South Asia Agriculture and Rural Growth Discussion Note Series Mar 2020 1 10 LEVERAGING COMMUNITY INSTITUTIONS TO SUPPORT AGRI-BUSINESS AND LIVELIHOODS IN JHARKHAND, INDIA Key findings Average income at baseline for households targeted under JOHAR1 was INR 56,4302, with household size of 5.34 and average per capita income of INR 10,567. JOHAR’s high value agriculture (HVA) crops have significantly higher (3.3 times) gross sales per acre compared to non-HVA crops. Access to irrigation was a major predictor of whether households cultivate HVA crops in multiple seasons. The average net income per acre for irrigated land was 2.67 times that of non-irrigated land. Context Jharkhand has the second lowest income demand for agriculture production and level among all states in India despite enterprise. The National Rural Livelihoods having the largest share of mineral The JOHAR project was initiated in 2017 Mission, supported by the resources and impressive economic to aid targeted rural producer households World Bank, has been performance during the 12th five-year plan to diversify and enhance their household implemented in Jharkhand (2012–2017). More than half of Jharkhand’s income, and achieve a significant increase labor force relies on agriculture and allied over the past several years, in real income till 2023 in selected blocks of sectors, and a large portion of the farming and has built a robust platform rural Jharkhand. JOHAR builds on the work community consists of small and marginal of community institutions that of the National Rural Livelihoods Mission farmers3, who practice rain-fed single crop include women self help groups (NRLM) in the state. subsistence farming. Access to irrigation (SHGs) and their federations. is critical and its absence leads to lower The JOHAR project recently completed a JOHAR’s objective is to use income levels since it limits crop choice, baseline for the project evaluation using this base of women SHGs and yield and cropping intensity. Further, poor randomized controlled trial, supplemented their federations to enhance market access and an underdeveloped with a non-random control group outside and diversify household financial sector limit options and incomes the program area that would provide a counterfactual based on an additional income in select farm and for small producers; persistent gender gaps in agriculture limit access and control for quasi-experimental design. The data non-farm sectors for targeted women; and skill development in agriculture presented are primarily from surveys beneficiaries in project areas. and allied sectors lags behind the growing of women self help groups (SHGs) and 1. Jharkhand Opportunities for Harnessing Rural Growth. 2. The average monthly household income in INR 5,854 for Jharkhand. Source: NABARD All India Rural Financial Inclusion Survey (2016-17). 3. For more details on the project see: World Bank. 2017. India - Jharkhand Opportunities for Harnessing Rural Growth (JOHAR) Project (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/303211498576866109/India-Jharkhand-Opportunities-for-Harnessing-Rural-Growth-JOHAR-Project 2 households conducted between August and outcomes. The purpose of this note is to beneficiaries, and outlines how the project November 2018. The discussion focuses on present key baseline results and how they can achieve its target of enhancing and 13 program intervention blocks (302 SHGs validate the project’s theory of change. It diversifying the income of rural producer and 1,568 households) to inform improved summarizes the findings from the baseline, households. implementation and attainment of intended presents the status-quo on potential JOHAR Interventions I. Institutional interventions, which include the collectivization of producers into producer groups (PGs) and Farmer Producer Organizations (FPOs) that provides the base for the delivery of other interventions. II. Input interventions, which include provision of higher quality seeds or hatchlings and establishment of infrastructure (such as irrigation systems or animal sheds). III. Market interventions, which include supporting farmers to move up the value chain and undertake additional activities, such as sorting and grading Image Credit : JSLPS or processing, before they sell their produce. The project has complex impact pathways chain of inputs, outputs, initial outcomes, with multiple intervention components. The intermediate outcomes, final outcomes and IV. Credit or finance interventions, theory of change, presented here, describes impact (discussed below). which improve the availability of finance the project and its strategy to push target to producers by providing access to •• There are five types of intervention credit from community institutions as well households along the impact pathways in a inputs: as financial institutions. simplified framework, organized as a results JOHAR theory of change showing impact pathways Increased Increased availability Input income and quality of inputs; Collectivization into PGs and FPOs Interventions lower costs of inputs Institutional Interventions: Higher prices or Increased sales Market Improved market access greater value add revenue Interventions Credit/Finance Increased availability Interventions and access to credit Changes in Increased production production decisions - Quantity - Use of inputs (productivity + area) Improvement in farmer - Diversification - Quality Skills and Knowledge knowledge and - Output mix Interventions information and increase in farmer skills Convergence Inputs Outputs Initial Outcomes Intermediate Outcomes Final Outcomes Impact 3 V. Skills and knowledge inputs, as well as lower cost of inputs. through diversification or increased use interventions, such as trainings on II. Improved market access. of inputs; which in turn would lead to the prescribed package of practices, increased production and/or productivity III. Improved access and increased capacity building, and the provision (intermediate outcome) and increased availability of finance. of climate information and market sales revenue (final outcome). intelligence. IV. Improved knowledge and increase in skills. •• The above outcomes, in turn, are expected to lead to an impact in terms •• The above inputs are expected to lead to •• The above outputs would enable of meeting the program targets of four related outputs: producers to change their production increased household income of targeted I. Increased and improved availability of decisions (initial outcome), such as producer households. Key Learnings This section summarizes key learnings from the recently completed baseline for the project evaluation4. Enhancing incomes from agriculture requires shifting to production of HVA crops and increasing cropping intensity through multi-season cropping. HVA cultivation has the potential to yield higher returns, given that HVA crops have significantly higher average gross sales per acre (3.3 times) than non-HVA crops. However, data shows that only 67 percent of the households cultivate (any) HVA crops, that too allocated in fragmented and small landholdings (on average 0.08 acres per household). Image Credit : Rohit Jain HVA production is strongly correlated with the ownership of midland and upland, and the use of irrigation. It is not correlated zaid (0.03 acres) seasons leading to a low season use. Only 41 percent of households with landholding size or other independent cropping intensity of 110 percent. have access to some form of irrigation on variables. This validates the emphasis To enhance rural incomes, JOHAR would their land, mainly as private wells. Of these, on providing irrigation to households to need to focus on increasing the total area only half and two-thirds of households use facilitate HVA cultivation and suggests that under HVA cultivation, primarily through it during kharif5 and rabi seasons (with the project should focus on upland and three potential pathways. First, by nudging variation by topography) respectively, midland. This is further supported by the and incentivizing existing HVA farmers which falls to a quarter or less during the fact that 82.9 percent of households who to expand their land allocation to HVA summer season. This could be due to lack have access to irrigation undertake HVA cultivation. Second, by supporting traditional of availability of water, such as wells drying cultivation compared to 56.6 percent of non-HVA farmers to undertake HVA up. This and other barriers to using irrigation households without irrigation. cultivation. Third, by enabling both HVA and need to be overcome. Findings from the non-HVA farmers to cultivate HVA in more baseline survey suggest that irrigation could Furthermore, HVA crops allow cultivation seasons than they currently do. increase the current average cropping in multiple seasons. While 99 percent of intensity from 110 percent to 193 percent. the JOHAR target households cultivate in the kharif (monsoon) season, 47 percent Increasing irrigation coverage is cultivate in the rabi (winter) season and only key to increasing land use and Adopting new practices holds multi-season cropping.The average potential to reduce costs and 14 percent cultivate in the zaid (summer) net income per acre for irrigated land is 2.67 improve productivity. The baseline season. The average cultivated areas times that of non-irrigated land due to multi- data suggest a huge potential to increase are quite low during rabi (0.14 acres) and 4. For more details on the baseline see: http://jslps.org/wp-content/uploads/JOHAR-IE-Baseline-Report.pdf. 5. It is presumed that irrigation used in kharif is low because people are relying on rainfall. 4 productivity, as there are significant Variations in productivity across households productivity differentials across households, with the most productive households Kg/acre by decile producing 10 times more per acre than the least productive households6. 5000 This suggests that many farmers have the 4500 potential to increase productivity through 4000 adoption of new practices already being 3500 Kg/acre practiced by their neighbors. 3000 Most farmer households suffered from lower 2500 net income owing to high cost of inputs (up to 45 percent of gross income) and 2000 low sales prices, primarily due to market 1500 inefficiencies (such as poor market linkages, 1000 multiple dealers and middlemen). The low 500 degree of collectivization further created an impediment to leveraging the benefits of 0 0 1 2 3 4 5 6 7 8 9 economies of scale in input procurement, as well as the sale of the final produce. Decile Further, there is potential for income gains higher level markets by reducing market example of tomato price differentials across through collectively selling produce at inefficiencies. The table below shows an various markets. Average sale price of tomato at various levels of markets Proportion of households Markets selling tomato in the market Average price for tomato in (%) the market (INR/kg) Farmgate 15.28 15.91 Village 55.14 12.76 Block 32.22 21.56 Low access to credit limits the amount of savings per member was productivity and climate ability of target households, modest, and only in one-third of instances resilience. Less than 4 percent of the and low lending from SHGs did the respondents report that savings households received any skills training limits their capability to meet were loaned out immediately. Low savings in the past three years. This holds back project objectives. Only 16 percent and lending limits the capacity of SHGs to adoption of new practices and skills training of households had a loan in the past year. meet the project goals of extending financial support is required to augment the capacity Of these, only around a third reported using support for value chain activities, such as of participating farmers. Further, adverse the credit to purchase farm assets; most processing, marketing and undertaking weather conditions make farmer households reported using it for non-income generating agri-business. vulnerable to crop loss. Less than 1 percent activities. Further, despite high participation of households reported having received any rates in SHG savings activities, the savings Low knowledge and training training in climate-related stresses and their generated were low and often not utilized for on new practices needs to impact on livelihoods or having adopted productive purposes. The mean prescribed be addressed to improve any farm-level practices to cope better 6. Producer households are ranked by output productivity (kilograms produced by acre). 5 Image Credit : Rohit Jain with climate change. Supporting farmers to and non-timber forest products these vulnerable households by providing manage climate risk and other shocks would (NTFPs) to address vulnerability opportunities to adopt allied production increase income and de-risk investments in in the form of low levels of activities, such as livestock rearing, fish diversified and intensified production. diversification and high rates farming in community-owned water bodies, of landlessness. Baseline data at and collection or processing of NTFP would Significant scope for promoting the village level showed that 27 percent be key in addressing the needs of landless livestock development and of scheduled castes, 19 percent of households. This effort of supporting significant efforts to nudge other backward castes and 9 percent of vulnerable households requires focus, households to take up fisheries scheduled tribes were landless. Supporting since only 6 percent of households reported Contribution of various income sources toward average annual household income Non-Timber Forest Product (NTFP) Livestock Wages Agriculture Other sources Enterprise National Rural Employment Guarantee Act (NREGA) 6 livestock as a primary or secondary activity, even though 42 percent of households reported owning a goat. This suggests significant scope for promoting livestock as a profitable economic activity. Data suggests that impediments for women livestock producers include inadequate knowledge on scientific management practices, compounded by a lack of formal training. JOHAR needs to focus on alleviating these issues. Further, only 10 percent of target households reported engagement in the collection or processing of NTFP, which implies that significant effort would be needed in nudging households, whether landless or landed, to engage in the collection or processing of NTFP. Image Credit : Rohit Jain Way Forward The data collected for the project baseline producer households in Jharkhand7. adoption of good practices, collective evaluation validates the project’s theory of In particular, facilitating irrigation and marketing of produce, improving access change, by showing that diversification switching to HVA cropping has the to credit, and promoting supplementary and intensification of production can potential to transform incomes. This can income generating activities. significantly increase incomes for rural be supplemented by supporting broader 7. Average gross sales per acre for households that only cultivate paddy is INR 20,290, whereas is INR 37,464 for households that cultivate paddy and HVA. ABOUT THE DISCUSSION NOTE SERIES This note is part of the South Asia Agriculture and Rural Growth Discussion Note Series, that seeks to disseminate operational learnings and implementation experiences from World Bank financed rural, agriculture and food systems programs in South Asia. Author: Bipin Bihari, Jasmeet Khanuja, Anand Kothari, Tom Newton-Lewis & Gurpreet Singh Series editor: Vani Kurup Publication Design & Illustrations: Parth Varshney We are grateful for the generous support from DFID. Disclaimer: The findings, interpretations, and conclusions expressed in this note are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent.