India - Eastern States Foodgrain Review - Bihar (Vol. 1 of 2) : The General Report

RETURN TO Document of REPORTS DESK The World Bank WITHIN ONE WEEK FOR OFFICIAL USE ONLY E CONFIDENTIAL Report No. 1440-IN INDIA EASTERN STATES FOODGRAIN REVIEW - BIHAR (IN TWO VOLUMES) VOLUME I - THE GENERAL REPORT May 4, 1977 South Asia Projects Department Agriculture Division C 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) 8.80 Rs 1 US$0.1136 Rs 1 million US$113,600 WEIGHTS AND MEASURES (Metric System) 1 kilogram (kg) = 2.20 pounds 1,000 kg - 1 metric ton = 2,204.6 pounds 1 meter (m) = 1.09 yards - 3.28 feet 1 kilometer (km) = 0.62 mile 1 hectare (ha) 2 2.47 acres 1 square kilometer (km ) = 100 ha = 0.39 square mile 1 cubic meter (m ) = 35.39 cubic ABBREVIATIONS AEO - Agricultural Extension Office AEW - Agricultural Extension Worker APC - Agricultural Production Commissioner ARDC - Agricultural Refinance and Development Corporation BDO - Block Development Office CAD - Command Area Development CCB - Central Cooperative Bank FCI - Fertilizer Corporation of India GOB - Government of Bihar GOI - Government of India HYV - High Yielding Variety ICAR - Indian Council of Agricultural Research IDA - International Development Association LDB - Land Development Bank NSC - National Seed Corporation PC - Agricultural Production Cooperatives PCS - Primary Credit Society RAU - Rajendra Agricultural University RBI - Reserve Bank of India SAO - Sub-divisional Agricultural Officer SCB - State Cooperative Bank SFDA - Small Farmer Development Agency SMS - Subject Matter Specialists BIHAR RICE SEASONS Rabi - November/December-February/March Kharif - June/July-October/November Summer - February/May-June (pre-monsoon) FOR OFFICIAL USE ONLY INDIA CONFIDENTIAL EASTERN STATES FOODGRAIN REVIEW - BIHAR TABLE OF CONTENTS VOLUME I - THE GENERAL REPORT Page No. SUMMARY ............... .......... .. ......... i - iv I. INTRODUCTION ........... .................... ...... 1 II. STRUCTURE OF AGRICULTURE . .................... 2 III. POVERTY AND THE AGRICULTURAL SECTOR ....... 5 IV. AGRICULTURAL PRACTICES ................ ....... 7 V. INVESTMENT IN AGRICULTURE AND PLANNING ........... 10 VI. CONSTRAINTS IN THE PAST .......................... 13 VII. DESIGN OF A PROGRAM ..... ........................ 17 VIII. MISSION RECOMMENDATIONS ................. . .. 20 VOLUME II - ANNEXES I - IX 1. ECONOMIC IMPLICATIONS OF FARM SIZE DISTRIBUTION, TENANCY, CROPPING PATTERNS, AND INCOME DISTRIBUTION IN BIHAR's AGRICULTURE Appendix 1. Crop Budget Per Ha (Paddy) 2. Crop Budget Per Ha (Maize) 3. Crop Budget Per Ha (Kharif Potato) 4. Crop Budget Per Ha (Sugarcane) 5. Crop Budget Per Ha (Wheat) 6. Crop Budget Per Ha (Gram) 7. Farm Budget Northern Bihar - 1.5 Ha Farm 8. Farm Budget Northern Bihar - Irrigated Farm 1.5 Ha (Full Development) 9. Farm Budget Ranchi - 1.5 Ha Rainfed Farm 2. PRESENT AGRICULTURAL SITUATION 3. WATER RESOURCES DEVELOPMENT IN BIHAR Appendix 1. Organization and Functions of Command Area Development Agencies This document has a restricted distribution and may be used by recipients or*t in the peformance of their offcial duties. Its contents maY not otherwise be disclosed without Wahi liak authorization. -2- 4. AGRICULTURAL EXTENSION Appendix 1. Provisional Guidelines for the Reorganization of Agricultural Extension 5. AGRICULTURAL RESEARCH - NATURAL AND HUMAN RESOURCES Appendix 1. Emerging Research Problems - Some New, Some Neglected 2. Staffing Analysis 6. DRAINAGE AND FLOOD CONTROL 7. AGRICULTURAL CREDIT IN BIHAR Appendix 1. Terms and Conditions for Short- and Medium-Term Loans 2. Constraints in Credit Disbursal and Suggestions by ARDC and RBI 8. INPUTS SUPPLY AND DISTRIBUTION 9. STATISTICAL APPENDIX MAPS WB12521 WB12549 INDIA EASTERN STATES FOODGRAIN REVIEW - BIHAR SUMMARY i. This report is a result of a Sector Mission to Bihar in August/ September. The purpose of the Mission was to review the agricultural sec- tor of the State, particularly with respect to foodgrains, and to recommend an investment program to improve the output over the next five years. ii. The population of the State of Bihar is largely dependent on agri- culture, with more than 80% of the workers in the State employed on farms. More than 70% of these workers are operators of farms of less than 2 ha or are agricultural laborers:. Holdings below 2 ha cover only 30% of the State's agricultural land compared with 70% for the country as a whole. About 40% of the operational holdings in Bihar are leased in land, including 28% that are leased in land for "share produce"; about one-third of the farmers oper- ating holdings below 2 ha are sharecroppers. Furthermore, operators of farms of less than 2 ha receive incomes from agriculture which are well below the poverty line of Rs 2,970 per family (in 1972/73 prices). Even with improved practices, most farms of 1.5 ha or less could not earn enough income from farming to reach the poverty line. In the plateau region, about 2.5 ha would be needed to reach this objective. iii. Since the early 1960s, the State's population has grown at an annual rate of 2.2% per annum, but agricultural output has grown at a much slower pace and income earned from agriculture has shown no significant trend. Thus, in constant prices, income per capita from agriculture declined at a rate of about 3% per annum. For rice and maize, productivity per hectare has shown no sig- nificant trend, nor has the acreage planted to these crops changed very much. The output, area and yield per hectare for wheat has shown a steady increase, especially since the mid-1960s. Potato acreage has increased since the mid- 1960s, but yields have shown no trend. Despite the fact that the output of wheat and potatoes has increased in recent years, output for agriculture as a whole has not because the production of several minor crops has declined, such as pulses, ragi and millet. iv. Since so much of the land is controlled by farmers operating more than 2 ha, a program which improves the productivity of most of the farm land in the State will necessarily be beneficial to the larger farmers and smaller farmers might receive few-benefits. Conversely, a program which is tailored to reach a large number of smaller farmers would have little benefit for most of the cultivated land. Thus, any program which has the twin objectives of increasing productivity and benefiting a large number of small farmers must have special conditions and design. Subsidies on capital investment for small farmers may help them to start increasing output. Such a program would have to be developed through a national program, such as a greatly expanded SFDA operating through ARDC. - ii - v. In the long run, alleviation of such severe poverty as is prevalent in Bihar will be dependent on larger employment opportunities, both within the agricultural and other sectors of Bihar's economy. This report makes suggest- ions concerning development of the agricultural sector which will increase output and associated employment within the sector. Such development would also have some beneficial effects on employment in other sectors. vi. Most of the land suitable for cultivation in Bihar is already cropped with 8.7 million cultivated ha increasing to 11.3 million cropped ha because of multiple cropping. Therefore, improvement of stagnant agricultural output de- pends largely upon increasing the yields per hectare and upon more multiple cropping. The potential for increasing multiple cropping can be realized by the development of large unused groundwater resources and the technology for increasing yields per hectare in many situations is known. However, it is probably uneconomic for many small farmers to invest in and operate tubewells unless they can participate in a group tubewell or sell water to other farmers. In most of the situations where higher yielding technology is not known, suitable technology could be developed through appropriate research. However, the institutional constraints in Bihar are severe and unless they are resolved, little can be done to increase the productivity of agriculture. vii. Investment in agriculture in both the private and public sector has been ineffective. For the ten years ending in 1971/72, there was little in- crease in the assets of farmers. Public investment in the Fourth Five-Year Plan attained only 61% of its target and was principally in extension services, education, research and plant protection. The Mission believes that these programs were not effective. viii. Program and project planning and preparation and monitoring have been weak in the past. In recent years, the Agricultural Production Commissioner (APC) has instituted a micro-planning system and a weekly Block staff meeting which enables weaknesses in the system to be evaluated. However, this is a relatively recent development and there still is no staff to help with the planning and preparation. ix. Other institutions are also weak. The extension service does not effectively disseminate improved technology to farmers nor does it receive practical advice from the research stations. The Rajendra Agricultural Uni- versity (RAU) is poorly staffed and poorly organized. The credit institu- tions in the State are weak both for seasonal credit and longer-term credit. Reorganization of the Agricultural Production Cooperatives (PC) has been recently started, but the effectiveness of this reorganization remains to be seen. Groundwater development is further hindered by three minor irriga- tion departments, sometimes with conflicting objectives. Cutting across all the programs are the small and highly fragmented holdings. Under these con- ditions, it is difficult to develop irrigation facilities which take advantage of topography and to institute development of infrastructure and effective investments to increase agricultural production. The distribution and the purchase of inputs by farmers are hindered by price policies which rob farmers of the incentive to use the inputs and which do not give dealers - iii - incentives to distribute them. Many of the villages are isolated during much of the year because of poor road connections and much of the grain is lost because of poor storage conditions in the villages. x. The Mission's recommendations are divided into four major categories. The first are recommendations for policy modifications (para 73), including price policies -- prices for purchased inputs as related to prices received by farmers for crops -- and distribution margins for dealers; and improved plan- ning, preparation and monitoring of projects by GOB. xi. The second category includes programs which could be instituted by GOI and GOB, perhaps with some technical assistance from IBRD (paras 74 to 76). These programs include expansion of institutional credit and strengthening of credit institutions, the delivery of purchased inputs to retail outlets in a timely fashion and the development of changed cropping patterns. xii. Three special studies are recommended with which IBRD could assist (paras 77 to 79). The first includes a land use map using Landsat photography to provide basic information on existing water management and cropping patterns. The second is a drainage and flood control study for the Ganges and its tribu- taries to diminish the severity and duration of floods, which over the past 25 years have affected an average of 1.1 million ha (540,000 cropped ha) per annum. The study would include development of works in Nepal and Bangladesh, as well as in India. The Mission suggests that GOI and GOB initiate planning to determine the costs of such studies and that IDA encourage a request for technical assistance for these studies. The third is an evaluation of lift irrigation schemes and storage schemes on monsoon streams. xiii. The Mission identified five projects which it believes would be suit- able for IDA financing (para 80). These projects would cost in the neighbor- hood of Rs 2,575 million ($293 million) and are listed below, in order of priority: (i) Research and extension; (ii) Groundwater development; (iii) Cadastral surveys and land consolidation, including construction of infrastructure in villages; (iv) The construction of feeder roads and godowns in village markets and intermediate markets; (v) Improvement of village storage through the use of steel bins in village houses and insect and rodent control. - iv - xiv. The Mission recommends that preparation of the extension and re- search project should start as soon as possible. It also recommends that development of a groundwater project should be stimulated, through ARDC fi- nancing, reorganization and consolidation of the State's minor irrigation departments and training of well drillng contractors. The land consolidation project is most important and should be started immediately but it will un- doubtedly take drilling some time to have a significant impact. The feeder roads and village market development should be associated with the present market project for 52 markets, but it is suggested that the initial phase be limited to a few of these markets. The village storage project will depend in large part upon strengthening credit institutions in the State and probably should be started in phases. INDIA EASTERN STATES FOODGRAIN REVIEW - BIHAR I. INTRODUCTION 1. This report is the result of a sub-sector Mission to Bihar, which arrived in Bihar on August 29, 1976 for about four weeks 1/. The broad ob- jective of the Mission was to review the structure, policies and performance of agriculture 2/ in the State and to identify an investment program to improve the output of food, especially foodgrain, over the next five years. 2. The State of Bihar is in eastern India and is bounded on the north by Nepal, on the west by Uttar Pradesh and Madhya Pradesh, on the south by Orissa and on the east by West Bengal (Maps 12521 and 12549). The State has a total area of 17.4 million ha, of which about 10.6 million ha are suitable for agriculture. The geographic area which is cultivated is about 8.7 million ha, but multiple cropping increases the cropped area to about 11.3 million ha. The State has a population estimated at about 62 million people in 1976, about 357 people per sq km. 3. In 1970/71, the average size of an operational holding was 1.5 ha. The average size varied from a low of 1 ha in the Darbhanga Division in the Plains of North Bihar to a high of 2.3 ha in the Cholanagpur Division of the Plateau Region. These small farms are an indicator of the extreme poverty under which the great majority of the population in the State lives and the heavy pressure of population on arable land. 4. Per capita income of Bihar was estimated at Rs 489 in 1973 compared with the national average of Rs 698. In terms of 1972/73 prices, the poverty line for income would be about Rs 540 per capita. Measures of income elas- ticity indicate that for those people below the poverty line, foodgrains are luxury goods whose consumption would rise proportionately faster than a rise in expendible income (Annex 1). Thus, the pressure on the foodgrain supply in Bihar is expected to be great until the massive poverty which exists in the State, is relieved. 5. The Agricultural Sector's productivity is conditioned by the scarcity of employment outside of agriculture in the State. Because of this scarcity, agriculture is the principle or sole source of income for more than 82% of the population. About 47% of these people are landless laborers whose principal occupation is working in agriculture for low wages. This situation has also led to many small farms and fragmentation of these farms. 1/ The Mission was composed of Messrs. F. Lowenstein, M. Kaneda, P. Pohland, A. Guinard, H. McDonald, E. Oshrat and A.A. Johnson. 2/ As used in Bihar, the "agriculture sector" includes crops only. It does not include animal husbandry, forestry and fisheries. - 2 - 6. The cure for low income, underemployment and low wages would involve large increases in employment outside of agriculture and investi- gation of this aspect was beyond the Terms of Reference of the Mission. It would also involve increasing output of, and accompanying employment in, agriculture. The Mission has developed a strategy which would improve both the production of, and employment in, agriculture in the State. However, such a program cannot, alone, solve the massive distribution of poverty now existing in the State. The agricultural program can contribute its part in solving the problems but a satisfactory solution will not be forth- coming, in the Mission's opinion, unless the other sectors of the economy also progress. 7. Expansion in agricultural production, particularly when associated with groundwater development and accompanying multiple cropping, will increase employment of farms and will also create some employment outside of agriculture The outside employment arises because of the necessity to produce and service equipment and tools used in agricultural production and construction and operation of faclilities needed for marketing, processing, and storing agri- culture output. Thus, the agricultural program, developed in this report, could be a start toward alleviation of the depressing poverty which now exists in the State of Bihar. II. STRUCTURE OF AGRICULTURE 8. In 1970/71, the year of the last agricultural census, there were 7.6 million operational holdings in the State of Bihar (Table 1). Of this total, 64% 1/ were below 1 ha in size and 79% were below 2 ha in size. An additional 6.8 million workers earned their living as agricultural laborers. Thus, operators of farms below 2 ha plus agricultural laborers comprised about 73% of the State's labor force. Holdings below 2 ha covered only about 30% of the State's agricultural land. For the country as a whole, operational holdings of I ha and less comprised about 51% of the total and approximately 70% were 2 ha and smaller. 9. Even with optimistic assumptions, farms in Bihar of less than 2 ha have incomes well below the poverty line of Rs 2,970 per family of 5.5 people in 1972/73 prices (Annex 1), as shown below. Average Incomes from Cropping Activities, 1972/73 (Rs per holding) Farm Size Group Average Income (ha) Less than 0.5 379 0.5 to 1.0 1,163 1.0 to 2.0 2,082 Table 1: Bihar and India: Farm Holdings by Size Group Bihar 1/ India Size Class No. of Area Percentage No. of Area Percentage (has per holding) Holdings Covered No. of Area Holdings Covered No. of Area ('000) ('000 has) Holdings ('000) ('000) has) Holdings Less than 1.0 4,874 1,845 64.3 16.1 35,682 14,545 50.62 8.97 1. to 2. 1,109 1,563 14.6 13.6 13,432 19,282 19.05 11.89 2. to 3. 575 1,379 7.6 12.0 6,722 16,353 9.54 10.09 3. to 4. 341 1,157 4.5 10.1 3,959 13,646 5.62 8.42 4. to 5. 223 989 2.9 8.6 2,684 11,929 3.81 7.36 5. to 10. 320 2,186 4.2 19.0 5,248 36,305 7.44 22.39 10. to 20. 105 1,392 1.4 12.1 2,135 28,521 3.03 17.59 20. to 30. 19 447 .3 3.9 401 9,344 .57 5.76 30. to 40. 6 195 .1 1.7 120 4,178 .17 2.58 40. to 50. 2 102 * .9 45 2,050 .06 1.27 50. and above 3 225 * 2.0 65 5,971 .09 3.68 Total 7,577 11,480 100.0 100.0 70,493 162,124 100.00 100.00 I/ Source: "Report on Agricultural Census 1970-71, Bihar," Government of Bihar, Revenue Department, page 273. 2/ Source: "All India Report on Agricultural Census, 1970-71," COI, Ministry of Agriculture and Irrigation, New Delhi, page 113. - 3 - With improved practices, many farms of about 1.5 ha could obtain incomes which would equal or exceed the poverty income. Income per farm varies from region to region according to the cropping pattern used, agro-climatic environ- ment, etc. Four farm models are summarized below showing that, with improved practices, 3 of the 4 farm models exceed or about equal the poverty line in- come at a size of 1.5 ha. In 1976 price levels, the poverty line income would be about Rs 3,890 per family. Rainfed farms in the Plateau Region required about 2.5 ha, before they could exceed the poverty line income (Table 2). Table 2: Net Farm Incomes under Improved Practices* (Rs) North Bihar Farm Size Grains and Sugarcane Grains, Sugarcane and Potatoes (ha) 2.0 5,079 5,823 1.5 3,809 4,367 1.0 2,539 2,911 .5 1,271 1,456 Plateau Irrigated Rainfed 2.5 8,192 4,503 2.0 6,553 3,602 1.5 4,915 2,702 1.0 3,276 1,801 .5 1,638 901 * Source: Annexes i and 2. 10. The implications of thiP analysis are stark indeed. Since so much of the land is controlled by farmers operating more than 2 ha, a program which improves the productivity of most of the farmland in the State will necessarily be beneficial to the larger farmers and smaller farmers might receive relative- ly few benefits. On the other hand, if a program is tailored to benefit a high proportion of the smaller farmers, it will have little benefit for most of the cultivated land in the State, and, therefore, productivity would not increase significantly. Thus, any program which has the objective of increasing pro- ductivity and benefiting a large number of small farmers in Bihar, must be carefully designed- 11. Since the early 1960s, the State's population has grown at an annual rate of about 2.0%, but, in real terms, income earned from agriculture has shown no significant trend (Table 3) 1/. The per capita income from agricul- ture has declined over the past fifteen years by an average annual rate of about 3%. On the other hand, income per capita from other sectors, in constant prices, increased by 2% per annum. 12. Although overall agricultural output showed no growth trend, the performance of individual components within the sector showed wide variations. The three principal crops in Bihar are rice, wheat and maize, which accounted for 65% of the area harvested in 1974/75. The area sown to rice and maize has shown little tendency to change since 1960/61, and yield and production of these crops have also been trendless. 13. Wheat acreage, yield and output have shown a consistent upward trend. Production of wheat showed an average increase of about 15% from 1960/61 through 1974/75 and was even sharper from the mid-1960s onward, as shown below. Wheat: Growth Rate Area Yield Production 1960/61 to 1974/75 8.57 5.63 14.69 1965/66 to 1974/75 9.85 9.01 20.75 Source: Statistical Appendix. 14. The other crop which has shown significant change during the past 15 years has been potatoes, whose area and production increased steadily over this period even though yields showed no significant trend. However, the area planted to potatoes is relatively small, being only 114,000 ha in 1974/75. 15. On the other hand, there are a number of less important crops which have shown declines in area and output and these include gram, barley, ragi and sugarcane. Jute has shown a significant decline in area, but because yields have increased, production has held fairly constant. Thus, the in- crease in wheat output has been largely offset by the decline in output of a number of other crops. 16. We have a picture of an agricultural sector whose production is largely stagnant, which supports about 80% of the population of the State, which provides a steadily declining per capita income, which is dominated by large masses of people living in extreme poverty, which has little land resources into which it can expand and which does not utilize much of its 1/ The data for State Income at constant prices (Table 3) show a statistical aberration between 1969/70 and 1970/71. The growth rates discussed here are adjusted for this aberration. INllIA EASTERN STATES FOODGRAIN REVIEW - BIHAR Та61е Э- 811iar: State Income (т111{on гиреев) _ .ucrent r сее onstan r сев А гlси циге Other То[а1 А rlculture Other То[а1 - Уеаг Va1ne PercenCage Va1ue Percentage Va1ue Ve1ue Peccentage Vв1ие Percentage Va1ue М Н ч. М Н s. М R s. М R�в. М R в. М R s. 1960/61 4,281.5 4Э 5,64В.7 57 9,930.2 4,281.5 4Э 5,648.7 5Т 9,9Э0.2 1961/62 4,2Э0.В 41 6,075.9 59 10,306.7 4,492.5 43 5,927.1 57 10,419.6 1962/6Э �4,3ЭЭ.4 Э9 6,796.4 61 27,129.8 4,4Э1.Э 42 6,174.6 5В 10,605.9 iч6Э/64 _ 5,Э49.4 42 __ 7_,421._8 58 _ 12.,771.2. _4.406.0_ 41_ __ - 6,408.1 59 ----10;814.1- 1964/65 6,319.9 4Э 8,2Э7.7 57 14,557.6 4,3U1.9 40 6,569.5 ЬО 10,871.4 1965/ЬЬ 7,611.8 45 9,148.6 55 16,760.4 4,Э37.В 39 6,845.4 61 11,18Э,2 1966/G7 6,168.8 ЭВ 9,981.7 62 16,150.5 2,972.4 31 6,686,9 69 9,659.3 1967/6В 9,735.7 47 10,76й.8 5Э 20,500.5 4,274.9 40 6,921.6 60 10,596.5 1968/69 8,419.7 42 11,621.0 58 2U,040.7 4,Э67.7 40 6,551.9 60 10,919.6 1969/70 8,4Э0.0 38 1Э,500.8 62 21,ЧЭ0.8 4,101.7 Э7 7,123.3 6Э ]1,2'25.0 � 1970/71 9,728.0 41 14,071.Э 59 2Э,799.Э 5,350.4 41 7,739.2 59 13,089.6 Ф 1971/72 10,181.9 41 14,922.8 59 25,104.7 5,55Э.1 41 7,979.1 59 1Э,532.2 1972/7Э 12,740.4 45 15,741.1 55 28,481.5 5,Э70.б 40 8,011.8 ЬО 13,3В2.4 1973/74 16,941.8 47 18,842.8 5Э 35,784.6 5,116.0 37 8,60В.1 ЬЭ 13,726.1 1.974/75 21,402.2 49 21,959.Э 51 4Э,ЭЬ1.5 5,Э89.б 38 8,722.1 62 14,111.7 Inteccepc 3,483.3 3,4В3.Э 8,810.2 4,4ЭЬ 5,743.42 10,165.00 (ML111on Rupeee) Ь 2 3 - - - - Э9.60 10.09 20.55 }дипт�у ah{fter, %) Ь1Э 2 11.05 9.66 12.12 -1.11 2.02 .78 (groиtб га�е, 9) R21 2Э лг г12 .9200 ' .99Э2 .4316 .5766 .9281 .9028 ** ** ** [612 Э - - - 5.3Э45 4.ЭЭЭ1 7.71Э2 г **12.22Э4 **43.6829 **Э.1711 -1.6Э954 1/ **В.2777 *2.9551 Ы Э.2 Prnba6L11ty оЕ random correlatlon lеее [lгап .05%. *^Pru6a611{[у of гапдот correlatlon lевв Сhвп .01Х. l/ Noc чlgnlficant. � n w 1у Decem сг 1, 1976 - 5 - water resource (para 26). Obviously, historical trends cannot continue indefinitely without massive malnutrition continuing on a worsening scale or without increases in economic assistance from the rest of the country. III. POVERTY AND THE AGRICULTURAL SECTOR 17. The massive poverty in Bihar does not have an easy solution. There is a dichotomy between the number of farm operators operating farms below 2 ha -- 79% -- and the proportion of the cultivated area controlled by those operators -- 30%. Farm budget models indicate that most of these farm oper- ators (paras 6 and 7) hav,e incomes from farming which are below the poverty line. Furthermore, there are 6.8 million rural workers who are classified (in the census of agriculture) as agricultural laborers and many of these laborers are probably sharecroppers. The operators with holdings of less than 2 ha, plus the agricultural laborers, comprise about 73% of the workers in Bihar. 18. How can the incomes of these desperately poor people be raised above the poverty line? Logically this problem could best be solved by family planning, 1/ which would slow the rate of population growth (now about 2% per annum) over the next 20 years or so, coupled with sustained growth in agricultural production and employment over that period. There are three approaches which might help increase agricultural production and employ- ment and they are explored below: (i) land reform to increase the land resources of the desperately poor; (ii) subsidization of small farmers to enable them to invest in capital improvements; and (iii) improved agricultural practices to increase output per ha and, thus, increase incomes and employment. Land Reform 19. Redistribution of land through land reform might help some. The current laws of the State set land ceilings of about 8 to 24 ha 2/ per owner and division of excess land among potential heirs is permitted. The area covered by holdings of more than 10 ha covers about 2.4 million ha or 21% of the farm land in Bihar. The area covered by holdings of 30 ha and larger is 1/ Study of family planning is beyond the scope of this report so further analysis of this fact is not pursued herein. 2/ Planning Commission,! New Delhi; Implementation of Land Reforms, "Report of Shri A.N. Seth, Director, Planning Commission on Implementation of Land Reform in Bihar," p. 51, para 18; August 1966. - 6 - about 522,000 ha or 4.5% of the farm land. Therefore, division of that land which is in excess of the ceilings would help but would not completely solve the problem. 20. Equal division of farm land among all farm operators would not accomplish the objective of raising the incomes of the rural poor. If all the agricultural land in the State were divided evenly among all the existing farm operators, each operator would hold about 1.5 ha. Such holdings would hardly be large enough to permit the earning of poverty line income for most of the farm operators under existing agricultural practices. This analysis does not consider the plight of the agricultural laborers (6.8 million workers) 1/ who might be even worse off after land reform because of the elimination of potential employers with holdings above 1.5 ha. Presumably, employers with only 1.5 ha could obtain their labor needs principally from family labor. Subsidized Loans to Small Farmers 21. The output and yield per ha of small farmers could be improved if they could obtain certain capital improvements, such as tubewells. However, the costs of such improvements are often beyond their financial resources, even if institutional credit were readily available to them. One suggestion is for broad scale subsidization of capital improvements by Government to help small and marginal farmers obtain the benefits of improved capital facilities. However, the farm budgets and the elasticity of demand for grains (Annex 1) indicate that, even with such improvements, most farmers of 1.5 ha or less could not repay the subsidized loans. Thus, the subsidies would have to con- tinue over a long period of time. Agricultural laborers would not be helped by such a program and some kind of relief program for them would be needed. This course of action requires subsidization for many years of more than 70% of Bihar's workers. Such a course of action does not appear practical nor feasible. 22. However, subsidized loans to selected farmers for certain capital improvements, such as group tubewells and milking buffalo, might help increase their income. The extent to which viable loans of this nature would be feasible needs careful study. An effective program for subsidized loans to small farmers would depend upon the results of such a study. Larger Agricultural Output 23. Some improvement in the economic situation of the State would result if future agricultural production would increase as fast as, or faster than, population growth (2% p.a.), in contrast to past stagnation in agri- cultural output. Such improvement would raise incomes because of larger 1/ This figure probably includes some of the 28% of the farm operators who are sharecroppers, as indicated by the National Sample Survey. However, some farmers are partially land owners and partially sharecroppers. - 7 - production and create additional employment. Additional employment would result because of: the need for more farm labor for cultivation and harvest- ing (especially for multiple cropped land); the manufacture, servicing and maintenance of tools and equipment; the construction of additional marketing, processing and storage facilities; and the construction of rural works. Such a program is proposed (para 71), but it cannot effectively moderate poverty without similar development in other sectors of Bihar's economy (see paras 5 to 7). IV. AGRICULTURAL PRACTICES 24. Most of the cultivable land in Bihar is already under cultivation, reflecting the high population density. Cropping intensity averages 129%, varying between 109% in the Plateau region and 135% in northern Bihar. The cultivated area has not changed much in the past ten years but population has increased by about 20%. The situation is particularly acute in northern Bihar, as shown below (Annex 2): Rural Population per ha Region of Cultivated Land Northern Bihar 6.9 Southern Ganges Plain 5.7 Plateau 4.7 State Average 6.0 25. Irrigation facilities are estimated to cover about 1.9 million ha, about 20% of the farming area. Because tubewell irrigation is more prevalent in northern Bihar, the area irrigated varies less from kharif to rabi than in the southern Ganges plain where sources of water are less reliable. Irriga- tion plays a minor role on the plateau because of a scarcity of water resources (Annex 3). 26. Bihar has enormous groundwater resources. Its utilization of these resources is relatively small. The total irrigated area in Bihar is about 20% of the area covered by agricultural holdings. This is slightly larger than the proportion in all India and compares with about 72% in Punjab (Table 5). The comparison with Punjab is pertinent because Punjab too has large ground- water resources. Although Punjab has a somewhat larger proportion of canal irrigation than Bihar, the real difference lies in the utilization of tube- wells. About 44% of the irrigated area in Punjab uses tubewells, whereas only 13% is covered by tubewells in Bihar. The Bihar percentage is even smaller than the average for all of India, about 17%. Yet the Mission estimates that Bihar has groundwater resources to service approximately 1.5 million tubewells, compared with an existing 125,000 (Annex 3). To sum up, the utilization of groundwater in Bihar is much below the capacity of the groundwater supply and - 8 - Bihar has not utilized this valuable agricultural resource to the extent to which it has been utilized elsewhere in the country. 27. There are three cropping seasons - kharif, rabi and summer. During kharif, rice and maize are the dominant crops. Rice is usually grown in the lower lying areas and maize grown on better drained soils. Other kharif crops are jute in the north east and the north west of Bihar, and millet on the poorer soils of the plateau. The area planted during kharif is about twice that planted in the other seasons, as shown below: Kharif Rabi Summer Total Total area sown ('000 ha) 7,200 3,200 300 10,700 28. Rabi crops are grown either with irrigation or from the residual moisture in the soil. Wheat is the main crop in the irrigated areas or where the water table is not too deep. Potatoes and some maize (about 10% of the annual area under maize) are also grown. Drier areas are planted with drought resistant crops like barley, millet or short cycle crops (pulses and oilseeds). Unit yields are much more secure in rabi than in kharif, since pests are less active and major climatic risks are smaller. 29. All summer crops are irrigated. They are mainly vegetables with some rice and maize. 30. In most cases, land is prepared with six to twelve passes of a tra- ditional plow, without mould-board, which only scratches the soil surface. The number of steel mould-board bullock plows in Bihar is not known but very few are actually used. There are about 7,700 tractors and 700 power tillers, but tractors are largely underutilized - each one plows about 20 ha per season. 31. Improved or HYV seed of rice, maize and wheat is supplied by the Department of Agriculture, which operates seed farms totalling 5,884 ha, and by seed corporations. In 1975/76, the total quantity of seed available from public sources was far short of farm requirements, even for the improved cul- tivation program (Annex 2). A large part of the seed is either saved from previous harvest or procured from other farmers and may thus be poor quality. 32. Irrigated and some winter rainfed paddy are transplanted. Early paddy and paddy grown in the flooded areas are broadcast. Paddy is often planted late because of insufficient rainfall or scarce irrigation water. Frequently, it is too widely spaced. Apart from maize, which is planted in hills, other crops are generally broadcast. Late planting of the kharif crop often delays the planting of the following rabi crop. 33. Farmers regularly apply compost or farm yard manure, although in limited quantities (1 or 2 tons per ha), and traditional plows do not turn organic manure evenly into the soil. Fertilizer consumption has increased more than eight times during the last 15 years, from 15,000 tons (in terms - 9 - of nutrients N, P 05, K20) in 1961/62 to 124,000 tons during 1975/76. The quantity of fertilizer applied by the farmers on the various crops is not known. Compared to the total cultivated area, fertilizer use is still low. However, it seems to be quite significant per irrigated hectare where most fertilizer is applied (Annex 2). Farmers mainly use nitrogenous fertilizers and the NPK balance of fertilizers applied is completely different from the recommendations of agricultural research institutions. Most of the chemical fertilizer is used on the southern Ganges Plain and in northern Bihar. Little fertilizer is used on the Plateau. 34. Water management is poor. Land is poorly leveled and bunds are often much too low. Consequently, farmers cannot store enough water to tide their crops over a spell of dry weather or when water supply is interrupted. Many rice fields seen by the Mission were without standing water at the flowering stage, sometimes even where tubewell irrigation was available. Field channels have not been completed in large parts of the command area of the major irrigation systems and the fragmentation of holdings makes the delivery of water to individual fields difficult. 35. Weeds are a major problem, particularly in rainfed broadcast crops, because of insufficient cultivation methods. Pests and diseases are more dangerous during the hot and humid kharif season than during rabi. Efficient chemicals for crop protection are not easily available to the farmers and, for the most part, suitable sprayers generally are not available. 36. Harvesting is done by hand. Most of the farm crops are threshed under the feet of bullocks. Post-harvest losses of grain from weevils and rats are estimated to be high. Metal containers have been developed for grain storage, but they are not widely used. Post-Harvest Technology 37. Post-harvest technology in Bihar is quite elemental. Most of the grain is harvested and threshed by hand. Some grain is spread on the roads so that vehicles will pass over the stalks and thresh the grain in the pro- cess. This appears to be quite wasteful but there are no data on recovery of grain from this process. Some grain is threshed under the hoofs of animals and some is simply beaten against a hard surface in the traditional manner. 38. Some 65% to 70% of the grain harvested in Bihar is retained by farmers in their villages. This grain is stored in the villages, usually in homemade containers. These containers are made of mud or wattle over a bamboo frame, or pottery. Some grain is stored in a room in gunnysacks. It is sacked; the sacks are laid in layer over a layer of straw; they are covered by a layer of straw; another layer of grain in gunnysacks is laid over the second layer of straw; another layer of straw is laid and so on, until the room is filled to the ceiling. All of these methods provide ready access to insects and rodents. However, data on wastage by these storage methods are not readily available. A report in 1966 estimated that wastage from all causes was about 9.33% and showed that wastage by rodents and insects was about 5%. However, the Mission believes that this estimate was most conservative. - 10 - 39. Under a UNDP project, in the past few years, metal containers have been developed for use in houses in villages. These containers are rodent and vermin proof and fumigation can be carried out in them. Each container will store 0.62 ton and costs about Rs 350. During the 1976/77 season, Rs 800,000 are available for financing the purchase of these bins. The farmer pays 40% down and repays the balance over three years with no interest. Since this is the first year in which this program has been instituted, there is no experience with collections. 40. The current program will have only limited impact and a much larger program would be needed. The Mission estimates that it would take 3.6 million bins scattered over the State to provide 50% of the storage needed in villages. This would require investment of Rs 1,260 million (US$143 million). 41. Another problem in village storage is moisture. Grain is often not adequately dried and spoils when put in storage. Again, there are no adequate statistics on losses from this source. Furthermore, it is a difficult problem to handle, as some of the grain is harvested during the monsoon and sun drying then becomes difficult. If artificial drying were introduced on a village basis, fuel for the driers would be needed. However, benefits from investment of this nature would have to be carefully evaluated. 42. Rodent control in the villages appears to be very primitive. The poisons normally used are zinc phosphide and aluminum phosphide, but these are only used in fields around villages to kill rodents. Anticoagulants have been tried in houses, but this program is very small. Insects are controlled by fumigation with Etheyline Di Bromide (EDB) for fumigation purposes and 50% Malathion sprayed in storage receptacles and threshing yards. However, it would be very difficult to control rodents and insects through the applica- tion of pesticides without a well organized and massive program, which does not exist. V. INVESTMENT IN AGRICULTURE AND PLANNING 43. Bihar's farmers have had little success in increasing their invest- ment in agriculture. According to publications of the Reserve Bank of India 1/, assets per rural household, other than land, in current prices were about 127% larger in 1971/72 than in 1961/62. However, there was sharp inflation over the ten-year period. Analysis of the prices in Bihar indicates that the average rate of inflation was about 9.2% per annum 2/. When assets are adjusted for 1/ Reserve Bank of India, "All-India Rural Debt and Investment Survey, 1961-62" and "All-India Debt and Investment Survey, 1971-72." 2/ The price indices for Bihar show a statistical aberration between 1969/70 and 1970/71. The analysis of price changes included herein adjusts the price indices for these statistical aberrations. - 11 - these price changes, the increase is less than 1% per annum per household and the change is probably not significant. 44. Public investment in agriculture in the past is indicated by invest- ment under the Fourth Five-Year Plan. The plan target called for investment of Rs 133 million over a five-year period ending in 1973/74. Actual investment was about 61% of the target (Table 4). The largest part of the investment went into the HYV Program, mainly extension services, followed by Education and Research and then by Plant Protection. The mission believes that these three programs were not effective (Annexes 1, 4 and 5). Furthermore, few resources went into improving management of the agricultural program under the fourth Five-Year Program. Planned Public Investment in the Future 45. Some of the past shortcomings are recognized by GOB and efforts are being made under the Fifth Five-Year Plan to remedy some of the shortcomings. For example, targets for expenditure on direction and administration of agriculture under the Fifth Five-Year Plan are about 4.4% of the total com- pared with an expenditure of 0.6% under the Fourth Five-Year Plan. Further- more, the quantity of money to be spent under the Fifth Five-Year Plan, is considerably larger than the target under the Fourth Five-Year Plan, targets of Rs 345 million and Rs 133 million, respectively. Expenditures on manure and fertilizer, agricultural implements and machinery, and strengthening the administrative machinery of SFDA are to be increased sharply. 46. The subheadings of budgets for the Five-Year Plans disguise some closely related activities. The subheading entitled "Agricultural Farms" provides funds for increasing seed production and, for analytical purposes, should be combined with "Multiplication and Distribution of Seed." The sub- headings entitled "HYV Program" and "Strengthening Administrative Machinery SFDA" are extension activities and should be combined with "Extension and Farmers' Training." When,these combinations are made, the proportion of the Five-Year Plans which are'spent on these two activities increase substantially from apparent expenditures indicated by the subheadings of the plans, as shown below: Activity Proportion (%) 4th Plan 5th Plan Indicated by Indicated by Com- Indicated by Indicated by Com- Subheading bining Subheadings Subheading bining Subheadings Extension 6.71 31.64 6.10 14.22 Seed Pro- duction and Dis- tribution 5.04 5.04 3.39 6.28 - 12 - Table 4: Bihar - Public Investment in Agriculture Fourth and Fifth Five Year Plans Fourth Plan Fifth Plan Actual Expenditures Target Value Percentage Value Percentage ('000 Rs) ('000 Rs) Agriculture Direction & Administration 456 0.56 15,058 4.36 Multiplication & Distribution of Seeds 4,106 5.04 11,682 3.39 Agricultural Farms /d 10,000 2.90 Manure & Fertilizers 165 .20 9,611 2.79 HYV Program lb 20,291 24.94 18,013 5.22 Plant Protection 10,540 12.95 30,030 8.70 Commercial Crops /d 4,465 5.49 4,744 1.37 Drought Prone Area Program /a Extension & Farmers' Training IC 5,459 6.71 21,040 6.10 Agricultural Research & Education 13,453 16.53 30,000 8.70 Agricultural Implements & Machinery 249 .30 3,729 1.08 Agricultural Statistics - 150 .04 Horticulture 1,992 2.45 8,205 2.38 Other Crops (Pulses & Oilseeds) 1,837 2.26 14,350 4.16 Strengthening Admini- strative Machinery SFDA /& 10,000 2.90 Agricultural Marketing 8,989 11.05 27,800 8.06 Weights & Measures 4,000 1.16 Area Development 9,370 11.52 126,585 36.69 Total 81,372 100.0 344,997 100.00 /a Not included in target, but actual expenditures in 1975/76 were Rs 1,200 thousand and for 1976/77 expenditures at Rs 1,535 thousand are proposed. lb Includes demonstration plots and additional extension support in 137 blocks. /c See HYV Program and footnote b. d Additional facilities for seed production on farms owned by GOB. /e See Agricultural farms and footnote d. If Demonstration plots. /g Strengthening technical support for small farmers. Source: Annual Plan for 1974/75, 1975/76 and 1976/77. - 13 - 47. The target under the Fifth Five-Year Plan for extension activities of Rs 49.1 million ($5.6 million) is relatively small. The Mission tenta- tively estimates that an 'effective extension project will cost about Rs 150 million, exclusive of the research part of the project - estimated to cost an additional Rs 106 million (para 80). 48. Under the Fifth Plan, the sharpest expansion is provided for "Area Development", an increase of 1,251%. This activity includes integrated development of the command areas of the three major river projects - Sone, Gandak and Kosi. It also includes development of dry farming in the Plateau Region. This program includes cadastral surveys and land consolidation which are urgently needed to lay the foundation for increasing crop yields in Bihar. However, little information is available on the number of hectares covered by the program. Development of infrastructure, such as irrigation and drainage channels, feeder and village roads, and godowns and schools, apparently are not covered under the program. 49. Expenditures under the Fourth Five-Year Plan, planning and direction of the agricultural program in the past has been low. However, there is evidence of a serious attempt to improve the efficiency of management in the agricultural sector of the State in recent years. The Department of Agricul- ture has developed a micro-planning operation in which the infrastructure and distribution system for inputs are mapped for each block and each district. This micro-planning effort enables the Agricultural Production Commissioner (APC) to direct investments to the areas in the greatest need. In addition, the APC requires Block staff meetings every Tuesday and a report must be sent to him after each meeting from each Block. He is then in a position to determine the need for action in the agricultural program in each Block. 50. Strictly speaking, improvement of administrative machinery does not indicate effectiveness of investment. However, it would be impossible to im- prove the effectiveness of the agricultural program and to approach the target of the Fifth Five-Year Plan without substantial improvement in the management program by GOB. VI. CONSTRAINTS IN THE PAST Population and Land Pressure 51. Historically, Bihar has been subject to increasing pressure of popu- lation on land. The result has been a steady decline in the size of opera- tional holdings. For example, according to the National Sample Survey, in 1961/62 about 54% of the holdings and 15% of the area farmed were in holdings of less than 1 hectare. Comparable figures in 1971/72 were 59% and 18%, res- pectively. Holdings of more than 2 ha declined from about 23% in 1961/62 - 14 - to about 18% in 1971/72 1/. Furthermore, data from the National Sample Sur- vey indicate that the leasing of land increased from 1961/62 to 1971/72, both in number of holdings leased and the area leased out. The National Sample Survey for 1971/72 indicates that almost 40% of the operational holdings in Bihar leased in land. Of this total, 28% of the holdings leased in land for "share produce" (i.e., sharecropping) (See Annex 1). A substantial portion of the small holders are tenants and in 1971/72 about one-third of the opera- tional holdings with less than 2 ha were sharecroppers. If we include all forms of tenancy, the proportion in this size group rises to almost 45%. Furthermore, many of the landlords could be termed "petty" landlords because their land ownership is small. Thus, they are in no position to help equally small tenants manage their plots. 52. Another restrictive feature of the farming in Bihar is fragmentation of the land. There are about 30,000,000 farm plots in Bihar and the total area of holdings is about 11.5 million ha. Thus each plot covers about 0.4 ha. Since the average size of holdings in the State is 1.5 ha, each holding is split on the average, into four plots. In north Bihar, the richest agricul- tural region, the situation is even worse. Scattered information indicates that the average size of a plot in north Bihar is around 1/4 ha. Some plots are reported to be less than 0.1 ha. In one village, where a pilot land consolidation project was undertaken, the average size of the plots before consolidation was about 0.1 ha. Furthermore, the land is laid out in a crazy quilt of plots so that it is impossible to develop irrigation and drainage channels to optimize topography. For the same reason, it is difficult to develop farm service roads to distribute inputs to farms and to market farm produce. Such small plots also make it difficult to develop groundwater facilities even though an abundant supply of groundwater is available to much of Bihar (see para 26). 53. These small farms also inhibit the ability of farmers to take ad- vantage of improved facilities. Simulated farm budgets indicate these diffi- culties. In 1974/75, cropping incomes of 75% of the farm households were be- low the poverty line. This estimate was provided by GOB, but analysis indi- cates that most of the rural poor are literally on the margin of subsistence with little capacity to save or take risks. Severe flood or drought can easily wipe out the little inventories that they have accumulated and push them below this margin, often into deeper indebtedness. In fact, farm house- holds in the smaller size groups, below one-half hectare, would be making in- comes less than the official poverty line for one person for the entire family group (para 6). 1/ These data differ somewhat from the Agriculture Census of 1970/71, but no agriculture census was taken before the above-mentioned dates. The National Sample Survey provides the only historically comparable data that the Mission could obtain. - 15 - Extension and Research 54. The agricultural extension service is not effective in helping farm- ers to solve their day-to-day problems nor in effectively persuading farmers to use yield increasing technology (Annex 4). Little effort has been made to know and understand farmers' problems. The causes of discrepancies between actual farm practice and recommendations of extension campaigns (for years) have not been studied. While blame is put on farm conservatism or lack of access to credit facilities, more convincing explanations would come from analysis of farm costs and returns. To be successful, agricultural extension must be a two-way communication system which refers farmer problems to the Department of Agriculture and to agricultural research institutions, as well as advising farmers on the solutions to their problems. Only this two-way approach can ensure that improved technology is suited to farmers' needs and resources. The second problem of extension is its dispersion among too many objectives. While the density of extension workers is, on the whole, adequate, field personnel have too many non-agricultural responsibilities. The Mission estimates that about half of their time is occupied by administrative duties. Moreover, some of these activities, such as the collection of loans in arrears, are in direct conflict with the role of a VLW as an advisor to the farmers. Even in the agricultural field, staff are asked to deal with too many subjects. Therefore, VLWs tend to concentrate on a single aspect of their duties, promo- tion of fertilizer, which has the advantage of being easily recorded for their supervisors. 55. Agricultural extension programs are too ambitous. Progressive steps of development from traditional practices to the advanced techniques have not been defined. Therefore, many farmers with limited resources are hardly touched by development programs. Extension staff work mainly with progressive farmers who have access to the irrigation and credit facilities required by the advanced technology. 56. Interviews in the field show that VLWs are well dedicated to their difficult and demanding occupations. However, their training has been ne- glected. Consequently, the technical efficiency of VLWs is not adequate. 57. There has not been adequate coordination between research and ex- tension. Agricultural research programs have largely ignored the average farmer and the extension services have not been in a position to exert a real influence on the objectives of scientists. 58. Agricultural research in Bihar is the responsibility of The Rajendra Agricultural University (RAU), including six regional colleges and research in- stitutes and 11 substations. RAU was organized in 1970 but has not functioned effectively. Staffing of RAU has been weak and executive direction of RAU has not been professionally adequate. There has been a series of four Vice Chancel- lors, each with short tenure. Vacant to the present are the posts of Director of Research, Director of Extension Education and Deans of Agriculture and Veterinary Science, Basic Science, and Humanitarian and Home Science. De- velopment of RAU as a strong agricultural research and education institution - 16 - is contingent upon filling top leadership posts. Though RAU has responsibility for research and teaching in agriculture and related subjects, there is no authoritative central leadership to speak for the university or to give it overall guidance. Under these circumstances, technology which would raise yields in Bihar has not been effectively developed and disseminated to the farmers of the State (Annex 5). 59. The types of soils and water resources in Bihar are basic to de- veloping a practical research program. Detailed soil and land uses mapping is needed to guide planning of agricultural development in the State (Map 12549). Of particular importance is an evaluation of water problems, such as the depth of water on paddy fields during the monsoon, degree of stagnation of water, whether the crops are irrigated or rainfed, and the adaptability of soil types of various crops and various water management regimes. This work could be accelerated through the use of Landsat data (satellite photography), including development of a soils use map. Water Management 60. Multiple cropping is dependent upon the development of additional water during the rabi season for north Bihar and the plains of south Bihar. For the Plateau Region, which has few resources for irrigation during the rabi season, drought resistant crops are needed. These crops require relatively little investment, but do impose the need for better extension advice. 61. Most of the canal irrigation systems are run-of-the river systems which cannot increase the supply of water greatly during the rabi season. Even though Bihar has large groundwater resources (Annex 3), the quantity of land irrigated in the State is, at present, small. About 20% of the farm land was irrigated in 1970/71 (Table 5). This compares with 18% for the entire country and with 72% for Punjab, a State with similar groundwater re- sources. Of the total irrigated, only 17% was from tubewells, compared with 44% in Punjab. In other words, much of Bihar's groundwater resource has not been developed. The large proportion of small farms in Bihar make it diffi- cult to develop an effective tubewell program (Table 1). Many small farmers probably would find it uneconomic to invest in and operate a tubewell. Many of them do not have farms which are large enough to use the water produced by a small tubewell, many may have trouble in selling water to other farmers or in developing a group to use the water of a group tubewell. GOB has in- vested considerable sums in a variety of minor irrigation schemes other than tubewells, including lift irrigation from charrs (lakes) and perennial streams and small earth dams across stream channels to impound water during monsoon rains. The cost effectiveness of these schemes is questionable (Annex 3). 62. In the longer term, flood control and drainage works are badly needed in Bihar. In almost every year, severe damage is done by the flooding of the Ganges River and its tributaries. From 1950 to 1975, damage to crops averaged Rs 257 million per annum ($29.2 million) and affected an annual average cropped area of 613,000 ha. Flood control is extremely INDIA EASTERN STATES FOODCRAIN REVIEW - BIHAR India. Bihar and Punjab: Area Irrigated. Proportion by Farm Size Group, Ty Type of Irrigation (Percentage) Total Irrigated as Pro- Size Grotip Canals Tubewells Wells Other portion of Total Holdings (hea) Bilar Punjab India Bihar Punjab India Bihar PunJab India Bihar Punjab India Bihar Punjab India Below 1 35.26 47.55 40.27 12.08 36.77 15.41 12.80 14.76 19.17 39.86 .92 25.15 22.43 69.46 30.20 I to 2 -38.32 46.23 42.00 11.68 41.25 15.65 10.60 11.72 20.56 39.40 .80 21.79 23.54 71.46 24.58 2 to 3 37.91 44.62 40.95 12.42 45.25 17.11 10.78 9.41 21.87 38.89 .72 20.07 22.19 72.69 22.73 3 to 4 38.37 44.66 41.29 13.06 46.59 18.11 9.39 8.05 22.38 39.18 .70 18.22 21.16 73.55 21.16 4 to 5 39.90 44.61 40.77 13.64 47.64 18.89 9.09 7.02 23.11 37.37 .73 17.23 20.02 74.27 19.26 5 to 10 44.99 47.51 42.09 12.60 46.58 18.25 7.20 5.21 24.94 35.22 .69 14.72 17.80 74.44 16.62 10 to 20 47.74 52.62 42.82 13.57 42.88 15.93 6.53 3.72 27.76 32.16 .78 13.49 14.30 70.57 12.06 20 to 30 48.33 59.04 43.00 11.67 36.90 12.56 6.67 2.93 28.14 33.33 1.14 11.30 13.42 62.53 8.86 30 to 40 54.17 62.45 43.85 12.50 33.69 11.30 4.17 2.31 26.58 29.17 1.56 18.27 12.37 57.54 7.20 40,to 50 53.85 66.38 45.86 7.69 30.17 11.28 7.69 2.18 23.31 30.77 1.28 19.55 12.75 55.05 6.49 50 and above 46.15 55.74 59.40 23.08 38.94 8.36 3.85 4.05 17.31 26.92 1.28 14.93 11.56 38.51 5.61 Average 40.45 48.29 41.82 12.62 44.13 16.64 9.55 6.80 22.91 37.38 .77 18.63 19.53 71.67 17.91 becember 9, 1976. - 17 - difficult because of the low gradient of these rivers, about I to 10,500. The rivers have had levees constructed along their banks which helps some, but the beds of the rivers rapidly build up as silt is deposited, and it becomes difficult to effectively control the flooding (Annex 6). A major complication in controlling the Ganges River basin in Bihar is the necessity to involve other parts of India and two other countries, Nepal and Bangladesh, in a flood control program for the Ganges. 63. Fragmented farms impose significant barriers to the development of effective irrigation works (major, medium and minor), to development of a feeder road network for the use of farmers and to the use of some improved technology, which requires distribution of purchased inputs to farmers. Thus, land consolidation, preceded by cadastral surveys and the updating of cadastral records, becomes an essential activity for introducing other improvements. Input Supply and Planning 64. The supply of inputs should be more plentiful and available at cri- tical periods. At present many inputs, seasonal and capital, are simply not available. Even when they are available, many farmers cannot obtain financial resources to purchase them. For example, short-term lending from cooperatives and the Department of Agriculture only provide about 20% of estimated require- ments (Annexes 7 and 8). Thus, many farmers must use traditional sources of credit and many simply cannot obtain credit. In addition, the cooperatives have large overdues (the overdues on loans of the Department of Agriculture are even larger) and, therefore, find it difficult to expand their loan volume. 65. Finally, the Mission found the capacity for planning, project pre- paration and monitoring at the State level was not acceptable. There was no organization with the responsibility for analyzing the agricultural sector, to set priorities for investment and to identify the success of existing projects. The absence of such capability would greatly hinder, if not stop, the process of significantly increasing the productivity of agriculture in the State. 66. The modification of so many components of the agricultural sector of Bihar would be a massive job. A program consisting of several projects and alteration of essential policies is mentioned below. In time, these projects, if successful, would develop a much more progressive agricultural economy in Bihar than has existed in the past. VII. DESIGN OF A PROGRAM 67. The Mission's objective was to develop a program which would increase the output of Bihar's agriculture and start to alleviate the extreme poverty which permeates such a large proportion of the State's population. The two halves of the program are closely interrelated. - 18 - 68. In the short run, small farmers and landless laborers need massive help, just to exist. Subsidies on capital investment for small farmers may help them to start on the long road upward. For example, such subsidies could be applied toward the installation of tubewells, particularly for group loans, or to the purchase of a milking buffalo. Such a program probably would have to be developed through a national program, such as a greatly expanded Small Farmers Development Agency (SFDA). The extent of needed activity of SFDA in Bihar would need to be carefully evaluated before further recommendations could be made. In addition, such recommendations would need to be coordinated with a national program, which is now being considered by IBRD under ARDC II. Even an expanded SFDA program will not be the answer unless the small farmers can be made more viable over time (paras 6, 18, 19 and 53). 69. In the long run, the alleviation of poverty is dependent on larger employment opportunities within the agricultural sector and in other sectors of Bihar's economy. This report is concerned with agriculture and, therefore, does not pursue development in the non-agricultural sectors. 70. Larger agricultural employment will result from higher yields per hec- tare and from increases in multiple cropping. Both developments would require more labor for cultivation and harvesting. In addition, larger output will require the supply of more inputs, the supply of more and improved equipment, such as farm implements, fertilizer, pesticides, and seeds, more infrastructure, such as feeder roads, village and intermediate godowns, and village markets, more tubewells and better design and maintenance of irrigation and drainage channels, improvement in post-harvest practices, and, in the long run, better flood control and major drainage. Large investments and much more labor will be required to initiate and maintain the various facets of the program. Fur- thermore, larger output will create more income from agriculture, which, in turn, will generate demand for other goods. The program developed in this report is concerned with increasing the output of the agricultural sector. 71. There are four distinct parts to the effort. The first involves policy actions on the part of GOB and GOI. There is little that IBRD can do concerning such actions other than to make suggestions. The second part involves program development and action on the part of GOB. Again IBRD can make constructive suggestions and, perhaps, finance some technical assistance. The third is initiation of three essential studies, which IBRD could help finance. The fourth is implementation of specific projects which are suitable for IBRD financing. An outline of important actions recommended by the Mission is shown below: (a) Policy Considerations: (i) Prices for purchased inputs and crops should provide effective incentives for farmers to use improved technology. (ii) Improved planning, preparation and monitoring of projects is needed so that successful projects and programs can be initiated at a quicker pace and executed efficiently and effectively. - 19 - (iii) Distribution margins to sellers of farm inputs should be sufficient to give them incentives to carry stocks of inputs and to establish convenient retail outlets. (b) Programs (i) Institutional credit should be greatly expanded for the purchase of seasonal inputs and to facilitate longer- term capital investment by farmers, especially smaller farmers. This should also cover strengthening of institutions dealing with groundwater development. (ii) Delivery of purchased inputs to retail outlets should be in sufficient quantity to meet the demand of farmers at the time that the supplies are needed by farmers. (iii) Drought resistant rabi crops and upland crops (maize and soybeans) should be expanded in the Plateau Region. (c) Special Studies (i) A land use map is needed to provide basic information on existing water management and cropping patterns and on adaptability of ecological conditions to changing cropping patterns. (ii) Drainage and flood control of the Ganges and its tributaries are needed to diminish the severity and duration of floods. Over the past 25 years, an average of 1.1 million ha (+ .94 million) I/, including 0.6 million ha (+ 0.48 million) 1/ of crops, has been damaged each year. A comprehensive study of this problem is needed, including the need for storage reservoirs for tributaries of the Ganges in Nepal and the effect of flood control in Bangladesh. (iii) Evaluation studies of minor irrigation works constructed or to be constructed in lakes and streams (Annex 3). (d) Projects (i) Technical advice should be delivered to farmers, which is practical and is delivered at appropriate times - extension and research. (ii) Much larger supplies of irrigation water during the rabi season are needed in north Bihar and the Plains of south Bihar to increase multiple cropping - groundwater develop- ment, tubewells. I/ Standard deviation, two-thirds of the years lie between the average plus and minus one standard deviation. - 20 - (iii) Consolidation of fragmented holdings of land is needed to permit efficient design of irrigation and drainage channels, according to topographical considerations and to permit construction of common facilities in villages, such as feeder roads, schools, godowns and markets. (iv) Better marketing facilities and feeder roads at village and intermediate levels are needed to improve the effi- ciency of distributing farm inputs and marketing farm output. (v) Conservation of harvested grain by reducing waste and spoilage after grain is harvested. 72. Project implementation should be divided into three time slices. (a) The first are those projects which should be implemented quickly and which should have relatively rapid benefits. These projects included (i) and (ii), above. (b) The second category includes projects for which benefits would take somewhat longer to materialize and, in some cases, would take longer to initiate. These projects include numbers (iii), (iv) and (v) above. (c) The third category includes projects which require much more study before initiation and from which benefits will be still longer in materializing. Such a project might develop out of the study recommended under (c)(ii), above (para 71). VIII. MISSION RECOMMENDATIONS Policy Considerations 73. The Mission recommends that careful consideration be given to the relationship between prices charged farmers for purchased inputs and prices paid to farmers for crops. The mission understands that these policies are largely set nationally and consideration must be given to them at the center. However, there are three parts to this problem which should be considered: (a) Margins to sellers of farm inputs would reflect transpor- tation costs and should provide sufficient incentive to encourage retailers to carry sufficient stocks at cri- tical times (Annex 8). Such policies could cause some increase in the prices charged farmers for the inputs and might cause some increase in prices paid to farmers in order to provide appropriate incentives. Thus, a careful study and analysis will be needed, each season, in setting these prices. - 21 - (b) Improved planning, preparation and monitoring for projects in Bihar is largely a State responsibility. These activities are most important to the success of agricultural projects in the State. Therefore, it is recommended that technical assist- ance be provided under the proposed project for research and extension, to enable the development of these activities within the Department ,of Agriculture. The Mission recommends that these activities be directly attached to the APC. The number of officers required to perform these activities is small. The project preparation unit should probably consist of an agri- cultural economist (group leader), an agriculturalist, and a land and water resources specialist for the planning. These officers would utilize various divisions of the Department of Agriculture to obtain information and to organize and to write reports. They would be charged by the APC with the responsibility for seeing that appropriate and high quality planning and project design were accomplished. (c) The monitoring unit would consist of an agricultural economist and a well trained, sampling statistician. These officers should have access to appropriate computational facilities, including hired time on a computer with appropriate support personnel. Their job would be to evaluate development, dis- bursements and effectiveness of specific projects and they would use sampling techniques to accomplish their objective. They should be completely independent of project execution organizations and, again, would report directly to the APC. Programs 74. Institutional credit should be greatly expanded for the purchase of seasonal inputs and to facilitate longer term capital investment by far- mers. The strengthening:of credit institutions in the State is an urgent task (see Annex 7) and there is little that IBRD can do until these institu- tions are stronger. Moves are under way to strengthen the cooperative move- ment and there is some sign that commercial banks are attempting to move into rural areas. However, these movements are in their infancy and should be greatly encouraged. If the institutions are strengthened, funds will be available from the Reserve Bank and ARDC to increase credit resources for farmers, especially for seasonal credit. Although some resources will be available from the Reserve Bank for longer term credit, additional IDA credits may be needed to help such a program. The bylaws of the Land Development Bank (LDB) should be modified to permit loans for tubewells without using land mortgage as collateral. 75. Distribution of fertilizer, seeds and pesticides needs to be im- proved. Larger quantities of inputs will be needed as agriculture develops and the timing of the availability of the supplies should be improved. Such a program requires better estimates of demand by farmers and better orga- nization and managment of the purchase and marketing of inputs. - 22 - 76. In the Plateau Region much can be done to improve agricultural out- put by changing the cropping pattern to produce crops which are better adapted to the soil and climatological conditions of that region. A special project is not needed, but emphasis should be given under the research and extension project to developing this program for the Plateau Region. Two seasons should be considered. One is the kharif season where some of the land should be shifted out of paddy to other crops, such as maize, soybeans and cotton (Annex 2). During the rabi season when there is little rain and because of the scar- city of irrigation resources, drought resistant crops should be developed, such as linseed and safflower. Some of these crops may require additional marketing and processing facilities and studies should be made under the research and extension project concerning the need for such facilities. Studies 77. A land use map using Landsat photography could probably be developed at relatively little cost. Such a map would be most useful in developing a practical research program and in guiding agricultural development. IBRD, in cooperation with GOB, could probably develop such a map at a cost of around $50,000 and this study should be started as soon as possible. 78. The drainage and flood control study is a difficult one because it requires international cooperation and the cost of the studies is not known at this time. The Mission suggests that GOI and GOB initiate planning to determine the appropriate costs of such studies and that IDA encourage a request for technical assistance for these studies. 79. The cost effectiveness of investments in lift irrigation schemes for lakes and perennial streams and storage of water from streams which flow only in the monsoon is questionable. Perhaps, GOB could use equivalent in- vestments more effectively in other types of development for agriculture. An evaluation of those schemes should be made before additional investments are made. Technical assistance by IBRD for such studies would be helpful (Annex 3). Projects 80. This section covers only projects in which IDA would be involved. These projects would require the expenditure of about Rs 2,575 million (US$293 million) but probably less than half of this expenditure would be foreign ex- change. There are five projects included in this list. The list of projects which could be financed are shown below: (i) The Research and Extension Project includes two components, as the name indicates, and preparation should be started immediately. The research component includes training of appropriate personnel for the RAU, the staffing of the main campus of RAU in the Agricultural Sciences and the appropriate staffing of research stations (Annex 5). The Mission emphasizes that the development of the physical - 23 - sciences is important. However, the development of an agri- cultural economics unit, which would work closely with the scientists in the research stations and would also train young men to work in this field, is equally important. Eva- luation of farm budgets and opportunity costs for farmers are badly needed in the State and can only be done if such a unit is effectively operating. The cost of research de- velopment is estimated at about Rs 106 million ($12 million). The extension section of this project would follow the "Benor" principles. It would provide for an agricultural extension staff whose only objective would be to transmit technical information to farmers and who would not be burdened with multiplicity of extraneous duties. A training program for extension workers would be developed and careful coordination between research objectives and extension service would be developed (Annex 4). The extension part of the project probably would!cost about Rs 150 million ($17 million). The entire project would cost about Rs 264 million ($30 million), including about Rs 8 million for technical assistance for planning, project preparation and monitoring. (ii) As stated before, Bihar has large groundwater resources. Not only does the Mission recommend that these groundwater resources be developed as rapidly as possible but GOB has plans for developing private tubewells at the rate of 100,000 per annum. There are problems in reaching such an objective. The minor irrigation departments of GOB would need to be completely reorganized and many additional well drillers would have to be trained. In addition, manage- ment and administration tools would have to be developed to insure that the wells will meet appropriate standards (Annex 3). However, the greatest obstacle lies in stimu- lating the financial institutions to expedite loans for the wells. Many could be channeled through ARDC but a unit is needed in Bihar to stimulate applications for wells, to help solve problems of adequate loan collateral 1/ and to coordinate applications for credit with financial institutions and ARDC. The cost of such a project is estimated at about Rs 572 million ($65 million) per annum and it probably would take at least ten years to obtain 1 million additional wells. Furthermore, a target of 100,000 wells per annum probably could not be attained immediately and might take three to five years to be reached. A project for further developing groundwater should be started immediately with the realization that it will be in operation for many years. The project should include a unit 1/ In the past, mortgages were required as collateral for loans for tube- wells. Many farms are too small to provide adequate collateral under a mortgage system. - 24 - in Bihar to train well contractors and to coordinate appli- cations from farmers to the credit institutions and financing should come from ARDC through the financial institutions of the State. (iii) The small size of farm plots throughout Bihar inhibits the development of all of the projects which the Mission considered. Therefore, the Mission recommends a cadastral survey and land consolidation project. The project should first bring cadastral records up to date and then consolidate local land ownership on a village by village basis so that each farmer has his land in one or, at most, two plots. The size of each operator's holding would not be greatly affected but he would not have his holdings split into several plots. The farms would be laid out so that irrigation and drainage channels could be constructed according to topographical advantage. Land would be reserved for common purposes, including irrigation and drainage channels, roads, market places, godowns, schools etc., in each village. At pre- sent, there are two laws under which such reorganization can take place. One permits voluntary consolidation which requires the consent of 100% of the farm operators in the village and the other is a compulsory land consolidation law. The Mission recommends that these laws be changed to require a two-thirds majority in favor of land consolidation before land consoli- dation is initiated. This provision would provide strong support by the villagers for land consolidation, but it would not provide for a compulsory land consolidation nor would it permit a small minority to block the operation. Although this work should be started immediately, the difficulties are great and it would probably take many years before it is completed. If IDA finances such a project, it might well want to do it in phases rather than to try to do the whole State in one project. The cost of such a project for the State is estimated at around Rs 704 million ($80 million), including the construction of village irrigation and drainage channels. (iv) Many villages are practically isolated, particularly during the monsoon because of poor feeder roads, and these do not have adequate village markets and godowns. The build- ing of these facilities would greatly facilitate the supply of inputs to farmers and the marketing of farmer's produce. These facilities would be associated with the present IDA market project which covers 52 principal markets. However, the present project does not include development of secondary markets nor village markets nor feeder roads. The estimated cost for villages serving all 52 IDA markets is about Rs 616 million ($70 million). However, it probably would be prudent to start such a project with a small group of markets and construct the rest of the facilities in later phases if the first phase proves successful. - 25 - (v) Improvement of village storage and drying probably would reduce wastage of grain significantly. Well designed pest- proof storage bins for use within village houses are avail- able. The Mission believes that a project to finance such storage facilities and perhaps some artificial drying in each village would be fruitful. If half of the villages in the State were covered, the project would cost about Rs 1,260 million (US$143 million). A project covering about one-third of these villages, followed by a second and third phase might be feasible and would cost about Rs 420 million ($48 million). Financing of fumigation chemicals for the storage bins in the first year or two after installation of the metal bins would be desirable. However, credit and repayment for the loans for storage bins would be needed through credit institutions and, therefore, the strengthen- ing of credit institutions should come first (para 71(b)). May 4, 1977