, particularly in regard to organization, compulsory on-farm development, water alloca- tion, or the recovery of costs. Maps. Updated cadastral, topographic and soils maps in suffi- cient detail to plan and implement on-farm.development such as mentioned above will be needed. Government Organization. The Irrigation Department is competent aiu ddequately staffed and equipped to carry out irrigation in- frastructural improvement works. However, it does not have sufficient trained technicians to plan and implement on-farm development; this also includes the pre-extension campaigns to enlighten and win farmers' consent to improvements on their private land. GOA has no central organization to plan and implement a CAD program, particularly in the all-important coordination between the activities of the Agriculture, Irriga- tion, Revenue and other departments concerned with such a pro- gram. While GOA is committed to improving irrigation it has no practical experience of the CAD approach and of the complex social and organizational problems which have to be surmounted. The Proposed Project 7. GOA had, with assistance from WAPCOS, preliminarily identified three compact areas each of 30,000 ha at Kokrajhar, Barpeta (a deep flood-prone area) and Jamuna. Because of the extent of the deficiencies and lack of actual CAD experience under Assam conditions noted in paragraph 6, the mission believes it would be unrealistic to prepare a full-scale CAD and irrigation improve- ment project in one step. We have therefore proposed a relatively small first-stage project, for inclusion in the larger foodgrains project, which would be expected to lay the basis for a iarger, separate CAD project in a few years' time. The main components of the proposed project, which might be implemented over four years, would*be'as follows: (a) Simple basic on-farm development works on up to 8,000 ha on existing surface flow schemes at Kokrajhar and Jamuna and in the Maliobari lift scheme; ANNEX 5 Page 4 (b) Irrigation network improvements on up to 20,000 ha to guarantee water supply to the 8,000 ha; (c) Development of up to 1,500 ha of conjunctive groundwater command utilizing either existing or new public tubewells; (d) Technical assistance for the preparation of a larger, follow-up project; (e) Engineering, survey and administrative costs. Depending upon the results of further project preparation, the CAD component might be expected to cost about $5 million, excluding contingencies. Preparation Needs 8. The following are the most important tasks to be undertaken before a CAD component could be appraised: (a) To identify areas, of up to 8,000 ha, where a year-round water supply could be made available, and identify the improvements to the irrigation network required on the 20,000 ha. (b) Complete detailed surveys and designs for on-farm development for a 600 ha pilot area, and test farmer reaction to the pro- posals (see Attachment 1). (c) Amend legislation to provide GOA with powers to carry out compulsory CAD and to recover the costs from beneficiaries. (Draft legislation will be required by appraisal; enactment would be necessary before an IDA credit could be approved.) (d) Administrative action needs to be taken to create a CAD organization. 9. The mission emphasized in final discussions with both GOA and GOI that the preparation of a CAD component in time for appraisal before the end of 1976 would be a large task, which would probably be beyond the capacity of GOA by itself. GOI has agreed that the Ministry of Agriculture and Irrigation will take the initiative in assisting GOA in preparing the CAD component. The most urgent need is for GOI to appoint a CAD liaison officer to assist in project preparation. This officer could arrange for appropriate GOA officers to visit selected on-going CAD projects in other Indian states and assist in adapting their experience to Assam conditions. The GOI liaison officer could also maintain liaison with the World Bank during preparation through its Ne4 Delhi office. ANNEX 5 Attachment 1 Preparation Needs: 600 ha Pilot Area The following Project Preparation surveys, designs and cost estimates are required for the 600 ha pilot project area and for irrigation network improvements prior to appraisal: 1. Surveys: 600 ha of representative areas divided equally among the the three project locations of Kokrajhar, Jamuna and Maliobari. 1:2,500 ha scale topographic mapping at 30 cm contour intervals; definition of property boundaries and identification of project beneficiaries; semi detailed soil surveys; piezometer monitoring of shallow groundwater table; agricultural cropping surveys. 2. Designs and Planning: (a) Drawings of field channel layouts and location of structures, typical designs of principal structures (turnouts, falls, division boxes and drainage crossings), (b) planning of main irriga- tion networks improvements on surface water projects to enable adequate timely water delivery on a rotational basis down to the chak turnout level. 3. Cost Estimates and Implementation Schedule: Detailed cost estimates, methods, timing and staff required for implementation. Implementation schedule taking account of available working periods. Equipment required. 4. When all plans and estimates are complete, and agreed by GOA, joint presentations should be made to the farmers of the 600 ha proposed develop- ment, their opinions canvassed, appropriate modifications of the plans carried out and farmers' individual consent obtained. 5. In particular the CAD costs, which may be up to, say, Rs 1,600/ha, should be planned for recovery from the farmers within a 10 year period at the current interest rate advised by ARDC. Farmers consent to this should be obtained and this consent presented at appraisal. The legal status of this consent should be confirmed. ANNEX 5 Attachment 2 Preliminary Cost Estimates Area Unit Cost Total Cost (ha) (US$) (US$ million) 1. Irrigation Improvements Irrigation network 20,000 50 1.00 Medium tubewell 1,500 800 1.20 2. Land Development Surveys 12,000 10 0.12 Construction 8,000 200 1.60 Sub-total 3.92 3. Technical Assistance (for future project preparation) LS 0.30 4. Engineering and Administration 0.59 Physical Contingencies 0.59 Sub-total 5.40 5. Expected Price Increases 1.60 Total 7.00 ANNEX 5 Attachment 3 Implementation Schedule Calendar Years Item 1 2 3 4 Land Development 1. Surveys, Plans (12,000 ha gross) 2,000 1/ 4,000 6,000 2. Field channels and drains (8,000 ha) 1,000 1,000 2,500 2,500 3. Irrigation Network improvement (%) 10 30 30 30 Tubewells (Iuo umi) 20 60 60 60 4. Project Preparation for future projects (%) 20 70 10 1/ Surveys for approximately 1,000 ha would be available at start of project implementation. ANNEX 6 SEED PROCUREMENT AND PRODUCTION Table of Contents Page no. Present Status 1 Production 1 Procurement 1 Performance 2 Project Proposal 2 ANNEX 6 Page 1 SEED PROCUREMENT AND PRODUCTION Present Status 1. The supply of seeds in Assam is the responsibility of the Assam Seeds Corporation (ASC), which is described elsewhere (Annex 8). This annex is concerned principally with technical aspects of the seed supply system for foodgrains. Production 2. The climate of Assam is generally unfavorable for seed production, mainly because it is frequently humid during the ripening period. For rabi crops which may catch the early pre-monsoon showers and Ahu rice which ripens at the height of the monsoon, conditions are especially unfavorable. The high-yielding rice varieties recommended in Assam are nearly all on the Indian Council of Agricultural Research (ICAR) variety list and presumably available through outside suppliers from more favorable locations, the only major excel.--'in being the local improved variety, Monoharsali. Nevertheless, ASC maintains a network of 57 seed production farms for rice and pulse seeds and more recently the production of wheat seed has also been undertaken; the total ASC rice requirements, which amounted to some 500 tons in 1974/75, is produced within the state. 3. The ASC facilities for seed production, having been acquired from the Department of Agriculture in 1967 and subject to little capital re-invest- ment since, are very poor. Tillage equipment is often obsolete and liable to periods of unserviceability due to dependence on a centrally based mechanic. Plant protection equipment is rudimentary and seeds are mostly threshed by traditional techniques which may have an adverse effect on germination. There are no specialized drying or seed cleaning machines and storage is provided by traditional godowns, often in poor repair. Annual expenditure budgets are too low to provide fertilizers or sufficient labor for adequate rogueing of crops and average yields are below those of traditional farmers. Few if any of the ASC staff have any experience of modern seed production methods. Procurement 4. Despite ASC's involvement in rice, it is wheat seed which consti- tutes the major part of the corporation's sales; until now all wheat seed has been procured from outside the state. Principal suppliers are the National Seeds Corporation (NSC), Tarai Development Corporation (TDC) and private-sector suppliers such as Haryana Seeds. Seeds from NSC and TDC are accepted against the supplier's own certification while ASC evaluates supplies from other sources using the GOA seed testing laboratory. A total of about 4,000 tons of wheat were procured in 1975. ANNEX 6 Page 2 Performance 5. The performance of ASC has been much criticized. Some of the wheat seed procured has been found by farmers to be damaged by insects, infected with loose smut and has shown poor germination. Similar complaints have been made against the quality of rice seed produced on ASC farms, and about late de- liveries of wheat and rice. Project Proposal 6. The quantity of seed at present handled by ASC - less than 5,000 tons/year - is relatively small. Projections in Annex 1 suggest that this would rise to some 6,500 tons by year 3 of an angricultural development project and reach 15,000 tons by year 6. Thus, although the proportional increase may be considerable, the tonnage would remain moderate by the standards of some other states. In this situation it is suggested that the operations of ASC should be developed in the following way: (i) As much of the seed requirement as is practicable should be procured from outside the state. This would bring ASC into line with the GOI policy of giving NSC maximum responsibility for seed production within India, and of concentrating that production in the technically optimum areas. (ii) ASC's capability as a procurement agency should be strengthened. Staff should be trained and deployed to allow seeds offered by NSC, TDC and all other suppliers to be inspected and tested be- fore acceptance, thus eliminating any doubts on the quality of material received. Seed storage, transport and disinfestation facilities should be supplemented if necessary, to ensure that seed remains in satisfactory condition until delivered to the farmer. (iii) Seed production by ASC should be confined to varieties not avail- able from outside the state (e.g. local improved varieties such as Monoharsali) or to those of doubtful availability. All rice seed should be grown in the sali season. (iv) ASC production should be concentrated at only one or two locations. They should be in more favorable climatic areas and preferably associated with the plant breeding facilities of the Assam Agricultural University, whose staff would provide additional technical support. The ASC should divest itself of its other seed farms. (v) Production, processing, drying and storage facilities at the chosen location(s) should be upgraded. Staff should be trained ANNFY 6 Page 3 in all necessary aspects of seed technology to ensure that tech- nical standards are consistently acceptable. (vi) Once demand for locally produced seed outstrips the capacity of the re-equipped ASC production center(s) additional requirements should be obtained by use of licensed outgrowers in the vicinity, with supervision and field inspection by ASC staff. Based on the projections in Annex 1, this stage would be reached in about 3 years. Subject to their proximity, the Agricultural Farming Corporations might act as suppliers. Seed should not be brought from any outgrower unless it meets technical specifications. (vii) If necessary, the State Seed Certifying Agency should be strength- ened to ensure an adequate and independent quality control for both procured and Locally produced seed. 7. The cost of such a re-organization of seed procurement and production is estimated at approximtely $1.0 million, composed as follows: ($ million) Central see- -ultiplication farm(s) (200 ha total) 0.4 Outgrower facilities (10,000 ha total) 0.4 Upgrading procurement and distribution 0.1 Staff training 0.05 Upgrading seed testing facilities 0.05 Total 1.00 8. The figure for multiplication farms includes a land development charge of $50 per hectare; installation of deep tubewell or river lift irrigation; air-conditioned storage for 500 tons seed (including expanded storage of breeding lines for AAU): cultivation equipment, threshers, cleaners and driers; office buildings and senior staff housing; transport and staff salaries, and operating costs for four years. The outgrower figure provides for 1,500 tons storage without air conditioning; 1/ driers and cleaners; transport; four year's operating costs, and staff costs for two supervisors and 10 field inspectors over four years. 9. No specific proposals for organization and management are made here. However, in Annex 8 it is suggested that, in view of the continuing relatively low volume of business anticipated for other inputs as well as seeds, the func- tions of the ASC and those of the Agro Industries Development Corporation could 1/ The mission was advised that underutilized ventilated stores exist at District level. It is assumed that most of the extra storage need would be met from these existing facilties. ANNEX 6 Page 4 well be amalgamated. Within any composite organization it would be essential that accountability for seed quality, from the point of procurement or pro- duction, through processing, storage and distribution to the farmer, should not be divided. ANNEX 7 REPORT ON INSTITUTIONAL CREDIT FOR AGRICULTURE Table of Contents Page no. I. SUMMARY 1 II. BACKGROUND INFORMP!TION 1 Cooperative Credit Structure (Short and Medium Term) 2 Assam Cooperative Apex Bank 2 Cooperative Land 1brtgage Bank (Long Term) 2 Commercial Banks 3 III. RECENT EFFORTS TO RESTRUCTURE THE CREDIT SYSTEM 4 State Government's Efforts to Restructure Cooperative Credit 4 RBI Proposals Talwar Committee's Recommendations 6 Present Position and the Proposed Strategy for Channeling Credit under the Project 6 IV. ACTION PROGRAM FOR MEDIUM AND LONG TERM CREDIT BY COMLERCIAL BANES 7 Short Term Action Program 7 Long Term Action Program 9 V. ACTION PROGRAM FOR SHORT TERM LENDING 9 Priority to Credit and Input Supplies 10 Recovery Drive 10 Rehabilitation of Apex Bank 10 Issues Concerning Financing Banks 10 Loan Procedures 12 Issue of Credit Books 13 Strengthening GPL Administration 13 VI. IMPLEMENTATION, COORDINATION AND SUMMARY OF ACTION PROGRAM 13 Tables 1-5 Appendix 1: Eligibility Criteria Prescribed for Land Mortgage Banks Appendix 2: Scales of Finance followed by Assam Cooperative Apex Bank ANNEX 7 Page 1 REPORT ON INSTITUTIONAL CREDIT FOR AGRICULTURE I. SUMMARY 1. The existing institutional credit structure in Assam is extremely weak, and the use of agricultural credit almost negligible. In Rabi 1974/75, only 4,085 farmers used crop loans, averaging Rs. 220 per loan. In the 1975 Kharif and the 1975/76 Rabi seasons the position was no better, with 2,536 and 3,843 borrowers respectively throughout the State (Table I). Disbursements of long-term credit by the Assam State Cooperative Land Mortgage Bank Ltd. have also been low -- Rs. 1.68 million in 1975/76 (to December 31, 1975). Data on commercial bank disbursements of medium-term and long-term credit are not available, but are reported to be small. 2. Recovery performance has been very poor in Assam. Overdues of the central cooperative oanks were as high as 96 percent of demand in 1972/73 and of the Cen_1 Land Mortgage Bank 74 percent in 1974/75. Because of high overdues the usual refinance facilities from the Reserve Bank of India (RBI) are not available to the State Cooperative Apex Bank. Nor is refinance available from the Agricultural Refinance and Development Corporation (ARDC) to the Assam Land Mortgage Bank. 3. In view of the weakness of the financial and organizational structure of institutional credit in Assam, the mission concluded that size- able lending through either the cooperative credit institutions or the land mortgage banks does not appear feasible in the near future. The commercial banks will therefore have to be relied upon to meet term lending requirements for groundwater development envisaged under the project, and section IV outlines the action that: needs to be taken to enable the commercial banks to do this. At the same time, the report identifies a longer term strategy to strengthen the cooperative credit institutions, particularly the Gaon Panchayat Level Societies, so that they are in a position to meet production credit requirements as demand for this increases. As it will take several years it improve their performance, it is essential to start now. II. BACKGROUND INFORMATION 4. Institutional credit for agriculture is provided by cooperative credit institutions and commercial banks. The cooperative credit structure has two wings, one providing short and medium-term credit, the other long-term credit. Commercial banks are relatively new entrants in the field of agri- cultural financing. ANNEX 7 Page 2 Cooperative Credit Structure (Short and Medium Term) 5. Prior to August 1973, there was a three tier cooperative credit structure in Assam for short and medium-term credit: at the state level the Assam Cooperative Apex Bank, at the district level seven Central Cooperative Banks, and at the village level 3,069 primary agricultural credit societies. However, following the State Government's decision in August 1973 to organize- Gaon Panchayat Level (GPL) Societies in place of the primary credit societies (see Annex 9), the three-tier credit system has virtually ceased to function and has been replaced by a two-tier credit system with Apex and commercial banks at the State level and reorganized GPL societies at the base level. Assam Cooperative Apex Bank 6. The Assam Cooperative Apex Bank was registered on 7th December, 1948 under the Cooperative Societies Act to finance and promote the cooperative movement in the State. Advances by the Apex Bank, mainly short-term loans, were mostly for procurement of paddy through cooperatives, for cooperative sugar and jute mills, cooperative urban banks, industrial cooperative banks and tea gardens. Because of high overdues and consequent lack of refinance facilities, advances for agriculture since 1971/72 have necessarily been small (Table 2 and 3). In 1974/75, short-term loans disbursed by the Apex Cooperative Bank and Central Cooperative Banks were Rs. 1.01 million and Rs. 1.16 million respectively. Medium-term loans were less than Rs. 10,000. 7. The overdues of central cooperative banks stood at 96 percent of demand in 1972/73. Since the central banks were heavily in default to the Apex Bank, the latter's overdues also went up sharply and stood at 71 percent of demand in 1972/73 and 82 percent in 1973/74. Overdues at the primary level were 89 percent of demand in 1971/72. The major factors contributing to the poor recovery were ineffective supervision, defective loan policies and pro- cedures, poor operational efficiency of the societies and laxity in taking action against defaulters. Cooperative Land Mortgage Bank (Long Term) 8. There is a two-tier long-term cooperative credit structure in the State, the Assam Cooperative Central Land Mortgage Bank (CLMB), organized in 1955, at the apex level and 16 Primary Land Mortgage Banks (PLMBs) at the subdivisional level affiliated to the Apex Bank. The proportion of cultivat- ing households covered by membership of the PLMBs is under 1 percent against an all-India average of 8.5 percent and loans advanced have been small: ANNEX 7 Page 3 Loans issued Year (Rs. Million) 1972/73 1.32 1973/74 0.90 1974/75 0.37 1975/76 (1.7.75 to 3.1.76) 1.68 The CLMB's performance in raising resources through floatation of debentures has not been satisfactory. It has not made use of refinance from ARDC although one scheme for arecanut plantations involving refinance of Rs. 0.45 million was sanctioned as far back as 1971. Because of its weak capital base, its capacity to absorb the impact of overdues is severely limited. 9. Overdues of CLMB have been mounting over the years from 58 percent of demand in 1969/70 to 62 percent in 1973/74 and to 74 percent in 1974/75. The high overdues position of the CLMB is a direct result of the poor recovery performance of the PLMBs. Of 16 PLMBs, only one PLMB has overdues less than 35 percent of demanu as on June 30, 1975 and all others have overdues ranging between 40-77 percent (Table 4). Commercial Banks 10. Loan operations to agriculture have been small. The outstandings (total disbursements minus repayments) under direct credit to agriculture of all commercial banks at the end of March 1975 were Rs. 10.71 million: Amount in (Rs million) No. of Limits Amount outstanding accounts sanction- Up to end Up to end up to end ed up to March March March end March 1975 1974 1975 Short-term Credit 14,385 12.32 7.03 6.20 Medium-term/Long-term 708 4.34 3.68 2.25 Total 15,093 16.66 10.71 8.45 11. The United Bank of India and Uilted Commercial Bank are Lead Banks in the Plains District; the State Bank of India in the Hill Districts. At the end of December 1975, there were 261 bank offices in Assam (Table 5), 113 rural and 112 semi-urban and the remaining urban. The bank density in Assam is low, a bank office covering an average of 56,000 persons against an all-India average of 27,000. There is, however, a wide inter-district variation in bank density. ANNEX 7 Page 4 III. RECENT EFFORTS TO RESTRUCTURE THE CREDIT SYSTEM State Government's Efforts to Restructure Cooperative Credit RBI Master Plan 12. As a result of heavy overdues, the flow of credit through central cooperative banks and primary credit societies came to a virtual standstill in 1971. The Reserve Bank of India (RBI) prepared a Master Plan in 1971/72 which called for the reorganization of the Apex and Central Cooperative Bank and for the formation, on a pilot basis, of 150 newly organized or reorganized credit societies. The Apex Bank was to finance these societies in a radius of 10-12 miles around its branches. Under this Plan, 45 primary credit societies were organized or reorganized, and Rs. 1.2 million short- term credit was given to 34 societies in the 1973 Kharif season. However, action was suspended in August 1973 when the State Government decided to introduce its own plan to reorganize the cooperative credit structure. GPL Societies 13. At the State Level Cooperative Conference held at Gauhati on August 2, 1973, GOA took the decision to organize 663 Gaon Panchayat Level (GPL) Societies (now 664) following the concept of Farmers' Service Co- operative Societies to replace the existing 3,069 primary credit societies. Each society covers a population of 10-20 thousand or about 3,000-3,500 farm families spread over 20-40 villages. the GPL societies have an authorized share capital of Rs. 2 lakhs and a maximum borrowing power of 20 times paid- up share capital and reserves minus accumulated losses if any. The societies have a wide range of functions including procurement of foodgrains, dis- tribution of essential commodities, inputs supply and provision of credit (See Annex 9). Each society is to be financed either by the Assam Cooperative Apex Bank or a Commercial Bank with branches in the area. In the area of an adopted GPL society, all credit must be issued through the respective financ- ing bank. 615 societies have been adopted by financing banks: 38 percent by the Apex Bank and 62 percent by 7 commercial banks: ANNEX 7 Page 5 Financing Bank No. of societies adopted (up to March 10, 1976) Apex Bank 236 State Bank of India 152 United Bank of India 101 United Commercial Bank 98 Central Bank of India 12 Allahabad Bank 5 Purbanchal Bank 7 Punjab National Bank 4 615 Societies yet to be adopted 49 664 RBI Proposals (a) C-irantee for Overdues 14. With the organization of GPL societies, a two-tier credit system has, de facto, come into operation, the Apex or Commercial Bank at the State level and GPL Societies at the primary level. GOA also considered amalgamating the 7 central.cooperative banks with the Apex Bank. The RBI recommended, however, that before amalgamation can be effected, GOA should give an unconditional guarantee to the Assam Cooperative Apex Bank that the past overdues of primary credit societies, amounting to Rs. 88.35 million, be paid in 10 equal instal- ments so that when the Apex Bank takes over the assets and liabilities of the central cooperative banks it would not be burdened with the past liabilities of the central banks. Pending such a guarantee, no refinance facility would be available from the RBI to the Apex Bank owing to heavy overdues. So far no final decision has been taken by the State Government on the issue. (b) Amalgamation of Land Mortgage Banks with the Apex Bank 15. Because of the high overdues and weak financial position of the PLMBs, RBI also suggested the integration of the long-term credit structure with the short-term credit structure, by merging existing CLMB/PLMBs with the Apex Bank. GOI has set up a committee to study the prospects, problem and logistics of integrating the two structures, and, no decision has been taken by the State Government. (c) GPL Societies 16. The RBI Master Plan (para 12) recommended the formation of 150 newly organized or reorganized primary credit societies into multipurpose cooperative societies on a pilot basis with: ANNEX 7 Page 6 (i) a minimum staff of one Secretary, one supervisor- cum-clerk and one godownkeeper-cum-rsalesman, and (ii) financial assistance from the RBI, out of the National Agricultural Credit (Long-term Operations) Fund, to GOA for contribution to share capital of GPL Societies, Rs. 10,000 per society provided the society collected at least Rs. 5,000 as share capital from its members. Talwar Committee's Recommendations 17. In September 1969, the RBI appointed the Expert Group on State Enactments (the Talwar Committee) to recommend means to facilitate and expand commercial bank lending for agriculturists. GOA has implemented the recommendations for commercial bank lending through cooperative societies, but has not done so for direct lending by commercial banks. These include, inter alia, updating of land records, exempting commercial banks from the provisions of the Assam Fixation of Ceiling on Land Holdings Act 1956 (para 18), exempting banks from provisions of the Assam Money Lenders' Act 1934 and from the purview of the Assam Debt Conciliation Act 1936 and placing the commercial banks on par with cooperative banks for creation of charge/ mortgage, exemptions from registration fee and stamp duty, etc. 18. The Assam Fixation of Ceiling on Land Holdings Act, 1956 sets out the ceiling on present as well as future acquisition of land. Co- operative Farming Societies, Gram Sabhas and Land Mortgage Banks are ex- empted from the provisions of the Act. The Talwar Committee recommended that such exemption be extended to commercial banks. 19. Under Section 58(f) of the Transfer of Property Act 1882, the State Government is empowered to notify towns/centers where equitable mortgage procedures, mortgage by deposit of title deeds, can be introduced. The advantages of this over the usual registered mortgage are three-fold: firstly, it does away with the need for preparation and execution of mortgage documents; secondly, stamp duty and registration fee are avoided, and thirdly, the time taken in registration of mortgage documents is saved. The Talwar Committee has, therefore, recommended that towns/centers be notified under the Act. This has been done for all district headquarters, but should be ex- tended down to sub-divisional level, where basic land records are maintained. Present Position and the Proposed Strategy for Channeling Credit under the Project 20. Government's progcam to restructure and strengthen credit institutions has not -resulted in any increase in the flow of agricultural credit. The RBI proposals have not been implemented. Unless GOA provides the guarantee for past overdues, the Apex Bank will not have access to RBI's refinance facilities in which case its volume of loan business cannot expand. Sizeable term-lending ANNEX 7 Page 7 through the CLMB does not appear feasible in the near future given the heavy overdues position both of the PLMB and the CLMB. The volume of credit handled by the GPL societies is negligible. Until the cooperative credit structure is reorganized and strengthened and past overdues recovered, which will take some time, the commercial banks will have to be relied upon for term-lending directly to farmers for groundwater development envisaged under the project. At the same time, the GPL societies will have to be geared up to meet the production credit requirements as demand increases. Remaining part of this Annex is, therefore, divided into two sections. Section IV sets forth the action pro- gram to ensure that the commercial banks are in a position to provide the medium and long-term credit required under the project. Section V sets forth a rather longer term strategy to gear up the cooperative sector, in particular the GPL societies, to meet future production credit needs. IV - ACTION PROGRAM FOR MEDIUM AND LONG-TERM CREDIT BY COMMERCIAL BANKS Short-term Action Program Commercial Banks - Implementation of Talwar Committee's Recommendations (Action: State Government) 21. To make it easier for commercial banks to lend, medium and long- term, directly to farmers, commercial banks should be treated on par with the cooperative banks for creation of a charge/mortgage, exemption from registration fees and stamp duty etc., as recommended by the Talwar Committee (para 17). While some of the Talwar Committee's recommendations have been implemented by GOA, recommendations concerning direct financing by commercial banks have not. The necessary legislation and administrative action should be expedited immediately. Apex Bank/Land Mortgage Banks (Action State Government) 22. (a) Under present arrangements, 1/ in areas covered by GPL societies adopted by the Apex Bank, term finance has to be provided by the Land Mortgage Bank through its primaries. Because of high overdues, however, no refinance facility is available to the CLMB from ARDC. To overcome this constraint, it will be necessary for GOA to: (i) implement the reorganization formula recommended by the RBI involving a State Government G. rantee to the Apex Bank, covering overdues and amalgamation of CLMB with the Apex Bank (paras 14 and 15), and/or 1/ Once an area has been allocated to a GPL society and subsequently to a particularly financing bank, farmers in that area can borrow only from that financing bank. ANNEX 7 Page 8 (ii) rehabilitate the CLMB by reducing overdues of the primaries so that it becomes eligible for refinance from ARDC. (Eligibility criteria for PLMBs drawing refinance are given in Appendix I). 23. If neither of these alternatives are acceptable or feasible, it will not be possible to provide term loans for minor irrigation in areas covered by GPL societies adopted by the Apex Banks. The only other solution would, therefore, be to transfer these societies from the Apex Bank to commercial banks. Issue of Pass Books (Action: State Government) 24. Updating of land records will take some time. As an interim measure, the GOA might consider issuing pass books to farmers interested in obtaining credit, indicating the rights they enjoy over land cultivated by them. These could be issued by the Sub-Divisional Collector (SDC) showing, inter alia, details of land held, class, nature and extent of land owned and cultivated, the nature of interest in land, land obtained on lease, encumbrances over land, land revenue and cess. These pass books would need to be updated every year. These would serve as prima facie evidence to rights/ interests in land and provide thestarting point for banks to verify such rights and details pertaining to encumbrance on the land referred to therein. Similar pass books have been issued in Karnataka, Gujarat and Uttar Pradesh. Mortgage Procedures (Action: Commercial Banks/GPL Societies) 25. Under the present procedures, mortgage of land is required for term loans. The GPL societies also require mortgage of land for producticn credit. Hence a farmer obtaining a term loan from the bank finds it difficult to get production credit from the society. To overcome this, once the farmer has tendered security to the bank, the society should not insist on mortgage of land but issue crop loans on the hypothecation of crop as set down in the RBI guidelines (regarding issue of short, medium and long-term loans for agri- culture). Uniformity in Loan Procedures (Action: ARDC/RBI/Financing Banks) 26. Loan procedures followed by banks differ depending upon the financ- ing bank. Frequently they apply different terms and conditions, rates of interest at which they lend to 'armers and societies, due dates of repay- ments, loan ceilings against hypothecation of crops and creation of charge, documentation, margins, etc. Banks should adopt a uniform and simplified procedure, and ARDC should coordinate the necessary changes (see also paras 35-37). ANNEX 7 Page 9 Long-Term Action Program Updating of Land Records (Action: State Government) 27. The absence of proper and uptodate land records is one of the major obstacles faced by banks in lending for agriculture. GOA indicated that they would prepare a component to be included in the project to update land records, introduce a card index system for maintaining property titles and introduce a passbook system. Training of Staff (Action ARDC/Cooperative/Commercial Banks) 28. All the credit institutions, including the commercial banks, are handicapped in their efforts at expanding into the rural areas by a shortage of trained manpower - particularly people who are experienced in agricultural lending. *The need for skilled manpower will be increased further by the responsibilities assumed by financing banks in regard to GPL Societies. There is therefore an urgent necessity to take full advantage of existing training facilities 1/ or develop special programs for Assam. V. ACTION PROGRAM FOR SHORT-TERM LENDING (THROUGH GOAN PANCHAYAT LEVEL SOCIETIES) 29. Term lending for groundwater development in the project period can be adequately handled by commercial banks if the action outlined in the pre- vious section is taken. Neither the Apex bank nor the GPL societies are, however, currently in a position to meet a large demand for short-term credit. Fortunately, it is anticipated that the demand for short-term credit will not increase substantially in the next few years (General Report, para. 51). This section of the report deals with the action program to strengthen the short-term credit institutions so they will be in a position to meet credit requirements when demand increases. It focuses mainly on the GPL societies, the primary credit institutions. Annex 9 describes the functions and present status of the GPL societies in more detail, other than aspects related to credit, included in this section. The two annexes should, therefore, be read in conjunction. 1/ ARDC already has an all-India program, funded by IDA, to train 750 senior commercial bank and land developmen ba:k staff by the end of 1977, mostly at the College of Agricultural Banking, Poona. This training course is apparently not yet fully utilized. The on-going IDA credit to ARDC also provides for a state-by-state study of training requirements for junior staff. The report is expected by mid-1976, and training courses are expected to start shortly thereafter. ANNEX 7 Page 10 Priority to Credit and Input Supplies (Action: Cooperative Department) 30. The GPL societies are presently little more than fair price shops. Whatever credit has been disbursed has mainly been through efforts of the financing banks' field officers. The Cooperative Department should issue instructions that the GPL society secretary must give priority to inputs and credit (see Annex 9). Recovery Drive (Action: Cooperative Department) 31. There are an estimated 300,000 defaulters from the old primary credit societies. In addition, there are considerable number of defaulters to the State Government, for example for the 1972 Taccavi loans, but their exact number is not known. Previous defaulters are not allowed to join the GPL societies, and this, therefore, constrains membership and credit demand. 1/ To instill financial discipline and to make the Apex Cooperative Bank eligibTe for refinance facilities, it is essential that these overdues are collected. It will be necessary for GOA and the Cooperative Department to prepare a list of defaulters divided into wilful defaulters and those defaulting because of natural calamities. In cases where arrears are considered irrecoverable, GOA will have to write them off. For wilful defaulters a determined effort must be taken up immediately and legal constraints in obtaining and executing awards/cooperative dues certificates must be over- come on a priority basis. The RBI had recommended that a special cell be set up in the Office of the Registrar of Cooperative Societies, specifically to recover past overdues, and that the number of bakizai officers (responsible for execution of recovery) be increased. If the latter is not feasible, the possibility of entrusting recovery to Mouzadars on a commission basis should be explored. It is essential that the RBI recommendations are carried out. Until past overdues are collected, no efforts to increase credit (as opposed to grants) will ever succeed. Rehabilitation of Apex Bank (Action: State Government) 32. GOA should implement the reorganization formula recommended by the RBI involving a State Government guarantee to the Apex Bank and amalgamation of the CLMB with the Apex Bank (see Section IV). Issues Concerning Financing Banks a) Scale of Finance (Action: State Government/Financing Banks) 1/ Under a recent administrative instruction, even defaulters of older societies may join GPL societies but are ineligible to borrow. ANNEX 7 Page 11 33. Credit is given on the basis of a "scale of finance" recommended by the Department of Agriculture (Appendix II). These have traditionally been for the full package of practices, with inputs supplied in kind. Thus a farmer who-wishes to use an intermediate level of technology, using, say traditional seed and relatively small amounts of fertilizer has not been able to obtain credit. Implicit in the concept of a "scale of finance," is that (a) the farmer is unable to decide how much fertilizer, HYV or pesticide he should use, and (b) little benefit can be obtained by using less than the full recommended level of inputs. While it may be true that small amounts of fertilizer do not increase yield significantly at present, this is probably a result of poor cultural practices. As these improve with the revitalized extension service, so small quantities of fertilizer may bring significant yeild increases. The farmer has thus been expected to jump from what might be called a zero level of technology (traditional practices) to the full technology package in one step, contrary to the concept of extension which should offer the farmer a series of progressively more sophisticated techniques, geared to his growing ability and confidence. 34. Although t1le Department of Agriculture now issues more than one "scale of finance," in practice the commercial banks tend to follow the full packagc approach exclusively. Each GPL society aggregates credit applications into a credit limit statement which has to be sanctioned by the adopting bank. Once sanctioned, the bank places orders with the fertilizer and seed suppliers based on the "scale of finance." The mission recommends that the "scale of finance" and credit limit statement become just that - an upper limit to the amount of credit a farmer can obtain. Farmers would then be able to lift any amount of fertilizer, seed and pesticides up to the amount prescribed (see also Annex 8, paras 18 and 19). b) Security of Loan (Action: ARDC/RBI/Financing Banks) 35. Commercial banks are not following the guidelines issued by the Reserve Bank of India, set down in the Crop Loan Manual. Some banks have a ceiling of Rs. 1,000 for loans against hypothecation of crops and acceptable sureties. Normally banks insist upon a recorded land holding as surety, and this frequently eliminates small farmers, sharecroppers and tenant farmers. Some banks have a higher ceiling. For loans over Rs. 1,500 charge over the land mortgage is usually required, while the Apex bank will not grant loans above Rs. 3,500 even against mortgage of land and/or tangible assets. Banks should follow a uniform procedure and ARDC, in consultation with RBI, should ensure the RBI guidelines are followed. c) Rate of Interest (Action: ARDC/RBI/Financing Banks) 36. Rates of interest charged by financing banks presently discriminate against lending through co-operatives, as can be seen from the following ex- amples of rates charged by the United Commercial Bank: ANNEX 7 Page 12 Direct Lending to Farmers: Short-term loans 10 - 11% (normal) 4% (differential rate of interest) Term Loans 12% (10-1/2% - 11% if refinanced by ARDC) Lending Through GPL Societies Short-term Banks charge 11% for short-term loans for amounts up to Rs 150,000 and 12% for higher amounts. Farmers pay 12-1/2 - 13% and are not eligible for DRI loans. Terms Loans 13-1/2% - 14% (not advanced presently) (10-1/2% - 11% if refinanced by ARDC) Such rates will lead to the following problems: (i) small/marginal farmers eligible for loans at the differential rate of interest (DRI) can borrow directly from the financing bank at 4%. If they borrow through the GPL societies, they would have to pay between 12-1/2% to 13%, thus discouraging farmers from joining the GPL societies; (ii) the lower rate of interest on direct lending will also discourage farmers from borrowing through the cooperatives; and (iii) the lower rate of interest on loans of less than Rs. 150,000 to societies will discourage societies from expanding their volume of business. It poses the problem of which farmers would pay the lower rate of interest, and which the higher. Issues concerning disparities in interest rates should be resolved by ARDC in consultation with RBI and the financing banks. Loan Procedures (Action: State Government/Financing Banks) 37. These are extremel, cumoersome. At present, after the farmer com- pletes a loan application form, it is vetted by the GPL society management committee, collated with other applications into a credit limit statement and sent to the Revenue Department (Mondol) to verify the land record (land records are usually out of date, and frequently the present owner is not yet registered, thus many would be borrowers are rejected), then forwarded to the financing bank for further checking before they sanction the loan. ANNEX 7 Page 13 By this time the crop season is often under way and the loan is no longer required. It is essential that the procedures are.speeded up -- see issue of pass books (Section IV, para 24). Issue of Credit Books (Action: Cooperative Department) 38. Each society Member interested in borrowing through the GPL society should be issued a credit book containing details of the members share contribution, deposits, credit limit sanctioned, borrowings and repay- ments. Details need to be worked out. Strengthening GPL Administration (Action: Cooperative Department) 39. It would not be possible or desirable to strengthen the credit functions of the GPL societies independently of their other functions. Issues relating to staffing, training, margins, conflicting objectives, incentives for the GPL society secretaries, phasing., supervision (includ- ing supervision by the financing banks), inspection, auditing and evaluation are included in Ann- 9. VI. IMPLEMENTATION, COORDINATION AND SUMMARY OF ACTION PROGRAM 40. In May 1974, GOA issued a notice stating their intention to "constitute a state level committee for coordinating the activities of cooperative and commercial banks in financing agricultural cooperative credit societies." The Committee has met only once. Several of the issues raised in this Annex - for example, the different loan securities requested by banks - could be resolved in such a forum. Other issues - for example, whether the society secretary should be appointed by and answerable to the financing bank (Annex 9, para 19) - have arisen between the financing banks and Government, which can only be solved by frank discussions between the interested parties. The mission recommends that the committee be reactivated to discuss the recommendations made in this report and any other outstanding issues. 41. Implementation, of the recommendations in this report lies with Government of Assam, with assistance from ARDC and RBI. One department, preferably only one senior level officer, should be given the responsi- bility to see that these recommendationns are pushed through the various departments and the necessary legislati-n passed. 42. In addition to the two recommendations above (paras 40 and 41), the following summarizes the most important-and urgent actions required to be taken: ANNEX 7 Page 14 (i) implementation of all the recommendations in the Talwar Committee Report, i.e., for direct lending by commercial banks (para 17-19 and 21); (ii) implementation of the reorganization of the institutional credit recommended by the RBI, including, inter alia (para 22), - State Government guarantee for repayment of past overdues of the Central Cooperative Banks to the State Apex Bank, and - merger of the land mortgage bank with the Apex Bank; (iii) if (i) and (ii) above are not immediately acceptable or feasible, in the proposed groundwater development areas, adoption of the GPL societies allotted to the Apex Bank by the commercial banks (para 23); (iv) vigorous recovery drive of outstanding loans and implementation of RBI recommendation re Special Cell in Cooperative Department and increase in number of bakizai officers (para 31); (v) issue of pass books (para 24); (vi) implementation of action program to strengthen GPL societies (Annex 9). POSITION OF LOANS FOR RABI 1974/75, FOR KHARIF 1975, AND FOR RABI 1975/76 AS OF 12/31/75 (In Rs. Million) Name of Loan Amount No. of Societies No. of Farmers Amount No. of Societies No. of Borrowers Sanctioned from which Loan with Sanctioned Actually with actual Dis- Receiving Loans Sanctioned Loans Availed bursements Rabi 1974/75 2.76 127 Not Available 1.19 80 4,085 Kharif 1975 4.92 329 7,029 0.95 204 2,536 Rabi.1975/76 10.3 485 11,165 1.73 262 3,843 SOURCE: Government of Assam's Cooperative Department Annex 7 Table 2 Apex Co-operative Bank's Agricultural Loans (b.million) Through Direct Central agricultural Total Co-operative loans Banks 1971-72 9.55 0.25 9.80 1972-73 3.05 0.24 3.29 1973-74 0.32 0.86 1.18 1974-75 - 1.01 1.01 Notes All Agricultural loans advanced are short-term loanse Annex 7 Table 3 Loans issued by Central Co-operative Banks s thousands Name of the Loans issued during Bank 1972-73 1973-74 1974-75 S.T. M.T. S.T. M.T. S.T. M.T. 1. Cachar Central Bank 184 361. 109 - - - 2. Dibrugarh Central Bank 62 - - 21 - 4 3. Goalpara COntral Bank 104 3 552 - 992 1 4. Kamrup Central 415 - 38 - - - Bank 5. Nowgong Central Bank 452 66 -. 21 - 4 6.Sibsagar Central Bank 674 1 16 - - - 7. Tezpur Central Bank 1241 150 316 - 171 - Totals 3132 581 1031 42 1163 9 s.r. = Sort:-tezm M.'r. = Mediun-term AssAn Central Co-operative Land Mortgage Bank (In Rupees) Name of the Overdues as on 30-6-75 Demand as on 30-6-75 Total % of overdues P.L.M.B. Principal Interest Total Principal Interest to demand . . ------ - - - - - - (Total)--------- 1 2 3 4 5 6 7 8 1. Dibrugarh 45,411/- 50,327/- 95,738/- 48,041/- 54,866/- 1,029906/- 93.0 2. Sibsagar 24,677/_ 38,642/- 63,319/- 33,010/- 68,610/- 1,01,620/- 62.3 3. Jorhat 5,488/- 10,023/- 15,511/- 27,313/- 21,589/_ 48,902/- 31.7 4. Golaghat 79,485/- 43,481/- 1,22,966/- 86,424/- 60,416/- 1,46,840/- 83.7 5. Nowgong 69,394/- 50,436/- 1,19,830/- 1,04 256/- 99,144/- 2,03,400/- 58.9 6. Gauhati 2,14,631/- 2,24,317/- 4,38,948/- 2,21,056/- 2,39,257/- 4,60,313/- 95.4 7. Nalbari 75,342/- 1,01,465/- 1,76,807/- 99,448/- 1,29,435/- 2,28,883/- 77.2 8. BDrpeta 14,052/- 34,326/. 48,378/- 26,156/- 50,696/_ 76,852/. 62.9 9. Dhubri 56,766/_ 48,008/- 1,04,774/- 57,764/_ 56,315/- 1,14,079/- 91.8 10.Goalpara 35,078/- 55,684/- 90,762/_ 59,525/- 79,676/- 1,39,201/- 65.2 11. Mangaldot 43,214/- 48,604/- 91,818/- 64,51/- 72,875/- 1,37,390/- 66.8 12. Tezpur 17,111/- 31,708/- 48,P19/- 39,921/- 56,265/- 96,186/- 50.6 13. N.Lakhimpur 49,459/- 43,428/- 92,887/- 67,087/- 60,249/- 1,27,336/- 73.0 14. Hailakandi 5,972/- 8,277/- 14,249/- 11,181/- 17,132/- 28,313/- 39.7 15. Kar1mqanj 11,983/- 10,245/- 22,228/- 25,711/- 30,360/- 56,071/- 39.7 16. Silchar 51,358/- 46,047/- 97,405/- 1,02,467/- 1,02,467/- 2,07,821/- 46.9 7,99,421/- 8,45,018/- 16,44*439/- 10,76,762/- 11,990351/- 22,76,113/- CooMrcial Banks offices in Assan As on 31-12-75 District State Bank of United Bank United Central Allah )ad Purbanchal Punjab Others Total India of India Commercial Bank of Bank Bank National Bank India Bank 2 3 4 5 6 7 8 9 10 Kamrup 15 15 16 6 3 10 3 14 82 Goalpara 7 6 15 - 1 - 1 2 32 Darrang 8 1 12 2 1 1 1 2 28 Dibrugarh 8 13 4 2 1 2 2 4 36 Lakhippur 2 4 - - - - - - 6 SEbsagar 8 13 2 - 1 2 1 1 28 Nowgong 6 10 - 1 1 1 2 - 21 Mikir Hills 3 - - - - - - - 3 N.C.Hills 1 - I - - - - - 1 Cachar 4 14 2 1 2 - 1 - 24 Total. 62 76 51 12 10 16 11 23 261 IFADJ BMIKS I ASSAMt thited Commercial Bank - Kamrup, Gat Gbalpara and Darrang Districts. Uited Bank of India - Cach3r, Lakhimpur, Nowgong and Sibsagar Districts. State Bank of India - North Cachar Hills ad Mikir Hills. ANNEX 7 Appendix 1 Eligibility criteria prescribed for Land Mortgage Banks for refinance assistance from the Agricultural Refinance and Development Corporation According to the present regulations in force, the eligibility of a PLMB for a lending programme during the year will depend on its recovery performance in the previous year and will be linked to the disbursements made by it in the previous year as per the formula given below: Range of overdues at Eligibility of programme the primary level as as percentage of loans percentage of demand issued during the previous for the year year 0 - 25 Unrestricted 26 - 35 80 36 - 45 70 46 - 55 60 56 - 65 50 61 - 100 Nil There is also a provision for the contribution by the State Government to the extent of 10 percent of the demand and thus notionally reduce the overdues to that extent. There is also a provision to aggregate overdues of 5 years and more into a separate blocked account and exclude the same from the total overdues while calculating the percentage of overdues to demand. Every year 20 percent of this blocked account may be treated by the banks as demand for the year. However, full provision for the reserves for bad and doubtful debts to cover the shortfall, if any, in the recoveries against this demand should be made. The State Government may take advantage of these provisions and reduce overdues in order to be eligible to get ARDC refinance. Annex 7 Appendix II Page 1 SCALES OF FINANCE FOLLOWED BY ASSAM COOPERATIVE APEX BANK 1. Scale of Finance for AHU Paddy for the Year 1976 (a) Crop: HYV Paddy, Ahu/HYV regular Ahu Requirements Per Bigha 1. Seeds: 4 Kg @ Rs. 3.00/Kg -- Rs. 12.00 2. Fertilizers: Urea 30 Kg @ Rs.1.86/Kg -- Rs. 55.80 I S/P 33 Kg @ Rs.1.08/Kg -- Rs. 35.64 IRs.102.33 M.O.P.=: 9 Kg @ Rs.1.21/Kg -- Rs. 10.89 ISay Rs.103.00 OR "Amrit" Granulated Fertilizers 16:8:8 = 75 Kg -- Rs.103.00 3. Pesticides -- Rs. 32.00 4. Irrigation (Where necessary) -- Rs. 50.00 5. Cash-Component -- Rs. 30.00 Total of 1+2+3+4+5 -- Rs.227.00/Bigha (b) Crop: Local with N Fertilizers 1. Seeds: (Farmers own seeds will -- be used) 2. Fertilizers: Only Urea @12 Kg/Bigha @Rs.1.86/Kg -- Rs. 22.32 Say Rs.23.00 ANNEX 7 Appendix II Page 2 2. Scale of Finance for Rnbi Crops in Assam, 1975/76 (Per Bigha & in Rs.) (a) Wheat Irrigated. Cost Expected Yield Seed. 14 Kg 38.00 5 Qtl. = 525.00 Less Cost = 200.00 325.00 Fertiliser: Urea 23 Kg = 42.78 S.P. 33 Kg = 33.64 M.O.P. 8 Kg = 9.68 86.10 Pesticides: 5% B11C dust 4 Kg I Celphos tablet or 13.50 Ratobar 300 GMS. ( Irrigation: Ist. after 21-25 days I 2nd after 60-65 days I 40.00 3rd after 80-85 days I Cash Component: 20.00 TOTAL =197,60 (b) aThe.at Rainfed: Seed 14 Kg = 38 00 3.5 QtL. = 367.50 Less Cost = 118.50 249.00 Fertilizers: Urea 12 Kg = 22.32 S.P. 17 Yg = 18.36 M.O.P. 5 Kg = 6.05 46.75 Posticides: Same as irrigated = 13.50 Cash Component: = 20.00 (c) Vheat non-pIckage: Cost 14 Kg = 38,00 1.5 QUI. = 157.50 VertiIi.zer = Nil Less Cost - 38.00 Pos t i c i ides Nil afuJI Compow-1t. - Nil T.19. S 3 T.00 ANNEX 8 INPur SUPPLIES, MARKETING AND STORAGE Table of Contents Page no. INPUT SUPPLIES I. BACKGROUD 1 Fertilizer 1 Seed 3 Pesticides Implements 4 II. PRINCIPAL CONSTRAINTS AND PRIORITIES FOR ACTION 5 III. ACTION PROGRAM 6 Margins and Subsidies 6 Rationalization and Strengthening of Supply Institutions 9 Development of Improved Farm Implements 11 Inputs Supply Cell 11 MARKETING AND STORAGE 12 Appendix: AAIDC - Analysis of Expenses ANNEX 8 Page 1 INPUT SUPPLIES, MARKETING AND STORAGE INPUT SUPPLIES I. BACKGROUND Fertilizer (Consumption, Production and Distribution) 1. Consumption: Fertilizer consumption in Assam (excluding fertilizer use on tea) is the lowest: in India, at about 2-3 Kg nutrient/ha. Apart from a significant inrease in 1972/73, when Government distributed highly subsidized fertilizer as part of a crash food program after the drought of that year, there has been no noticeable increase in fertilizer consumption over the past few years: Table I. CONSUMPTION OF FERTILIZERS PER UNIT OF CROPPED AREA (Kg/ha) AND NUMBER OF SALES POINTS IN SELECTED STATES Sales Points 1973/74 1974/75 Zone/State 2/1/75 N P205 K 20 Total N P205 K 20 Total Central 7.8 2.4 1.0 11.2 7.2 1.5 0.7 9.4 U.P. 12,349 14.3 3.8 2.2 20.3 14.3 2.1 1.4 17.3 East 6.2 1.7 1.7 9.6 7.5 1.7 1.4 10.6 Assam 262 1.9 0.2 0.7 2.8 1.4 0.4 0.5 2.3 Bihar 3,789 6.6 1.5 1.0 9.1 8.3 1.5 1.1 10.9 Orissa 4,109 6.2 1.7 1.1 9.0 4.9 1.3 0.9 7.1 West Bengal 16,000 7.4 2.5 3.7 13.6 11.6 3.0 2.9 17.5 North 27.7 7.5 2.4 37.6 23.1 4.6 1.5 29.2 Punjab 5,310 41.4 12.8 4.0 58.2 36.7 8.2 2.4 47.3 South 15.1 6.6 4.7 26.4 15.8 5.4 4.1 25.3 West 10.4 4.9 2.0 17.3 9.0 3.5 3.5 16.0 All India 11.2 4.0 2.2 17.4 10.8 2.9 2.1 15.8 ANNEX 8 Page 2 Table II. FERTILIZER CONSUMPTION IN AGRICULTURE IN ASSAM (nutrient tons) N P K Total 1969/70 3,440 1,880 1,150 6,470 1970/71 4,120 1,330 1,000 6,450 1971/72 4,900 2,050 1,200 8,150 1972/73 7,260 3,250 1,900 12,410 1973/74 5,132 645 1,613 7,391 1974175 3,780 319 434 4,533 2. Production: The most important producer of fertilizer in Assam is the Fertilizer Corporation of India. The plant, located at Namrup, has an annual capacity of about 55,000 tons of urea and 100,00 tons of ammonium sulphate, equivalent to about 45,000 tons of nutrients. Actual production figures for the past few years are given below: 1970/71 1971/72 1973/74 1974/75 1975/76 ---------------------000 MT -------------------------- Urea 15 40 46 49 55 Ammonium Sulphate 63 55 60 64 69 There has been no detailed evaluation of the Namrup plant, but it is doubtful if the existing facilities could be made profitable without major modifications. 1/ The plant is being expanded to 330,000 TPY of urea and the new units are expected to come into operation in 1977. Since Assam is already a surplus producer of fertilizer, incremental production will have to be disposed of in neighboring states. 3. Distribution: The two main fertilizer distributors in the State are the Assam Agro Industries Development Corporation (AAIDC) and the Fertilizer Corporation of India (FCI). AAIDC 2/ was incorporated in 1967 with an authorized share capital of Rs. 25 million and paid up share capital of Rs. 21.7 million 1/ Source: World Bank Report No. 928-IN -- Appraisal of a Project to Improve Fertilizer Production (November 24, 1975). 2/ AAIDC's main objectives are procurement, distribution and sale of agri- cultural machinery and inputs (para 22) - with the exception of seeds - and the operation of custom hire centers. ANNEX 8 Page 3 contributed by GOI and GOA on a 50-50 basis. The Corporation maintains an office and storage facilities at each district and sub-division (a total of 24) and appoints fertilizer distributors in the private and cooperative sectors. -FCI has a network of 110 licensed dealers and distributors. The total number of sales points (on February 1, 1975) in Assam was 262, less than in any other State (Table 1). To increase the number of sales points and to reach the more remote areas, GOA recently set up 664 multipurpose cooperatives (described in Annex 9). So far they have distributed very little fertilizer or other inputs. The fertilizer distribution system is hampered by the low distribution margin, set by GOI (paras 12-19). This, combined with low sales volumes and high overheads, virtually ensures that AAIDC and the GPL societies make a loss on fertilizer distribution. Even with a transport subsidy of Rs. 10/ton, AAIDC rarely delivers fertilizer as they find it unprofitable to deliver less than 3 tons at a time, and the GPL society or the retailer have to make their own arrangements to pick up fertilizer from AAIDC's store. It is, therefore, hardly surprising that there are few retail- ers and that many GPL societies have not yet become licensed dealers. The situation of the FCI dealers is better as each has been awarded one or more tea gardens which provide a guaranteed market. FCI informed the mission that without this market, they would not have been able to appoint even this number of dealers .-4 distributors. Seed 4. The supply of seed is the responsibility of the Assam Seeds Corpor- ation (ASC), set up in 1967 with an authorized share capital of Rs. 10 million. ASC undertakes seed production on its own farms, procurement of high yielding varieties, mainly wheat,, from outside the State (principally from the National Seeds Corporation, the Tarai Development Corporation, and private sector suppliers, such as Haryana Seeds Corporation) and is also responsible for seed distribution. Seed production and procurement are described in Annex 6. This annex is, therefore, confined to a brief description and analysis of the distribution system.. 5. Prior to setting up the GPL societies and the reorganization of the extension service, seed was distributed through the following channels: (i) Eight ASC branches/offices; (ii) 16 Agents; (iii) Sub-divisional Agricultural Offices, and (iv) Block Development Offices (BDO). Most of the physical distribution of seed under (iii) ad (iv) was done by VLWs, the majority of whom will now devote all their time to extension. Their func- tions in supplying inputs are meant to have been taken over by the GPL societies; ANNEX 8 Page 4 70 have become ASC agents but the capability of the societies to supply seed or other inputs is limited (Annex 9). ASC is short of transport facilities and, in any case, does not transport seed to the GPL societies unless supply- ing a full truckload. The GPL societies have no transport of their own and margins on seed distribution, like fertilizer, are insufficient to cover costs (paras 20-21). Furthermore, once the VLEWs are enagaged solely in extension, there will be no one responsible for the estimation of seed requirements. In short, the seed distribution system, never good, will need urgent overhaul if it is not to break down altogether. The situation is exacerbated by the low and erratic demand, which provides insufficient throughput to support ASC's overhead and operating costs. Not surprisingly, the Corporation operates at a loss. Pesticides 6. Pesticides are distributed by AAIDC and private dealers. The latter are active in this sector as margins are not controlled. For example, Rallis, a private company, which used to distribute fertilizer but gave up doing so when it became unprofitable, have a sizeable pesticide business in which they allow margins of 9-15%. Data on distribution of pesticides are not available. Implements 7. The great majority of farmers use only traditional implements which are either made on the farm or bought very cheaply from local craft- men. Less than 1% of farmers own mouldboard ploughs and manual or bullock- drawn row seeders are almost unknown. A recent survey shows one tractor per 5,500 ha of crops and an even lower density of power sprayers and thresh- ers. At the present stage of development the widespread introduction of . motorized equipment does not appear justified, but there is a great need for improved bullock-drawn and manually operated implements to allow the majority of farmers to increase the rate of land preparation which is obtained with their existing draught animals, to popularize row seeding and to allow im- proved standards of weed control (see Annex 1). 8. Development of such equipment is the responsibility of the Assam Agricultural University (AAU). Two "improved ploughs" -- perhaps the most important single item needing development -- have reached prototype stage. However, AAIDC, which is responsible for local machinery manufacture, has not yet put them into production. Instead, it is concentrating on hand tools (which are of superior quality to its private-sector competitors but have a limited market because of their higher prices), components for pumpsets, power tillers, threshers etz., anid a comprehensive range of sprayers and tools for four-wheeled tractors, which are within the means of only a minority of farmers. AAIDC sales of simple bought-in drills and row weeders are also small. ANNEX 8 Page 5 II. PRINCIPAL CONSTRAINTS AND PRIORITIES FOR ACTION 9. The major constraints to the supply of inputs are (a) lack of farmer demand, (b) inadequate incentives to distributors and manufacturers (e.g. of farm implements), both institutional and private, and (c) the organizational and financial weakness of institutional suppliers. 10. The mission recommends increasing foodgrain production principally through the adoption of progressively more sophisticated farm practices, begin- ning with a package of improved cultural methods. This would result in a rather gradual increase in the demand for purchased inputs, which can be largely self-financed. The mission estimates (Annex 1, paras 38 and 39) incremental fertilizer requirements at 2,800 tons of nutrient by year 3 and 18,500 nutrient tons by year 6. Although a significant percentage increase, this is small in absolute terms and represents only a doubling of present total fertilizer distribution, including tea (about 20,000 nutrient tons). Incremental seed requirements-are also expected to be small - about 3,200 tons by year 3 and 11,500 tons by year 6. 11. In sum, i.puts are not seen as a major constraint to agricultural development : present or in the immediate future. The institutions dealing with input supplies are, however, weak, and their problems are compounded by low throughput. What is required is a flexible distribution network, com- mensurate in size with the volume of business and able to respond to in- creasing demand. It will take some years to improve performance, to create a business climate which will stimulate them to greater efforts and to tap the vast potential of the private sector. The priorities for action, in our judgement, are: (i) to increase distribution margins to make handling of inputs commercially attractive either by: (a) liberalizing the fertilizer trade so that prices are determined by free competition on the open market ; or (b) increasing the fixed margins. (ii) to reduce the overheads of institutional suppliers by making the size of the organizations commensurate with the volume of business and increasing their efficiency which requires, in particular, (a) rationalization of AAIDC and ASC, and (b) reassessment and overhaul of the GPL societies (see Annex 9); ANNEX 8 Page 6 (iii) strengthening institutional credit institutions to provide production credit and remove constraints, such as the scale of finance (Annex 7); (iv) expanding AAU's program for development of improved animal-drawn implements and hand-tools, which, once tested, should be freely available for AAIDC or the private sector to manufacture and distribute; (v) setting up a cell in the Department of Agriculture to estimate requirements of inputs, particularly seed and pesticides, and to ensure timely and adequate supply. III. ACTION PROGRAM Margins and Subsidies 12. There are real costs in having fertilizers, seed or other inputs available in remote rural areas at the right time. Firstly, the direct costs of transport, handling, storage (warehousing) and the cost of capital and, secondly and possibly as important, the risk factor on stocks, parti- cularly of seed, which cannot be held over from one season to another and may have to be destroyed. These costs should normally be borne by the con- sumer (the farmer), in the form of higher-prices, or, in perhaps in some cases, by Government (the tax payer) in the form of subsidies. At present they are forced onto the distributor, and are a major disincentive to the establishment of an efficient distribution system. 13. Fertilizer: The margins passed on and retained by AAIDC are: Retail margin Retail margin Margin retained when lifted from Consumer as % by AAIDC AAIDC store Price of price Urea (Rs/MT) 60 55 1,850 2.9 Ammonium Sulphate (Rs/MT) - 22 940 2.3 Murate of Potash " 50 30 1,120 2.6 14. As seen from the table above, the retail margin for urea is Rs. 55/MT (3%) when lifted from the AAIDC store. From this, the GPL society or private AAIDC retailer has to cover overhead costs, transport cost from the AAIDC go- down to the society (an average distance of some 50-60 miles), storage costs and the cost of capital. The cost of capital alone is about 1-1/2% per month, and hence two months' storage wipes out any profit. The margin retained by AAIDC is also insufficient to cover costs. AAIDC estimates that it incurs a loss of Rs. 60 on each ton of urea distributed (see Appendix). Margins for ANNEX 8 Page 7 FCI's private dealers and distributors are also low and unlikely to lead to an increase in the number of dealerships. Private dealers have to place a minimum order of one railway wagon (16/18 MT) load. Their margin is Rs. 100/ MT on urea and distributors are given Rs. 50 from this. Without the quick turnover provided by the tea gardens, the margin (2.8%) would be totally inadequate. 15. Studies by the National Cooperative Development Corporation (NCDC) and the Fertilizer Association of India indicated that the margin (in early 1975) should have been between Rs. 220 and 240 to enable the distribution business to be profitable. The mission estimates that, given the low volume of business and inherent risks in Assam, the margin should be even higher than this'level. A disadvantage of fixed margins, however, is that,.while distribution may be good near to the point of supply, the margin 4 Ag,ely sufficient to induce distribution to remote areas. 16. One solution to this problem would be to liberalize all controls over fertilizer distribution and to allow prices to be determined by the competitive market. Prices would rise to reflect real costs of transport and handling, and would increase more in remote areas than in more acces- sible areas. However, since Assam will shortly have a large*surplus of fertilizer, and both the major distributors and the cooperative and private dealers would be competing for customers, there is no reason to believe that prices would rise excessively. 17. An alternative solution would be to retain fixed handling margins (at a higher level), but to allow a differential transport allowance. This can be calculated on a ton-per-kilometer basis and determined separately either for each distribution zone (CD block or Gaon Panchayat) or individually for every registered dealer. In either case, every dealer would be obliged to display the maximum price, at which he can sell different fertilizers. 1/ 18. If neither of these possibilities (resulting in a higher consumer price) is acceptable, Government may have to consider injecting subsidy into distribution. One mechanism would be for AAIDC to supply fertilizer to the GPL societies on a consignment basis. The system would work broadly as follows: (i) The GPL society would assess the likely requirement for fertilizer to be sold for cash and credit and 1/ An interesting alternative Lo controlled transport allowances, being adopted in certain places in India, is to allow the dealer to determine his-own transport costs and add them to the fixed ex-rail level price plus controlled handling margin. By billing for transport costs on a separate invoice, this system avoids the legal complication of exceeding controlled consumer prices. It is left to competition to ensure that dealers do not add excessive amounts for transportation costs. ANNEX 8 Page 8 pass on the information to AAIDC. The fertilizer supplied on credit would be estimated from the credit limit statement, completed by the GPL society and sanctioned by the financing bank. (ii) AAIDC would supply and transport fertilizer to the society; the fertilizer would remain the property of AAIDC. (iii) Farmers would lift fertilizer as required either for cash or against their credit limit, the "scale of finance" determining the credit limit and not quantities of inputs '(Annex 7 paras 33 and 34). Forms would be completed in t±iplicate, one kept by the GPL society, one sent to AAIDC and one sent to commercial bank which would then make payment to AAIDC. 19. Fertilizer would thus be available on demand, preventing late arrival, one of the -jor bottlenecks at present. The GPL would not have to pay the ---t of capital for fertilizer stored. This would have to be borne, however, by AAIDC and details need to be worked out to assess the subsidy required to reimburse AAIDC for this and the transport costs incurred from the godown to the society. To prevent the society from overordering, it would be necessary to ensure that part of the cost is borne by them; this might be done by making them pay fertilizer storage costs. The scheme would involve the commercial banks in increased paper *ork but the banks expressed willingness to try the scheme on a pilot basis in an effort to increase the volume of credit. This scheme would not be a complete solution because it would do nothing to relieve the problems faced by the private dealer. 20. Seed. Margins allowed to licensed retailers are 5% on locally produced seed and 2-1/2% on certified seed procured outside the State. In theory, ASC agents have to place orders two months in advance of require- ments with a down payment of 90%. Much the same situation, therefore, exists as with fertilizer with the cost of capital exceeding the margin, leaving aside transport and overhead costs. The mission therefore recom- mends that the margin be increased to provide an adequate incentive to distributors. 21. However, seed distribution is more complex than fertilizer in that excess stocks have to be discarded ('he risk element). The obvious way for a supplier to avoid this is to underordeL, in which case farmers suffer. If the decision is taken that seed should be available on demand the risk cost has either to be incorporated in the margin, which presents obvious difficulties since excess stocks will vary from year to year, or else Govern- ment has to introduce a buy-back system. Thus the special cell, which it ANNEX 8 Page 9 is proposed should be set up in the Department of Agriculture (para 27), would place the order withi ASC who would be respon-sible for procurement, storage and distribution and would then purchase residual stocks. This would again involve a Government~ subsidy. Rationalization and Strenythening of Supply Institutions 22. AAIDC. As stated earlier, AAIDC is beset with a low turnover and the need to maintain a branch with an office and storage facilities at each district and subdivision, if it is to provide even a rudimentary supply net- work. Time did not permit more than a brief look at the corporation's capital and operating structure. The mission formed the impression that it is over- staffed, that it undertakes several uneconomic activities (custom service centers) that have little social value, and that it maintains storage ANNEX 8 Page 10 facilities and capital equipment that are greatly underutilized. 1/ The mission recommends a complete rationalization of AAIDC's distribution system, including storage facilities, preferably by a team of management consultants, and that serious consideration be given to closing down the custom service centers and disposing of their equipment. 1/ The mission visited one AAIDC sub-divisional branch, probably typical of others, which had the following staffing pattern: a) One sub-divisional branph manager; b) One storekeeper; c) One accountant; d) One peon; e) Two chowkidars. Total annual salaries are estimated at about Rs. 30,000. In addition, the branch had Three godowns, one of 1,000 MT, one of 500 MT, and one of 50 MT capacity. Assuming a rent of about Rs. 2/MT, the total annual overhead cost is approximately Rs. 60,000. Last year, the branch handled some 200 MT of fetilizer, about Rs. 50,000 of pesticides and about Rs. 20,000 of implements. At best, the operation is running at a loss of some Rs. 40,000. AAIDC estimates that it loses Rs. 60 per ton of urea distributed, Rs. 47 on super-phosphate and Rs. 42 on murate of potash (see Appendix ). Attached to the sub-divisional branch was a custom service center with the following staffing pattern: a) One mechanic; b) One tractor operator; c) One peon; and d) Seven laborers. The custom service center owned and operated the following equipment: a) Four tractors which last year, had ploughed/harrowed a total of 400 acres. b) Ten 5-HP pumps. Last year, four pumps worked a total of 55 days. Six pumps were idle throughout the year. c) Eight 9-HP pumps. Last year, -e pump worked 14 days. Seven were .idle throughout the year. d) Two 18-HP pumps. Last year, one pump worked five days. - The others was idle throughout the year. Thus the custom service center tied up a considerable amount of capital equipment and staff, both idle much of the year. ANNEX 8 Page 11 23. ASC. The production and procurement aspects of ASC's operations are discussed in Annex 6. In brief, it is recommended that ASC seed pro- duction should be concentrated at one or two farms and should be confined to varieties not available from outside the State. It is also suggested that ASC's capability as a procurement agency should be strengthened mainly by training of staff and improvement of storage, transport and disinfestation facilities. For these two functions, it would not be necessary to maintain branches throughout the State. However, distribution of 5,000 tons of seed hardly warrants branches throughout the State. In view of the envisaged continuing low turnover, it is suggested that the distribution functions of ASC be amalgamated with those of AAIDC, and that ASC branches be closed down. It is important, however, that continuing accountability be maintained from procurement through processing, storage and distribution. Thus ASC should still be made responsible for distribution, but there is no reason why the overheads of one or both of these organizations could not be substantially reduced. 24. GPL Societies (see Annex 9) 25. Strengthening Institutional Credit (Annex 7) Development of Improved Farm Implements 26. There is a great need for improved bullock drawn and manually operated implements (para 7). Development of such equipment, which would consist mainly of miniaturization of designs from elsewhere to match them to the draught capability of local bullocks, is the responsibility of the Assam Agricultural University. The mission believes that public sector activities in this field should be re-oriented in future to. give more direct support to the type of extension program outlined in Annex 2. This would entail an expanded program at AAU for the development of improved animal-drawn implements and hand tools, the tested designs of which should be freely available for AAIDC or the private sector to manufacture. AAIDC's oper- ations should give prominence to manufacturing and/or distribution of these designs at prices which would ensure a high volume of sales. Inputs Supply Cell 27. The mission recommends that a special cell be set up in the Depart- ment of Agriculture to estimate input requirements, to inform the supply institutions what likely demand is going to be and to ensure that they pur- chase sufficient inputs, particularly seed, on time (see buy-back system, para 21). If the extension service, for example, suddenly find the need to recom- mend a pesticide after, say, an outbreak of pests, this cell would coordinate with the institutions to ensure prowpt delivery. ANNEX b Page 12 MARKETING AND STORAGE 28. The Assam State Cooperative Consumer and Marketing Federation and the Food Corporation of India are the two Government institutions charged with procurement of foodgrains. Procurement of paddy for the past few yeas has been: 1970-71 124,000 MT 1971-72 130,000 MT 1972-73 132,000 MT 1973-74 168,000 MT 1974-75 143,000 MT Apart from the recpnt 1975/76 rabi season, there has been no significant procurement of wheat. In fact, wheat has been imported into the State for distributiji, about 150,000 to 300,000 MT annually between 1970 and 1975. 29. The procurement price, about Rs. 750/MT for paddy (Rs. 1,050/MT for wheat) has generally acted as a support price; there is no levy system in Assam. The movement of grain is, however, severely restricted and surplus areas are effectively sealed off, thus forcing the free market price below the procurement price and enabling Government to buy at the procurement price (even in deficit years, there are pockets with surplus grain). 30. The Marketing Federation and the Food Corporation appoint agents such as the GPL societies (Annex 9) to procure from farmers, giving a com- mission of Rs. 30/MT. In turn, the GPL societies frequently contract out to sub-agents who are paid up to Rs. 25/MT (a 3.3% commission, based on the procurement price of Rs. 750/MT). 31. Storage owned by the various agencies dealing with procurement and distribution of foodgrains is: The Food Corporation of India 91,500 MT The Central Warehousing Corporation 24,100 MT The State Warehousing Corporation 27,130 MT The State Government 19,800 MT Marketing Societies 28,400 MT 190,930 MT ANNEX 8 Page 13 32. Agencies such as AAIDC and the ASC also have storage facilities far in excess of requirements. In addition, there is considerable private storage. Much of the storage is in disrepair, much is underutilized, only' some is suitable for storing seed. The Food Corporation, Warehousing Corporation and the GPL Societies have plans to expand storage. An assess- ment needs to be made of the quality and quantity of storage available, including storage which can be rented and storage suitable for seed to pro- vide the basis for a rational construction program and to identify storage that should be transferrEd from one institution to another. Such a study would also provide the essential data needed from which storage for marketing the increased production from the project can be planned. Annex 8 Appendix AAIDC: ANALYSIS OF EXPENSE (Per Metric Ton of Fertilizers) Particulars Urea Superphos- Muite of phate 16% Potash Rs . Rs. s . (1) Handling & Transport cost from the Railhead to the Corporation's godown ... 20.00 20.00 20.00 (2) Storage cost - godown overheads *** 15.00 15.00 15.00 (3) Incidental expenses - rebagging cost staking etc. *** .** ... 5..00 5.00 5.00 (4) Transit & Storage losses - at the rate 40.00 40.00 40.00 of 1 per cent of the cost of fertilizers 17.35 8.97 10.15 (5) Cost of investmen.t (taking into account the aver-- pay-back period at 2 months) interest on the working capital at the rate of 181 p.a.(interest for 2 months) 53.25 28.11 31.65 (Calculated on cost plus expenses of Rs.40) 110.60 7 (6) Administrative expenses - office oncost 10.00 10.00 10.00 (administration overheads) Total cost:- 120.60 87.08 91.80 Less the amount of margin earned by the Corporation (net margin received) 60.0o 40.00 50.00 Net Loss/Deficit - per Metric Ton 60.60 . 47.08 41.0o Note- *(1)Purchase price of fertilizers per M.T.- 1. Urea .. .. Rs. 1,735.00 2. Superphosphate 16%.. Rs. 897.00 3. Muriate of Potash .. Rs. 1,015.00 (2) The interest on work.nr, capital is Worked on the cost prioe of fertilizer plas 'he expenses of Rs.40 per M.T. (items of expenses under serial 1, 2 and 3 above) (3) The transit and storage losses of 1% is worked on the cost price of fertilizers. ANNEX 9 GAON PANCHAYAT LEVEL SOCIETIES Table of Contents Page no. I. BACKGROUND 1 II. PRESENT POSITION 2 III. CONSTRAINTS AND RECOMMENDATIONS 3 Conflict of Objectives 3 Viability of Cooperatives 4 Strengthening Administration 5 IV. POSSIBLE PROJECT COMPONENTS 8 Appendix: Objectives of Each Gaon Panchayat Cooperative Society ANNEX 9 Page 1 GAON PANCHAYAT LEVEL SOCIETIES I. BACKGROUND 1. Prior to 1973, there was a three tier cooperative credit structure in Assam: at the State level the Assam Cooperative Apex Bank, at the dis- trict level seven .Central Cooperative Banks, at the village level over 3,000 Primary Agricultural Credit Societies. Because of high overdues, the Reserve Bank of India (RBI) prepared a Master Plan in 1971/72 to restructure cooper- ative credit in the State calling for the reorganization of the Apex and Central Cooperative Banks and for the formation of 150 newly organized or re-organized primary credit societies into multipurpose cooperative societies on a pilot basis. The plan had hardly taken shape when the Government of Assam took the decision to set up 663 (now 664) Gaon Panchayat Level (GPL) Societies throughout the plains districts, following the concept of the Farmers Service Societies recommended by the National Commission on Agricul- ture. Each society is adopted by a commercial or cooperative bank. The Societies e given many functions (for details see Appendix ), but they have four major functions: (a) distribution of essential commodities; (b) procurement; (c) supply of inputs; and (d) supply of credit. For each GPL society the staffing pattern proposed in the plan was for a secretary, an accounts clerk, and a stores-cum-sales assistant. The au- thorized share capital is Rs. 2 million and each society has a maximum borrowing power of 20 times of its paid up capital and reserves minus accumu- lated losses. 2. Management of the society rests with an 18-member committee. To prevent the Management Committee falling into the hands of the more powerful political and business interests, the bylaws provide that 8 members be elected from the weaker sections of the community (those who own less than 8 bighas of 1/ Annex 7 contains a detailed description of credit institutions in Assam (including the credit functions of the GPL societies), Government pro- posals to restructure the institutions and recommendations for action. Annex 8 describes input supplies, marketing and storage with reference to the GPL societies as one of the agencies dealing with these functins. The GPL societies are, thus, partly described in Annex 7 and 8, but because of the emphasi§ Government places on them, it was felt that their activities should be summarized in one Annex. ANNEX 9 Page 2 land and whose income is less than Rs. 2,001) and six of the remaining members be appointed. So far no elections have been held.and all members have been nominated by Government; this is expected to continue for a further three years. 3. GOA also set up the Assam Cadre Management Cooperative Society (ACMCS) to maintain and train a cadre of secretaries and to frame the rules concerning service conditions. The membership of the ACMCS was to have consisted of the State Government, Assam Cooperative Apex Bank, State level cooperative institutions and the financing banks. GPL societies would be nominal members, with no voting rights. The objective of the ACMCS and the system devised to elect the Management Committee is to form a cadre of secre- taries who would be independent of local village politics and would be answer- able to the financing banks and the State Government. II. PRESENT POSITION 4. The GPL Societies are presently weak and unable to carry out their functions. Provision of inputs and credit, the priority functions of the co- operatives, is still extremely low. In Rabi 1974/75, 4,085 farmers borrowed Rs. 1.2 million or an average of Rs. 219 per borrowing member. In Kharif 1975, and Rabi 1975/76 the position was no better with 2,536 and 3,843 borrowers respectively throughout the entire State. The GPL societies have sold almost no fertilizer, seed or pesticide for cash. The credit figures, thus, reflect the amount of inputs supplied through cooperatives. The mission visited about six GPSs in one district and found they are operating as little more than fair price shops. Societies were also handling procurement of paddy and wheat, although actual procurement was generally through appointed agents (Annex 8, para 28 et seq). The overall volume of business was insufficient to warrant employment of more than one part-time staff, yet several societies were employing four or even five staff and salaries were undoubtedly paid from share capital. The mission understood that the societies it visited in the field were fairly representative of the State as a whole. 5. In spite of their low level of activity, the cooperatives have very considerable political backing and a substantial manpower input from the Cooperative Department. At each subdivision, there are some 40 to 80 co- operative officers and one officer has been appointed full-time to supervise the activities of 4 GPL societies, a total of 166. To supervise four societies at their present low level of activity should not require much time; however, to play an active role in strengthening them requires specific instructions on what they should be trying to achieve, and how to do it. No such instructions have been issued by the Department. In addition, there is one senior inspector for only 45 societies and a separate staff for auditing. 6. In sum, the setting up of 664 societies has been a major under- taking which has been extremely demanding on the Cooperative Department's ANNEX 9 Page 3 staff time. Progress, in terms of membership, has been rapid, and nearly 500,000 rural people are now paid up members. Unfortunately, very few of its members have so far benefitted from their membership. 1/ It is clearly important to give a high priority to improving the service pro- vided to farmers as quickly as possible. III. CONSTRAINTS AND RECOMMENDATIONS 7. No plan or strategy for the future development of the cooperatives was shown to the mission. The mission was concerned with the lack of specific proposals- to strengthen ihe cooperatives. The only concrete proposal is for the construction of offices-cum-storage facilities for each GPL society (Annex 8, paras 31 and 32). The Cooperative Department was confident that the societies would eventually become viable and that this could be achieved partly through an expansion of staff and partly by increasing turnover. Unfortunately, the task jis rather more complex and before the GPL societies can function effectively the following issues need resolving: Conflict of Objectives 8. The GPL societies have such a wide range of objectives (see Appendix) that in the early years it is clearly essential for them to con- centrate effort on only the most important. GOA recognizes that the pri- mary objective of the GPL societies is the supply of inputs and hence also credit, which is inextricably linked to input supply. When setting them up, it was recognized that the throughput of credit and inputs alone would provide insufficient income to permit them to become viable. Distribution of essential commodities and procurement were, therefore, added to their functions, and as they are both easier and more profitable activities they have distracted attention from priority functions. In addition, there is a latent conflict between the cooperatives' function as a farmer service society and their function as government procuror. At present, since there is no cumpulsory levy system in force in Assam, this conflict has not emerged, and following the good 1975 season, for example, the GPSs were buying grain at a support price. However, in a poor year, the free market price would be above the procurement price, and should a compulsory levy be introduced in the future, the same cooperative society would be both the supplier of farmers' needs (inputs and credit) and Government's forcible procurement agent. The multi- purpose functions need re-examining in light of possible conflict of objec- tives, and at least in the short term emphasis should be given to input supplies and credit.. 1/ One farmer interviewed by the mission may be typical of cooperative members. When asked why he had joined the GPL society, he responded that he had joined so that he could get fertilizer and HYV seeds. However, he had so far failed to obtain either fertilizer or seed, and he added that this was because the cooperative stocked neither. ANNEX 9 Page 4 Viability of Cooperatives 9. The Government of Assam contributes Rs 9,000 share capital to each society, and the salaries of GPL secretaries are paid by the Assam Cadre Management Cooperative Society (paras 3 and 19) on a tapering basis (100% in year 1, 66-2/3% in year 2, and 33-1/2% in year 3). Apart from this, the GPL Society receives no financial support. Since the commercial banks have not yet joined the ACMCS, salaries are effectively paid by Government. Salaries of other staff and operating expenses have to be borne from society earnings. 10. Yet societies have little basis for viable operations, since few of their activities offer a reasonable profit and several incur losses. With about 4,000 loans last season (an average of 7 per society), the profit earned from credit is negligible. Nor is the margin on inputs sufficient even to cover the costs incurred by societies in procuring and stocking them (Annex 8). The low margins for supply of inputs partially explains the societies unwillingness to undertake activities other than distribution of essential commodities. However, with the exception of cloth on which the margin is 10%, the margins for th- :e are also low. 11. Thus, although Government assumes that the GPL societies will be viable in three years, their low profit margins - particularly on the priority items such as fertilizer and seed - mean that they will continue to make losses and that they will continue to require financial support from Government. To break out of this vicious circle, it is first essential to make a realistic assessment of the likely volume of input supplies and credit that will be channelled through the societies (for mission estimates see Annex 1, paras 38 and 39) and the volume of procurement and distribution of essential commodities. The Government could then decide on a formula (probably incorporating both adjustments to margins and increased financial support) to allow GPLs to break even over a 3-5 year period. Such a formula should recognize that the cooperatives will remain unviable until their throughout expands, but provide built-in incentives for the societies to expand, rather than to rely on Government subsidies. 1/ 12. Other factors affecting both the viability of the cooperatives and hampering efforts to strengthen them are discussed in other parts of the report with recommendations for action (see particularly, Annex 7 for discussion of the scale of finance, collection of overdues, and measures for rehabilitating the Apex Bank, and Annex 8 for a reference to cooperative storage needs). 1/ The most reasonable approach might be to determine a break-even budget, based on the turnover expected to be reached in, say, five years' time at an average level of administrative competence. Margins would be set at whatever level were necessary to break-even on this budget, and Government would determine a formula for subsidizing the societies' operations until they reached this break-even level of business. ANNEX 9 Page 5 Strengthening Administration (a) Organization 13. No single department has overall responsibility for planning and organization. The principal responsibility for cooperatives lies with the Cooperative Department. However, in regard to GPLs, an increasing level of responsibility has been assumed by the Monitoring and Servicing Cell in the office of the Chief Minister. Set up primarily as an evaluation unit, the Monitoring and Servicing Cell has become increasingly involved in planning and implementation and, rather than concentrating on improving their perform- ance in carrying out their priority functions, has been anxious to expand the activitiesy of GPLs even further. 14. The mission considers it to be essential that the responsibility for planning the development of cooperatives and for implementation, should be firmly centered in thE Department of Cooperatives. The Department may need to be suitably strengthened to undertake this job, and it might be de- sirable to transfer the Monitoring Cell to the Department for this purpose. However, if Governmtat considers that the cell should remain under the Chief Minister, a- 'n independent monitor, the mission would suggest that its activities are restricted to monitoring and evaluation. (b) A Rehabilitation Program 15. Setting up 664 multipurpose societies in place of 3,000 defunct primary credit societies has been a formidable task. It will not be pos- sible to rehabilitate all, societies at the same time. The mission recom- mends a phased program based on one of the alternatives below, or a com- bination of both: (i) to set up a number of spearhead teams, based on the AMUL model. A proposal was made by the Banking Advisor to the North-Eastern Council to establish spearhead teams to set up the GPL societies on a viable basis (adjustment of margins will be a prerequisite for this) by, inter alia, increasing membership, making farmers aware of the benefits that can be derived from the GPL societies, ensuring inputs are available on demand and training the secretaries in credit applications. Since there is no successful working model and since the GPL societies are still in an experimental stage, different spearhead teams should try different approaches but, until a schem, 's proven, it should not be replicated on a State wide basis. While the program for strengthening selected societies continues on a phased basis, GOA should reduce the staff on the remainder to a bare minimum, issuing instructions that priority be given to credit and inputs (see Incentive Scheme, para. 18). ANNEX 9 Page 6 (ii) to set up lead GPL societies which would, inter alia, be strengthened with a credit specialist. Since the volume of credit is low and not sufficient to support a credit officer in each society, the credit officer in the lead society would visit and train staff of others on a regular basis. This would increase the catchment area of the lead society, while other societies would remain little more than input distribution and storage depots, with part-time staff. As the volume of busi- ness increases, the number would be increased. (c) Staffing and Training 16. Staffing: Whichever rehabilitation method is followed, it will be essential to strengthen the GPL societies, particularly since there are no alternatives for the supply of credit. Strengthening cooperatives, however, does not necessarily imply an increase in the staff .(most are already over- staffed). Staffing should be commensurate with the volume of business. It is not possible to assess staffing requirements without first assessing the likely volume of business, adjusting margins and determining a plan for phased development. 17. Training: Society secretaries have no practical training in com- pleting loan application forms, appraisal and follow-up. A short duration course of practical training for the secretary and the supervisor should be provided by the financing banks. In addition, a workshop type training course might be held for society secretaries, within the State, possibly by a recognized institution, such as the College of Agricultural Banking, Poona. The course should be worked out by RBI, State Government and financing banks and would be coordinated by ARDC. Training in input dis- tribution could best be through in-service training by the spearhead teams or selected cooperative officers. (d) Incentive Scheme 18. To boost credit and input supplies, it is worth considering an incentive scheme for the staff of the societies, in particular the secretary. Incentives should be related to additional enrollment, particularly of small and marginal farmers, incremental input supplies, incremental loan business over the previous year and to the recovery of loans. The cost of the scheme would either be borne by the financing bank or the Cooperative Department. In addition, merit certificates (prizes) could be awarded to the best secre- taries during a national or ,tatt day celebration. An additional incentive would be to offer the opportunity for the best secretaries to be considered for recruitment into either the Cooperative Department or the financing bank. Conversely, unsatisfactory staff should be identified at an early stage and dismissed without a too cumbersome procedure. ANNEX 9 Page 7 (e) Involvement of Financing Banks and the Assam Credit Management Society 19. So far, 615 of the 664 societies have been adopted by banks, over 60% by commercial banks. 1/ Yet the commercial banks have been reluctant to join the ACMCS. The primary reasons for their not doing so are doubts concerning who will pay the secretaries' salaries and finance losses of the societies after the initial three years. Both questions relate to the commercial banks' lack of conviction that the societies will be or can become viable. This in turn relates to the questions of margins mentioned above. In order to ensure the wholehearted support and commitment of the commercial banks, it will be necessary to review the financial position of the societies and set them up on a basis from which they can become viable. Alternatively, Government has to declare that it is prepared to finance unavoidable losses by the societies on some predetermined formula. Misgivings the commercial banks have about their lack of control over the appointment, actions, and dismissal of secretaries, expressed to the mission, must be discussed and resolved at meetings of the State level coordinating committee (Annex 7 para 40). Until these issues are resolved, so that the necessary conditions exist for the commercial banks to join the ACMCS, the banks are unlikely to give more than nominal support to the societies. (f) Guidance, Supervision, and Control 20. There is currently a lack of guidance, supervision and control. To overcome this the following steps should be taken: (i) The Department supervisory staff (1 per 4 societies - para 5) should be told what it is they are expected to do and how to do it. Supervisors should instigate a system of regular on- the-job training and visits, which should be as much guidance as supervision. The commercial banks have a particularly important role to play in supervising societies' credit functions. The mission found that of the various cooperatives visited, the best was one in which the financing bank had assigned a field officer to five societies, with a rota of regular visits. Although it would be unreasonable to anticipate the appointment of such supervisory staff throughout the entire State at this stage such a program should be taken up along with the phased strengthening of societies. (ii) The deputy/assistant registrar in the concerned-subdivision should carry out periodic surprise checks and the secretary/ chairman of the: scciet; should be made personally responsible for proper action to rectify any lapses or failure to meet targets - see (iv) below. The financing bank should receive a copy of the registrar's report. 1/ As of early June 1976, 656 societies had been adopted. ANNEX 9 Page 8 (iii) The audit of many of the societies is in arrears. This should be rectified and reports passed immediately to the con- cerned financing bank. (iv) A performance budgeting system should be introduced with a proper reporting system and maintenance of separate *accounts for various activities. The Cooperative Department should set targets (including target dates) for distribution of inputs, credit, and submission of credit with statements. Incentives (para 18) should be related to achievement. IV. POSSIBLE PROJECT COMPONENTS 21. It can be seen from the above that the major constraints are administrative and political and not financial. These constraints were fully discussed with the Government and GOI recognized that with or without the project, there is need to reassess the functions and strategy for the developmen, the GPL Societies (as well as the role of AAIDC and the private sector - see Annex 8). No proposals for strengthening the GPLs were put forward during the mission's visit to Assam, but a senior officer was assigned the task of preparing a phased program of rehabilitation. The mission has recommended that the Bank should support any feasible program if it can be prepared and discussed in time for inclusion in the main project. APPENDIX Page 1 Objectives of Each Gaon Panchayat Cooperative Society (i) The main object of the society is to promote the economic interest and well being of the members and the member of its affiliated cooperative societies. The society will help farmers particularly small and marginal farmers, rural artisans and agricultural laborers by providing them integrated credit and other services and facilities for increasing employment, production and income and by organizing services for distribution of consumer goods. (ii) In pursuance of the main objective, the society may ,undertake one or more of the following functions and shall coordinate its activities with those of other institutions in the area and wherever necessary, act as their agents (a) to grant short, medium and long term loans to members mainly for productive purposes (b) to procure, purchase and supply agricultural inputs like fertilizers, seeds, manures, implements, cattle- feed, pesticides, etc., fishery requisites, raw materials,, machines, appliances, etc., for cottage and small scale activities undertaken by members, to work as wholesale and/or retail consumer goods distributor, as the case may be, and provide cereals, essential commodities and other consumer goods to members as well as others (c) to procure, purchase and sell agricultural produces, dairy, animal husbandry and fishery products etc., and cottage/small scale industrial products of its members to their best advantage directly or through cooperative marketing societies or other agencies (d) to promote or own or hire processing units of agricultural produce, dairy and other animal husbandry products, etc. (e) to organize agricultural service activities by owning or hiring agricultural machineries like tractors, power tillers, bulldozers, sprayers and pumpset, etc., or arrange for custom servicing for agricultural operations for the bene:it of members - APPENDIX Page 2 (f) to render services for improving the breed of live stock of the members by owning or arranging for pro- vision of stud bulls, breeding rams, pedigree stocks etc., and also to run or support a model dairy farm etc. (g) to own or hire godowns to provide facilities to store the products of agriculture and agro-based industries for sale or to store the agricultural inputs meant for sale or for activities as are in the general interest of the community (h) to purchase, own or acquire or obtain on lease, land for the purpose of carrying on agricultural operations as model farm and for the dissemination of modern agricultural techniques (i) to undertake the construction of roads, sinking of wells, construct and repairs of buildings, tanks, canals, irrigation works and other job works etc., by entering into contract with the Government, Local Lodies or individuals and execute the contract through or with the help of members with a view to providing seasonal employment (j) to organize, execute, own and maintain lift irrigation scheme etc. (k) to encourage generally thrift, self-help cooperation among the members (1) to open branches, depots, sale shops and showrooms, and workshops according to necessity in furtherance to the objects under the by-laws (m) to provide agricultural extension service for the benefit of members by employing necessary technical personnel and also by owning and running demonstration and model farms (n) to raise funds by way of deposits and borrowings from members and non-members, including cooperative and commercial banks, financial institutions and the Government (o) to act as an agent of the land development bank or the marketing society or processing society which has jurisdiction over the area of operations of the society, for the disbursement and recovery of long-term loans APPENDIX Page 3 or the supply of agricultural inputs or consumer goods or the sale of agricultural product or products of occupations like milk, eggs, etc., as the case may be (p) generally to undertake such other activities as may be conductive to the promotion of economic interest of members, overall development of the area and the objects specified above as may be approved by the Financing Bank. ANNEX 10 REACHING THE RURAL POOR Table of Contents Page no. Introduction 1 Rural Poverty in Assam 1 The Role of Subsidies in Development I Alternative Measures to Reach the Rural Poor 6 Economic Research and Policy Formulation 6 Research and Deve1opment 7 Measurr- to Offset Diseconomies of Scale 7 Measures to Underwrite Risk 8 Special Incentives 8 Legislation and Administrative Action 9 Ongoing Programs 9 Conclusions 10 ANNEX 10 Page 1 REACHING THE RURAL POOR Introduction 1. The mission's first responsibility was to identify the means to increase production in Assam, and we have not attempted the larger task of developing a strategy for rural development as a whole. However, we are very conscious of the fact that the majority of Assam's prople are in one or more of the categories officially referred to as the "weaker sections" and that, on grounds of both efficiency and equity, it is very urgent to ensure that the process of development reaches as far down into society as possible., Thus, while we do not claim to have studied the problem very carefully, this annex puts together some of the conclusions reached by the mission about the possible impact of the proposed program on the weaker sections. Since Government has put great reliance on subsidies as a device to help the rural poor, we give particular attention to the role of subsidies in development and suggest alternative measures. Finally, we shall suggest the need for a coordinated attack on the problems of rural poverty. Rural Poverty in Assam 2. According to the norms used by the Government of India in the Fifth Plan, which set a minimum per capita consumption level of about R 40 per month at 1972/73 prices, nearly three-quarters of the popula- tion of Assam - or over 11 million people - are below the poverty line. Since over 95 percent of these people are in the rural areas, poverty in Assam is virtually synonymous with rural poverty. The disparities be- tween urban and rural incomes are wide and have been growing wider as the following figures show: 1960/61 1970/71 % increase Total income (R million) rural 2,349 3,068 30 urban 322 831 158 Number of workers (million) rural 2.8 3.7 30 urban 0.2 0.4 107 Income per worker (Rs) rural .827 830 0 urban 1,703 2,126 26 urban/rural 2.1 2.6 - Source: State Planning Board, Assam. ANNEX 10 Page 2 3. There are also wide disparities of income within the rural areas; and there is little sign of any improvement in the distribution of income: % Distribution of State Income Income Group 1960/61 1965/66 1970/71 Lowest 20% 9 9 10 Next 20% 12 8 14 Lowest 40% 21 17 24 Middle 30% 23 24 24 Top 30% 56 59 52 100 100 10 4. Who are the rural poor? While we have no precise definition of the rural poor, it is clear that the majority are to be found on the small, marginal or submarginal farms, which account for over 80 percent of all operational holdings in Assam. 1/ 5. In some districts as many as 40% of holdings are sub-marginal, that is, less than 0.5 ha in extent. Other sub-groups of the "weaker sections" of the population, which overlap with the small and marginal farmers, are the population of scheduled castes and tribes, who together numbered over 2 1/2 million in 1971. Finally, there are the agricultural laborers, including both landless laborers and small farmers who supplement their income with seasonal employment. In 1971 there were over 400,000 agricultural laborers recorded; the typical daily wage is R 4-5 for men and R 3-4 for women. 6. The reasons for rural poverty are many .and complex, but the most important direct cause is the low productivity of agriculture. Of the total rural workers, 84% are engaged in agriculture and allied activities and, with the stagnation of agriculture (see general report and Annex 1), total rural income has increased very slowly and the average productivity of rural workers has fallen sharply in real terms over the last twenty years. The following figures (at 1948/49 prices) from Assam's Fifth Five Year Plan illustrate the trend: 1/ For administrative purposes in Assam farm sizes are classified in terms of bighas (= 0.134 ha) as folI--ws: small farms = 8-15 bighas = 1.07-2.01 ha marginal farms = 3-8 bighas = 0.40-1.07 ha sub-marginal farms less than 3 bighas = less than 0.40 ha and landless cultivators ANNEX 10 Page 3 1951-54 1961-64 1969-72 State income from agriculture (R million) 1,102 1,110 1,357 Agricultural workers (million) 2.2 3.3 3.8 Average product per worker (R) 509 338 355 Impact of Proposed Program on Rural Poor 7. Since poverty in Assam is principally rural poverty and rural poverty is mainly causEd by low agricultural productivity, the proposed program can make a frontal attack on poverty by increasing productivity. The projections of production contained in Annex 1 postulate a 56% increase in foodgrains production between 1975 and 1983, or an average annual growth of about 5.7%. Allowing for population growth, this would repre- sent a growth of about 3% per annum in per capita production or a 28% increase in real per capita income from foodgrains production alone. Thus, a program of the kind advocated could, we believe, have a major impact on rural incomes. 8. The likely effects on income distribution are rather harder to assess. The program might be expected to reduce the overall gap between urban -and rural incomes both directly through the effect on farmers' incomes and indirectly through the increased demand for agricultural labor and services 1/. The effect on income distribution within the rural areas depends on, among other things, the receptivity of rural people to the opportunities offered them. There are, of course, very few large farmers in Assam: over 90 percent of holdings are less than 3 ha in size. Therefore the real question concerning distribution in whether the program can reach the very small farmers and other particularly disadvanged groups. We have argued (see general report, paras 17-21) that a program of this kind, which in its first years would put emphasis on increasing small farm productivity through fairly simple, low-cost improvements in technology, can benefit even the very small farm, at least by offering the family the opportunity to n- crease its level of consumption. In fact, since the strategy puts early emphasis on making more effective use of family labor, rather than expensive inputs, it is possible that the small farmer (who has few resources other than labor at his disposal) may respond to the advice of the extension service more readily than the larger farmer. 9. However, a foodgrains production strategy cannot by itself provide a solution to rural poverty; eventually foodgrains productivity must be high enough to free land for higher value crops, and other non-agricultural sectors must play an increasing role. Thus, while the priority in the short term is to increase food production, other programs - including the intro- duction of cash crops and the more economic use of non-agricultural land - 1/ These indirect benefits have not yet been quantified. ANNEX 10 Page 4 will assume greater importance in the longer run. Moreover, a foodgrains strategy can offer only limited prospects to the very small farmer, because he can never be commercially viable on the basis of foodgrains production only. Such a family, which needs all its little holding for subsistence, needs an alternative source of income to break out of its poverty, and will need special assistance programs. Some of the ways to reach these and other members of the weaker sections of the Assam population will be discussed in the remainder of this annex. The Role of Subsidies in Development 10. Explicitly or implicitly, both GOA and GOI have relied quite heavily on a range of subsidies as a tool for developing agriculture in Assam, and in particular for helping the weaker sections. Most of these subsidies fall into one of three categories: (a) Direct subsidies to the "weaker sections" of the community (small and marginal farmers, scheduled tribes and castes, landless laborers) on agricultural inputs and services and agricultural investments such as tubewells, bullocks or implements. (b) Ad hoc generalized subsidies which are introduced in times of emergency or as part of particular campaigns. Included in this group are "Taccavi loans" and various input subsi- dies which have been introduced (and wi'thdrawn) in the past to stabilize price, stimulate production after disasters, or promote new technologies. (c) Indirect subsidies which are hidden in the operating costs (or losses) of government agencies, including the Department of Agriculture (seed production, distribution of inputs, mechanization, crop spraying, etc.), the Department of Irrigation (water charges), the Assam Agro-Industries Development Corporation (distribution of fertilizer, custom hire'services) and the co-operatives (credit overdues of pre- vious system, top heavy administration and over-staffing of new structure). 11. The most comprehensive programs of subsidies in Assam are the Small Farmer Development Agency (SFDA) programs operated -in four districts 1/. The first scheme was initiated in 1972, -id since then a total of a little over R I crore has been disbursed. The Assam projects, as with other schemes under the GOI's SFDA program, consist entirely of the provision of subsidies to small and marginal farmers and landless laborers through the institutional 1/ Kamrup (1971 population 2.9 million), Goalpara (2.2 million), Nowgong (1.7 million), and Mikir Hills (0.4 million). ANNEX 10 Page 5 credit system. Subsidies have been provided on agricultural production loans, farm implements and tractor services and tubewells, for contributing to small farmers' membership of co-operatives and for rural relief works (now terminated). 12. According to reports prepared by the Evaluation Unit of the Department of Planning, Assam, the progress of SFDA schemes in Assam (in terms of the rate of disbursement) has not been satisfactory. The Evaluation Unit has not undertaken any evaluation of the economic impact of the SFDA's in Assam. It is likely, however, that their impact has been slight, not only because they have reached very few individuals among the weaker sections but also because they have relied on a standard range of input pr capital subsidies to reach the target population groups rather than devising integrated projects designed to tackle the problems of the weaker sections directly. 13. In general the mission is skeptical about the value of sub- sidies as a tool of development. Subsidies (like taxes) distort the economic allocation of resources and interfere with the efficiency of the pricing mechanism, often with unforeseen and undesirable consequences; they result in a growing burden on the budget (if successful) or in resentment and political embarrassment (if a failure); they inevitably breed corruption and favoritism; and it is very difficult to avoid their benefitting the richer and more powerful members of society, rather than the weaker sections whom they are usually intended for. In Assam, many subsidies must be judged as failures on practical grounds alone, either because they are inappropriate to the target groups who are .supposed to benefit from them or because they are not integrated into a wider program. For example, few small and marginal farmers can benefit from the "full package" of modern inputs which are available at subsidized prices under the SFDA program, and a subsidy on tube- wells cannot benefit a farmer who has access to'neither extension advice nor credit. 14. The mission's impression from talking with officials and farmers was that subsidies, whatever their possible benefits, have had a detrimental effect on both farmers' attitudes and official thinking in Assam. The most damage was caused by the "Taccavi loans". Even though they have not been given since 1972/73, farmers still seem to be disinclined to seek institutional credit in the expectation that other Taccavi "loans" will be made available. Similarly, the policy of heavily subsidized public irrigation schemes seems to have discouraged the development of private wells, even though public irrigation schemes have never benefitted (and never will benefit) more than a small fraction of the rural population. 15. The mission is not completely opposed to subsidies; we believe that in certain carefully controlled circumstances subsidies can play a useful function. The criteria which we would suggest for assessing the value of subsidies are the following: ANNEX 10 Page 6 (a) They should always be directly or indirectly designed to increase production; (b) Whenever possible they should be self-eliminating - e.g. they should be confined to supporting new technologies, meeting temporary difficulties, or underwriting the initial operating costs of new institutions; (c) They must be integrated into comprehensive development programs and preferably administered by regular in-line operational departments; (d) There must be satisfactory arrangements for controlling and monitoring the use of subsidies and for evaluating their results; (e) Every subsidy must meet the test of vigorous economic and financial analysis; (f) 'P1,sidies should be considered only when other measures oy themselves will not be sufficient. The basic consideration should be: how can Government reach and help the weaker sections most effectively at least cost? When subsidies are eva- luated in this way, other, more direct measures to assist the weaker sections, or to overcome the constraints which impede their development, can be expected to prove preferable. Some examples of possible measures of this kind are suggested in the following section. Alternative Measures to Reach the Rural Poor 16. Subsidies are only one device - and not a particularly effective one - for helping the weaker sections. What is required, in our judgement, is a comprehensive strategy for reaching target groups among the weaker sections, which will incorporate a wide range of measures - including subsidies in some cases - for achieving specific objectives. We. believe that such a strategy would comprise five categories of development measures, some examples of which are briefly described below. 17. Economic Research and Policy Formulation. The first step in formulating an.overall strategy is to identify the target groups and assess their position. This calls for not onl; -in understanding of their problems and needs and of the constraints which face tnem, but also, and more positively, an assessment of any particular advantages or resources (such as underemployed family labor) which the target groups may have. There has been a considerable amount of research done in India on the weaker sections of the community, but it is for the most part academic.and neither commissioned by nor fed into, the main streams of policy formulation. ANNEX 10 Page 7 18. In Assam there is little information available about the socio- economic situation of the weaker sections; in particular, the mission found difficulty in obtaining data about the economics of small farm production. We have already advocated (in Annex 3) an expanded program of agro-economic research, in conjunction with technical adaptive research, to throw more light on the potential and limitations of the small farm unit. A relatively small sum of money, focused on finding specific answers to specific questions, could lay the foundation. for policy formulation and the identification of specific measures of assistance. Much of the work could be commissioned through local universities, private research centers or consultants. 19. Research and Development. Coupled with this program of economic research,-an expanded program of technical research and development - targeted specifically at the potential and the problems of the weaker sections - needs to be undertaken. Some priorities for R and D which would have special relevance to the small and marginal farmer have already been suggested else- where in the report, including - - adaptive research and extension to promote low-cost, low-risk improved practices which are particularly suitable for the smallest farmers; - development of smaller, low-cost groundwater facilities; - research on miniaturization of farm implements; - simplified and more flexible credit procedures. A comprehensive strategy for the weaker sections must go further than these general measures, however, in developing specific technology for the target groups. It is particularly urgent to identify ways to increase the income and consumption levels of the landless laborers and sub-marginal farmers who do not have enough land even to break out of their subsistence (or sub-sub- sistence) way of life. These families probably need to be introduced to other viable enterprises (such as small stock, sericulture, bee-keeping, cottage industries) to supplement their limited cropping potential. There are already a number of programs to promote such activities, although they are typically uncoordinated, operated by a wide range of official and voluntary agencies, and insufficiently funded or staffed. 20. Measures to Offset Diseconomies of Scale. Small farmers, because they are small and their needs modest, are expensive to reach with agricul- tural services such as credit, input supply or marketing. There is a real cost in terms of transport, small turnover and risk (see below). Specific measures, including the integrated use of selected subsidies, may therefore be desirable to assist agencies serving the rural areas to meet these higher unit costs. Subsidies can be justified for many of these measures because they can be automatically eliminated when the turnover of agencies builds up to a viable level. Some examples of such measures are: ANNEX 10 Page 8 (a) in tubewell development, help bridge the gap between small farm size and technology by: a program to help pump wallahs to set up business; - technical and financial assistance for group wells 1/; (b) underwrite the initial losses of service facilities provided by private business to small tubewell operators; (c) in input supply, subsidies might be justified to: , - meet the incremental costs incurred by manufacturers/ distributors in supplying small packages suitable for small farmers; - underwrite distributors who are uneconomic because of low initial turnover. 21. Measures .i Underwrite Risk. Small farmers and risk are closely associated The small farmer, on the margin of subsistence, can ill afford to take risk himself; he appears to be a bad risk to credit agencies; and his often erratic production and demand creates special problems to input supply and other services agencies. Government, recognizing the constraining role of risk, can go some way to compensate for it. Some possible measures are: (a) more systematic debt relief program following poor seasons; (b) underwrite part of the loans advanced to the weaker sections; (c) accelerate program for registering tenant farmers; (d) full (and prompt) compensation for failed wells; (e) compensate Assam Seeds Corporation (on an agreed formula) for placing strategic orders for seed over and above their commercial demand forecasts; (f) introduce guaranteed buy-back system for seed and fertilizers unsold at end of year (see Annex 8). 22. Special Incentives. Special incentives - either in the form of honoraria or promotion - should not be `nored as an inducement for public officials to identify and reach the weaker sections. Some possibe measures might be: I/ The subsidy on group wells, since it encourages and demonstrates an innovative social organization, is probably sound. However, it might be more appropriate to limit the subsidy to the additional costs (e.g., for field channels or legal costs) which arise directly from - - 4 - 4 -i T.-. #- 0h n rio ANNEX 10 Page 9 (a) provide GPL secretaries with bonus for enrolling members of the weaker sections; (b) provide additional share capital to GPL societies who reach predetermined targets of lending to weaker sections; (c) direct honoraria for extension staff and other field workers who can demonstrate exceptional success. We also believe that prizes, merit awards and social recognition for good farming might provide reinforcement to an intensified agricultural extension program. 23. Legislation and Administrative Action. There are many legal measures which have been enacted to benefit and protect the weaker sections: land reform legislation, regulation of tenancies, control of moneylenders, etc. However, as the State Planning Board points out 1/, there is a vast lag be- tween legislation and implementation of land reform measures. A concerted effort to implement the provisions of these laws is required, and responsi- bility for implementation firmly established. Ongoing Programs 24. A number of programs to assist the weaker sections, including many of the measures outlined above, are being implemented in Assam by a variety of agencies. Apart from che SFDA, which has already been referred to, the Tribal Development Corporation, the Development Corporation for Scheduled Castes, the Minimum Needs Program, Assam Khadi and Village Industries, and various operating departments implement schemes to expand activities such as horticulture, small stock,, dairying, piggeries, sericulture and cottage industries among the rural poor and to extend services to the rural areas. The mission was unable to study all these programs. However, our impression has been that while there is a great deal of overlapping of functions between these agencies, none have sufficient staff or resources to make a significant impact on rural poverty, and there is no central point of coordination and planning. 25. One of the most recent and potentially most effective institutions is the Rural Development Agency which was established under the State Plan- ning Board in 1975. While it has so far operated on only a small scale, the R.D.A. seems to be developing on sound lines and could form the basis for a larger and more systematic program in the future. The main features of the Agency's approach are: (a) it is concentrating on the bottom 20% of the population (both urban and rural); 1/ See Assam, Rural Poverty, March 1976, p. 9-10. ANNEX 10 Page 10 (c) its emphasis is on identifying commercially viable investment opportunitites for the poor which can be financed through commercial banks without government subsidies; (d) prototype "model schemes" are developed and costed for replication throughout the state; (e) importance is attached to proper evaluation and control. Conclusions 26. In a state like Assam, where the weaker sections are the majority rather than a minority, there is need for a comprehensive approach to rural poverty. An agricultural intensification program by itself will go further than any other program to raise rural incomes, but special measures must be taken to assist and protect the most disadvantaged groups. The proliferation of specialized agencies does not serve the purpose because none has either the authority or the means to tackle the problem as a whole, they are in- adequately funded an, staffed, and the existence of special agencies exonerates c- -ational departments (on whom the real burden of responsibility should fall) from administrative responsibility for the weaker sections. 27. The mission considers that in view of these considerations the GOA might review its ongoing programs and policies for the weaker sections. One possibility which we tentatively put forward for consideration might be to establish a central coordinating cell - presumably in the Planning Department - to develop a strategy for the weaker sections and to coordinate the activities of the various agencies operating in this field. Its major functions could be: (a) to sponsor or carry out economic research; (b) to identify target groups and allocate priorities; (c) to develop, in conjunction with operating departments and agencies, production-oriented programs, projects and policies for the poor; (d) to coordinate and fund R and D designed to benefit the poor; (e) to advise on policies, including subsidies, which have a particular impact on the poor, (f) to take particular responsibility for implementing legislation protecting the poor; (g) to evaluate and monitor all programs designed to benefit the poor. ANNEX 10 Page 11 The agency should be adequately staffed with technical, economic, financial, legal and administrative staff,but would function entirely through operating departments and agencies.