1.
Cost-benefit analysis of agricultural interventions
in Rajasthan
Surabhi Mittal
Agricultural Economist
India, Jaipur 8-10 June 2018

2.
Background
• Aim to double farmer incomes by 2022
• About 65% population of Rajasthan is dependent on agriculture and
allied activities for their livelihood
• Its important to reduce instability in agricultural production
• Need to review policies related to productivity enhancement which
may provide pathways to improving incomes.
• The Government of Rajasthan is focusing on increasing the seed
replacement rate, enhancing crop productivity through improved soil
health, crop diversification towards high value commodities, and
strengthening the extension system, along with improved livestock-
based systems

3.
Challenge
• Climate change
• Traditional cropping pattern
• low seed replacement rates
• Poor soil quality
• Limited access to information and advice.
• Small and marginal farmers, who make up 80 percent of the total
farming sector in India, are particularly vulnerable to these issues.

4.
Interventions analyzed
Adoption
of
certified
seed
Crop
diversifica
tion
Soil
Health
Cards
Improving
Extension
system
with ICT

5.
1st Intervention
Certified seed through better seed
replacement rates

6.
The Problem
• The seed replacement rates and varietal replacement are low for most
of the crops
• This hinders introducing high yielding varieties
The Solution
• Encourage farmers to adopt certified seed production
• Improved SRR which would result in producing higher yields.
• Rajasthan State Seeds Corporation has taken steps to enhance the
processing, storage and marketing capacity for next five years

7.
CostsTotal cost- Rs. 584 crores
(higher SRR over a period of 3 years)
Cost of production of the
additional seed required to
achieve the higher SRR
Cost of promotion to increase
the adoption of the improved
seed (rs 186/ha)
Expanding extension,
demonstration and field
days

8.
Benefits
Increased yields
because of the use
of certified seed.
Higher yields lead
to increased
production (10%
yield increase is
assumed)
Better incomes
Total benefits - Rs.
11,586 crores

9.
Benefit cost ratios
Intervention Discount
Rate
Benefit (in
Crore Rs.)
Cost (in
Crore Rs.)
BCR
Certified seed
Production
3% 11,811 596 20
5% 11,586 584 20
8% 11,264 568 20

10.
2nd Intervention
Crop diversification

11.
The Problem
• Lack of diversification leads to greater risks of poor yields and crop
failure
The Solution
• Rajasthan government also proposes crop diversification as a part of
their strategy to double farmer incomes by 2022
• Moving away from traditional cropping systems to high value crops.
• Crop diversification provides a common solution for income and
resource sustainability
• Current threat from climate change, crop diversification would act as a
risk mitigation strategy for the farmers

12.
Costs
Cost 1
• Crop diversification interventions account for changing cropping patterns
• shift in area between crops and increased crop intensification
• Costs are based on the change in area (the percentage annual change in area
between 2011-17 for thirty major crops grown in Rajasthan)
Cost 2
• Cost of extension services. @Rs186/ha - Rs 451 crore per year for the entire
state of Rajasthan.
Total cost of this intervention is estimated at Rs. 4,074 crores.

13.
Benefits
Benefit 1
• change in value of agricultural produce at the wholesale prices
Benefit 2
• environmental gains because of diversifying away from high water consuming
crops.
• cotton and soybean is taken as they are high on water footprint. The value of
water savings is taken as Rs 8 per m3 i.e. Rs. 8 per 1000L and the total benefits
are 76 crore.
Total benefits estimated for this intervention is Rs. 4,176 crores.

14.
Benefit cost ratios
Intervention Discount
Rate
Benefit (in
Crore Rs.)
Cost (in
Crore Rs.)
BCR
Crop
Diversification
3% 4,257 4,153 1.0
5% 4,176 4,074 1.0
8% 4,060 3,961 1.0

15.
3rd Intervention
Soil Health Cards

16.
The Problem
• Consumption of NPK as a ratio is 6.7:2.4:1, which is highly skewed
towards nitrogen
The Solution
• Soil Health Card Scheme - Balanced use of fertilizers
• Soil health is necessary to ensure higher crop productivity
• Better soil health helps reduce the cost of production and improve
yields.

17.
• The cost built up over the
three years.
• Soil samples considered for
the cost analysis are as per
the targets of cycle 2 for
Rajasthan, which is 11.54
lakhs per year (46% of HH)
• Utilization of
recommendations is low-
targeted to reach 50% in 3
years
• The largest cost is of
micronutrients
• The total cost of this
intervention is estimated at
Rs. 2,406 crores.
Costs
• The main benefit
from the adoption
of SHC
• reduced cost of
fertilizer and manure
because of improved
efficiency
• leads to yield gains
• Better incomes
• The total benefits of
this intervention are
estimated at Rs.
2,601 crores.
Benefits

18.
Intervention Discount
Rate
Benefit (in
Crore Rs.)
Cost (in
Crore Rs.)
BCR
Soil Health Card 3% 2,722 2,517 1.1
5% 2,601 2,406 1.1
8% 2,435 2,253 1.1
Benefit cost ratios

19.
4th Intervention
Improved reachability of extension
system with ICT

20.
The Problem
• Public sector extension services are usually criticized for their
ineffective targeting, poor reach and the huge administrative cost of
delivering information
The Solution
• This intervention seeks to rely on ICT for improving the existing
extension services.
• The overall goal of using the mobile phone-enabled information
delivery mechanism is to have inclusive growth by reducing the
knowledge gap between large and small farmers and by creating
awareness.

21.
Costs
• The costs is a sum of three components (for mobile users)
• Cost of delivering agricultural advisories through SMS
• Cost of IVRS (Integrated Voice Recording Service)
• Other costs of operations.
• The total costs of the intervention are Rs. 1899 crore over five years
Benefits
• Increased farmer incomes- HH that have access to ICT based advisories have 16 percent
higher profits
• Utilization assumed to be 60% in 5 years
• average of small and marginal farmers is taken as the base income figure to remove the
bias because of large farming households
• Total benefits of this intervention are estimated at Rs. 6,862 crores.

22.
Intervention Discount
Rate
Benefit (in
Crore Rs.)
Cost (in
Crore Rs.)
BCR
Improving
Extension
services
3% 7,320 2,026 3.6
5% 6,862 1,899 3.6
8% 6,250 1,730 3.6
Benefit cost ratios