Innovative Strategies for Employment Generation & Rural Prosperity in Agriculture

 

This paper examines economically viable, employment-oriented programmes for production of biomass fuels for electric power, fuel for motor vehicles and edible oils on India's huge extent of degraded wastelands and for production of ethanol from sugarcane for blending with petroleum based motor fuels. In combination, these programmes can generate more than 15 million additional employment opportunities within five years, while creating more than fifty thousands crores of additional rural income, reducing India's dependence on imported fuel and edible oils, establishing a national network of rural power plants, and reducing environmental pollution.

I. Wasteland Development Programmes

India has approximately 50 million hectares of degraded wasteland that lie outside the areas demarcated as national forests. Development of these wastelands offers enormous potential both for economic development and sustainable employment generation.

A. Challenges of Wasteland Development

• Low soil fertility
• Little or no irrigation potential
• Not Suitable for cash crops that require fertile soil & continuous water supply
• High cost of investment in soil & irrigation development (cost per acre) beyond the reach of most rural families
• Improved technology required to make lands productive is beyond the skill levels of poor families
• Complex organization required for land development, cultivation, production & marketing

B. Viable Programmes

These wastelands can be developed in a variety of ways designed to meet the needs of a growing India economy:

• Biomass energy plantations for fast-growing tree and bush crops to generate electricity on marginal waste land.
• Oilseed plantations to produce edible and fuel oil on medium grade waste land.

C. Employment Potential

A combination of these programmes can be simultaneously launched in virtually all parts of the country. All of the programmes would create large numbers of jobs for landless rural families. It is estimated that two hectares of cultivated waste land can generate an annual income of approximately Rs 15,000-25,000 and year-round employment for one person. If the programmes discussed below are extended over an additional four million hectares each year, then year-round employment can be created for 12.5 million persons within five years.

2. Energy Plantations for Biomass Power Generation

A. Concept

Cultivation of fast-growing trees such as casurina equistifolia and bush crops such as prosopis juliflora can serve as biomass fuel for establishing a national network of decentralized rural power plants. These power plants, ranging in size from 10-25 MW, can generate thousands of megawatts of power from renewable, forest-based fuel sources in a cost-effective manner. This would reduce India's dependence on imported fuel oils, stimulate private investment in the power sector, and generate massive income and employment opportunities for the rural poor.

In order to meet pent up demand, India needs to create an additional 100,000 MW of power generation capacity during the 10^th Plan period. Establishment of 10 million hectares of energy plantation will be sufficient to generate 25,000 MW of power generation and provide year-round employment for 7.5 million people.

B. Energy Plantation

Casurina is a fast growing tree that can be cultivated on marginal waste land and harvested on a rotating basis from the third to fourth year onwards. Casurina is already commercially cultivated over wide tracks in the southern states, primarily as a rain-fed crop for fuel and construction. It can also be used as pulp for papermaking. It has been found an excellent species for environmental control of erosion, stabilization of soils and reclamation of poor soils. Casurina has a calorific value of about 3500 k calories and contains less water than most wood species.

• One hectare of casurina under rainfed conditions can produce on average 200 tons of fuel in four to five years, an average of 40 to 50 tons per annum.
• It requires 10,000 tons of casurina to generate one megawatt for a year.
• By harvesting the crop on a rotating basis, a standing plantation of 250 hectares is sufficient to generate one megawatt of power. A 2500 hectare casurina energy plantation can support a 10-12 MW power plant.
• Assuming a net farm selling price of Rs 700 per ton, one hectare of casurina can generate year-round net income of Rs 28,000.
• Allocating one hectare per person, each 10 MW power plant can provide employment for 2500 persons.

Prosopis is a thorny plant that already grows wild on extensive areas of wasteland and serves as a fence, but is not being harvested or utilized for commercial purposes. It grows rapidly, producing about 10 tons of biomass on dry-weight basis per hectare per annum. The wood is hardy with calorific value of about 4000, as compared with 3000 for coal. It grows well in sandy, loamy, sodic, saline, alkaline and marshy soils with very little input and at very low cost. The biomass is an excellent raw material for power generation. A 1000 hectares of rain-fed prosopis can provide sufficient fuel to generate one MW of electric power.

• One hectare of prosopis under rainfed conditions can produce on average 10 tons of fuel per hectare per year, from the 3^rd year onwards.
• By harvesting the crop on a rotating basis, a standing plantation of 1000 hectares is sufficient to generate one megawatt of power. A 10,000 hectare prosopis energy plantation can support a 10 MW power plant.
• Assuming a net farm selling price of Rs 700 per ton, one hectare of prosopis can generate year-round net income of Rs 7,000.
• Each hectare requires 100 man-days per annum of labour input.
• Allocating two hectares per person, a 10 MW power plant can provide employment for 5,000 persons, each earning Rs 14,000 per annum.

A portion of the wasteland needed for energy plantation can be leased out to private parties and cultivated by landless families using advanced practices with fast growing tree crops. Corporate control of a portion of the land will ensure availability of raw material which is essential to attract private investment in the power plants. Local landless labour will be employed by the corporates for cultivation and harvesting. An equal area can be leased directly to landless families to cultivate the same crops and register their crop with the power plant to obtain bank finance to meet the cost of cultivation.

C. Economics of Cultivation

 

	Casurina	Prosopis
Initial cost of cultivation 1st year (w/o labour)	Rs 2000	Rs 500
Gestation period	5 years	3 years
Capital cost till harvesting begins/hectare	Rs 6000	Rs 500
Average yield per hectare per year	40 tons	10 tons
Price per ton (net at farm)	Rs 700	Rs 700
Average annual gross income per hectare	Rs 28,000	Rs 7000
Average annual net income per hectare	Rs 27,000 from year 5	Rs 7000 from year 3
Plantation for 10 MW power	2500 hectares	10,000 hectares
Employment generation per plantation	2500 persons	5000 persons
Average annual income per person	Rs 27,000	Rs 14,000

D. Power Plants

• • ­Mini-power plants in the size range of 10 to 25 MW utilizing biomass such as casurina, prosopis and paddy straw are already operational and commercially viable in several Indian states.
  • The local power plants will provide an assured market for the energy plantation crops at pre-negotiated prices and reduce the cost of transporting the crop from field to market.
  • All power generation equipment is indigenously fabricated and readily available.
  • The power plants will cost approximately Rs. 3 crores per megawatt. The low capital investment in the power projects will make them attractive to Indian entrepreneurs and reduce dependence on large power projects with long gestation periods and foreign investment.
  • Based on a farm sale price of Rs. 700 per ton for the fuel, the cost of power generation is Rs. 3.00 per unit, compared to Rs 2.50 for coal and Rs. 4.00 for petroleum based power plants utilizing imported fuels. In addition, wood generates far less pollution than either coal or oil.

E. Programme Benefits

These rural plantation and power projects offer a variety of advantages:

• • Establishment of 10 million hectares of energy plantation will be sufficient to generate 25,000 MW of power generation
  • Cultivation of 10 million hectares of energy plantations alone will generates direct year-round employment for 7.5 million persons and rural income of Rs 20,000 crores.
  • Purchase of fuel from rural families generates rural jobs and rural prosperity rather than expenditure of foreign exchange.
  • Power plants can be located in every district and taluq of the country, providing the essential infrastructure for rural industrialization.
  • Local power distribution will also reduce transmission losses from the current 18-13% down to 10%.
  • Locally grown bio-fuel will reduce dependence on imported fuels.
  • General improvement in water harvest and increases the sub-soil water table.

o Better soil Conservation and fertility improvement.

o The expansion of forest area will increase rainfall, reduce the run-off of rainwater and raise the water table throughout the state.

F. Implementation Strategies

The challenge is how to implement the projects in a manner that will generate maximum income and employment for the rural poor. Several options need to be considered:

1) Development and cultivation of wastelands by small farmers & landless labour suffers from the following limitations --

o Lack of capital among this group

o Lack of technical expertise among this group

o Lack of commercial organization among this group

o Difficult to organize

o Will end up subletting land or not using it

2) Development and cultivation of wastelands by Government / Co-operative suffers from the following limitations --

o Requires heavy capital investment

o Commercial expertise needed

o Continuous management required

3) Development and cultivation by private sector/Small farmer in collaboration has the following advantages --

o Private sector has capacity to invest in industrial projects and land development

o Private sector has access to technology and capacity to disseminate it

o Private sector has commercial organization for marketing

o Small farmers & landless labour can supply labour and also cultivate land

4) Viable Approach

o Assign suitable land for each project in different parts of the state

o Lease 50% of the required land to corporates willing to invest in the approved agro-enterprises

o Assign the balance 50% to rural families for cultivation as a registered crop and supply of produce to the power plants.

o Cooperative power plants can also be established in regions such as Maharashtra where agricultural cooperatives have proven effective.

o Nationalized banks can be directed to extend crop loans to farmers based on registration of their crops with the local power plant, in the same manner as crop loans are now commonly extended to sugarcane cultivators whose crops are registered with nearby local sugar factory.

G. Policy Issues

1) Government should permit and encourage 30 year leasing of wastelands to corporates based on contractual commitments to cultivate fuel wood and oil crops and to purchase similar materials from farmers in surrounding areas.

2) Government power policy should encourage private sector investment in biomass-based power plants.

3. Oilseed Plantations

A. Concept

Cultivation of oil bearing crops such as Paradise tree and Curcas plants on medium grade wastelands can serve as an economically attractive alternative to the import of fuel oil and edible oils. Establishment of local oil extraction units can stimulate rural industrialization. Establishment of 10 million hectares of oilseeds plantation will be sufficient to provide 5 million year-round employment opportunities.

B. Crops

1) Paradise tree (simaruba glauca) -- This Brazilian oilseed bearing plant is a drought-resistant, high-yielding, perennial ever-green tree ideally suited for wasteland areas of India. It grows under rainfed conditions and requires minimal inputs. It starts bearing seeds from the 3^rd or 4^th year. The seeds contain 50% oil, which when refined is very similar in characteristics to groundnut oil. India currently produces 18 million tons of edible oil per annum, a shortfall of 3 million tons less than current domestic consumption. The National Oilseeds & Vegetable Development Board has already identified this crop and recommended its widespread cultivation in India. Cultivation of 5 million hectares of Paradise tree over five years can meet the entire shortfall in the country's edible oil production.

o Planting pattern - 250 plants per hectare @ Rs 10 per plant

o Cost of cultivation per hectare - Rs 3000 in 1^st year for plants & fertilizer (labour till maturity not included)

o Gestation - 3-4 years

o Yield per hectare -1500 kg seeds & 750 kg oil

o Sale price of oil - Rs 30/kg (assume Rs 20 to farmer, Rs 10 to expeller)

o Income per hectare - Rs 15,000 per annum from 4^th year onwards

o Edible oil produced per hectare - 750 kg

o Proposed area for cultivation - 5 million hectares in five years

o Employment - 100 man-days per hectare per year

o Total employment - 2.5 million permanent jobs

o Total income generated - Rs 7500 crores

 

2) Curcas (jatropa curcas) - This plant was introduced from Africa, where it grows in the wild. A wild species already grows in India and is often used as a fence crop. The plant produces large quantities of seeds which contain up to 35% oil. The oil is a bio-fuel and substitute for No.2 diesel and kerosene. It can be blended in diesel motor fuels up to 15%. The cost of production is competitive with other fuel oils. In addition, curcas oil can be utilized in the manufacture of soap, paints and varnishes. The oil cake is highly nutritive as an organic manure which is superior to poultry manure. The crop starts yielding from the 3rd year and continues bearing contcfor 25-30 years.

o Planting pattern - 1200 plants per hectare @ Rs 2 per plant

o Cost of cultivation per hectare - Rs 3000 in 1^st year for plants & fertilizer (labour till maturity not included)

o Gestation - yield from 3^rd year onwards

o Farm yield per hectare -

• 2250 kg of oil seed containing 750 kg of oil
• 1500 kg of oil cake
• 1000 kg of pulp manure (nitrogen rich manure can be used to extract biogas for power generation and then used as a fertilizer).
  • Sale price of farm produce - Rs 5/kg of seed; Rs 3-4 for oil cake, and Rs 1.50-2.00 /kg of manure
  • Income of farmer per hectare - Rs 18,000 per annum from 3^th year onwards
  • Value added income of oil industry - Rs 6,000 per hectare per year
  • Oil Produced - 750 kg per hectare valued at Rs 20 per kg = Rs 15,000
  • Employment - 100 man-days per hectare per year
  • Proposed area for cultivation - 5 million hectares in five years
  • Total employment - 2.5 million permanent jobs
  • Total income generated - Rs 12,000 crores

C. Oilseed extraction industries

Oil can be extracted from both Paradise seeds and Curcas by means of small oil expeller units suitable for operation in rural areas. Establishment of 2500 units to process the oil from these plantation crops will serve as a stimulus to rural entrepreneurship and rural industrialization.

o Investment per 10 ton per day oil expeller unit - Rs 10 lakhs, including

• Plant & machinery - Rs 5 lakhs
• Civil works - Rs 5 lakhs
  • Capacity - 10 tons of oil per day, equivalent to 4000 hectares per annum
  • Number of expeller units -
• 250 expellers per million hectares
• 2500 expellers for 10 million hectares

II. Bio-Fuel from sugarcane

A. Concept

India is currently producing surplus sugar and is holding stocks equivalent to 8 months domestic requirement. Export of the sugar is not viable because low productivity and high cost of production make Indian sugar uncompetitive on the international market. This proposal is to utilize sugarcane and molasses as raw material for the production of ethanol that can be mixed with petroleum products as a fuel for motor vehicles.

The programme will derive the sugarcane for ethanol production from three sources

• Diversion of excess cane from sugar to ethanol production - this will reduce the current unmarketable surplus and stimulate additional production.
• Increasing productivity of existing irrigated sugarcane fields by a minimum of 25% (actual potential is to increase average yields up to 100%) -- this will reduce the cost of cultivation and make Indian sugarcane internationally competitive.
• Expansion of the total area under sugarcane by 20% utilizing advanced cultivation practices - this will generate new job opportunities and generate sufficient ethanol as well as exportable (low cost) sugar.

B. Ethanol Fuel

Ethanol can be blended with motor fuels up to 5-10% without any modification of vehicles with fuel injection systems and can be used in higher blends up to 95% in modified vehicles. Ethanol blends generate significantly less pollution than alternative petroleum-based fuels.

Ethanol based motor fuel (gasohol) has been proven both technologically and economically viable and is widely used in over 20 countries, such as Brazil, Canada, Sweden and USA. The USA consumes nearly 4 billion liters of ethanol as mixed fuel annually. Currently about 41% of Brazil's demand for transportation fuel is met by ethanol, equivalent to more than 200,000 barrels of oil per day. Brazil has more than 4 million vehicles running on a 95% ethanol blend. The country is consuming more than 16 billion liters of ethanol annually, enabling it to reduce its oil imports by 70% between 1979 and 1992 while cutting reliance on imported oil from 43% to 22%.

Government of India has recently granted approval for adding up to 5% ethanol to petrol. Experience in other countries indicates that a 10% blend can be utilized in unmodified engines. Ethanol can also be blended with diesel fuels in unmodified engines up to 10% as well.

India presently consumes approximately 40 million tons of diesel fuel and 6 million tons of petrol per annum. Assuming a 10% blend of ethanol with petrol and diesel, the total requirement of ethanol would be 4.6 million tons per annum, equivalent to 4.6 billion liters. With engine modification, much higher ethanol blends can be utilized, created a potential demand for more than 10 billion liters of ethanol per annum.

The cost of production of ethanol fuel from sugarcane will be approximately Rs 18 liter, of which 2/3^rd will go as income to farmers.

Total current production of ethanol in India (primarily from molasses) is 1.3 billion liters, of which 50% is used for industrial purposes and 50% for potable purposes.

C. Sugarcane

India currently produces approximately 300 million tons of sugarcane annually, of which 60% is crushed for sugar production and 40% for jaggary and other products. The 180 million tons of cane is converted into 18 million tons of sugar and 8 million tons of molasses annually. Current domestic sugar consumption is only 15 million tons. Since the cost of production in India is above the international level, surplus sugar accumulates. India's current stock of surplus sugar is 10 million tons, equivalent to 8 months consumption.

Assuming that 25 million tons of sugarcane is diverted from sugar production for production of ethanol fuel, an additional 1.6 billion liters of ethanol can be produced. Additional ethanol can be produced by increasing the yield of sugarcane and total area under sugarcane.

By international standards, productivity of sugarcane is extremely low in India. Introducing improved agricultural practices can raise average yields up to 100%. A national farm school education programme demonstrating internationally proven practices can easily increase average productivity by 25%.

D. Programme

1. Divert 25 million tons of sugarcane (8% of total cane) to ethanol production, resulting in production of 1.6 billion liters of ethanol fuel.

2. Establish sugarcane farm schools in all sugarcane growing areas to demonstrate advanced agricultural practices to increase the average productivity of existing sugarcane fields by 25%. This can result in production of an additional 75 million tons of sugarcane, sufficient for production of 4.8 billion liters of ethanol.

3. Expand the total area under sugarcane cultivation by 20% or 800,000 hectares utilizing advanced cultivation practices. This can result in additional cane production of 75 million tons, sufficient to produce and additional 4.8 billion liters of ethanol.

4. Establish 400-450 new processing plants to convert 175 million tons of sugarcane. The additional six million tons of molasses can be processed into ethanol in India's existing distilleries, which are underutilized.

5. Total ethanol production from these programmes would be 11.2 billion liters per annum.

6. The additional begasse produced by the programme would be sufficient to generate more than 20 billion units of electricity valued at Rs 6000 crores.

E. Programme Benefits

1) The programme produce 11.2 million tons of ethanol fuel per annum, valued at Rs 17,000 crores, as a substitute for imported oil.

2) The most significant benefit of the programme is that it can help meet the nation's energy requirements in a manner that generates additional rural income of Rs. 10,000 to 12,000 crores, rather than by expenditure of foreign exchange to generate prosperity in petroleum producing countries.

3) Improving the productivity of sugarcane can bring down the price of sugar to internationally competitive levels so that surplus production can be exported.

4) The higher cane yields and additional area cultivated will generate 2.5 million additional employment opportunities.

5) The programme can produce 30 billion units of electricity from begasse valued at Rs 9000 crores.

F. Approach

1) Since sugarcane production is presently in excess of domestic requirement, a portion of present production can be diverted to ethanol production. Additional areas can be identified for growing sugarcane exclusively for ethanol production. In addition, availability of sugarcane can be increased by a concerted effort to improve the productivity and efficiency of existing sugarcane cultivation.

2) Apply advanced soil management and cultivation practices based on technology offered to double the average yield of sugarcane production, while utilizing less water per acre by introducing improved methods for land preparation, improved methods to enrich soil fertility, and improved water utilization

3) Convert the additional sugar production into ethanol for use as cleaner burning automotive fuel in mixture with petrol. The locally produced alcohol mixed fuel will be fully price-competitive with imported oil.

G. Policy Issues

1) Government of India should sanction ethanol blends up to 10% in both petrol and diesel fuel.

2) Existing sugar factories should be licensed to produce ethanol in areas where they can increase sugarcane productivity or expand the area under sugarcane.

3) New ethanol factories should be licensed in areas where additional cane can be cultivated.

III. programme summary

 

 

Project	Area (Ha)	Plan Investment (Crore Rs)	Income Generation (Crore Rs)	Job Creation	Gestation
Energy plantations Prosopis Casurina	5 million 5 million wasteland	250 2500	6,500 13,500	7.5 million	3 years 5 years
Oilseed plantations Edible oil Fuel oil	5 million 5 million wasteland	Crop 3000 Industry 250	20,000	5.0 million	3-4 years
Ethanol plantations	800,000 irrigated	Crop 4,800 Industry 21,000 Power	12,000 5,000 6,000	2.5 million	1 year
Total	20 million wasteland 800,000 irrigated	Rs 33,000 crores	Rs 63,000 crores	15 million jobs