March 17, 2011 12:15 am
FT ArcelorMittal Boldness in Business Award winner: Environment
As a young man, S. Ravi endured grinding poverty on his family’s farm: a dozen acres of dry land in the southern Indian state of Tamil Nadu. With only enough water to irrigate a single acre, the family suffered, and Ravi dreamed of escaping his father’s laborious life.
But four years ago, Ravi was taken to visit vegetable farmers whose fortunes had changed dramatically after installing drip-irrigation equipment from Jain Irrigation Systems. The technology allow ed them to irrigate their land with far less water, and they reaped substantial increases in yields.
Today, Ravi, 33, has installed drip irrigation on several acres of his family’s land that once lay barren for want of water. The expansion of his land under cultivation – and two bumper crops of tomatoes and onions – helped him settle outstanding debt and expand the family home he shares with his elderly parents and wife.
The new technology has given him hope for what he has now decided will be a lifetime in farming. “It is our traditional job, and I feel there is quite a good scope for the future. I am very confident that agriculture will be my mainstay,” he says.
Promoting more efficient water use among small Indian farmers such as Ravi – and thus transforming the economics of their farms – is not just a business but also a mission for Jain, based in the small town of Jalgaon in the horticultural belt of Maharashtra state.
Ever since the family-run company’s founder, Bhavarlal Jain, now 73, was exposed to drip irrigation at an agricultural trade fair in California in 1983, it has tirelessly promoted the technology in India.
Initially, its efforts were met with fierce resistance from local agricultural experts, government bureaucrats and poor subsistence farmers sceptical of any deviation from their traditional methods.
But today, Jain’s commitment – both to drip-irrigation technology and to providing a good service to their farmer customers, regardless of the size of their landholdings, their level of education or their purchasing power – is paying off.
The company, now managed by the founder’s four sons, holds a 55 per cent share of India’s Rs30bn ($660m) drip-irrigation market, which is growing at roughly 30 per cent a year as farmers and policy-makers wake up to their country’s severe water crisis. A publicly listed company, Jain has attracted international investors such as Singapore’s Temasek Holdings, the International Finance Corporation and George Soros’s Quantum Fund.
Along with providing drip-irrigation equipment, Jain’s field workers offer guidance to farmers on choosing appropriate crops for their fields – after analysing their soil and water conditions – and custom-design the irrigation systems, taking into account the chosen crop and the terrain.
“Our approach is very holistic,” says Ajit Jain, the company’s joint managing director. “We are selling concepts, not products. What we provide is a tailor-made solution. The system a farmer buys must add value for him. If he buys it and it does not add value, that’s a problem.”
Currently, crops grown on about half of India’s 140m cultivable hectares still depend entirely on rain.
Bhavarlal Jain was a prosperous rural dealer in agricultural products such as fertiliser, seeds, pesticide, plastic pipes and tractors when he first encountered drip irrigation and saw its benefits. But as he began proselytising for the technology in the late 1980s, he was met with disbelief from traditional farmers.
“People were saying, ‘How are my plants going to grow with so little water?’” recalls Ajit. “Their whole lives they heard that more water equals more productivity, and there we were saying, half the water, twice the productivity.”
To overcome these doubts – which were also pervasive among scientists at India’s leading agricultural universities – Jain established its own 1,200-acre demonstration farm in Jalgaon and bussed in farmers to see how crops could flourish on drip irrigation and sprinklers. A few years ago, the company set up a similar 1,000-acre farm in Tamil Nadu, more accessible to southern farmers.
In the early days, Jain found progressive “lead farmers” willing to experiment – often those with larger landholdings and so more able to take a risk – and gave them free irrigation systems, which meant they, and farmers in the surrounding areas, could see the benefits first-hand.
Over time, more farmers, experts and government bureaucrats were convinced, usually after witnessing the results on the ground. Across several states, neighbours have followed neighbours in adopting drip irrigation after seeing their harvests transformed.
“Unless and until they see, they don’t believe,” says V. B. Patil, senior agronomist at Jain. “For the farmer, seeing is believing.”
Today, India is the world’s fastest-growing drip-irrigation market. Over the past decade, nearly 9m acres of the country have been converted to drip and other water-conserving methods of micro-irrigation, such as sprinklers. Of the converted farmland, roughly 5m acres have irrigation systems installed by Jain.
Government subsidies help cover the high upfront cost, but affordability remains an issue.
Drip irrigation can cost up to Rs400,000 per acre for a closely spaced crop. Even with government subsidies that can cover up to half the cost, many farmers struggle to come up with their share.
“The level of awareness is very high, and the resistance to change is less nowadays,” says Atul Jain, director of marketing. “But the availability of financing is definitely a constraint.”
Working with the farmers still requires intensive handholding from Jain’s staff – of whom more than 1,300 have degrees in engineering or agriculture – and its extensive dealer network.
A. Gunasekaran, who grows turmeric and peanuts on his farm in the Erode district of Tamil Nadu, installed drip irrigation on two of his eight acres last year. During his first growing season, he often panicked over whether the technology was working. He called a Jain field officer, who visited to inspect and reassure him.
The results were spectacular: Gunasekaran’s turmeric yield on his two drip-fed acres doubled over the previous year’s production, and he is now putting another two acres under drip. “A youngster helping a farmer is unbelievable,” he says.
The provision of such service to its customers – who hold on average less than 2.5 acres of land – comes right from the company’s top. “The whole concept for us is that you have to operate as if it is your own farm,” says S. Narayanan, Jain’s head of marketing in Tamil Nadu. “We are salaried people, and at the end of the month, we get our cheque no matter what. But for them [the farmers], there is 100 per cent risk. If you don’t empathise with that, you better do something else – like sell soap or toothpaste.”
Not every drip-irrigation system works perfectly. Once installed, 5-10 per cent of systems can fail, owing to rats gnawing through the plastic tubes or improper maintenance, for example.
But whatever the cause, Jain quickly replaces any broken system. “Farmers should believe in the technology, and continue to believe in the technology,” says Narayanan.
Ultimately, Jain’s way of doing business reflects its core belief that its own success depends on bringing success to its customers.
“Our prosperity lies in the farmers’ prosperity,” says Atul Jain. “Unless I deliver a product that helps him, I can’t prosper.”
India grapples with serious water challenge
India’s current pace of rapid economic growth could be undermined by two very different, but equally disturbing, trends. One is the sharply rising price of food; the other is the plummeting levels of its water tables.
For the past two years, as India’s economy has grown, the country has wrestled with double-digit food price inflation, fuelled by a combination of higher input costs – including rising labour costs – and growing demand for higher-value food items by an increasingly affluent population.
“Millions of Indians are now able to afford non-cereal foodstuffs, [but] supply has not shown a commensurate increase,” Goldman Sachs, the investment bank, wrote in a recent report.
India is also facing an acute and worsening water crisis, with underground water tables falling sharply over the past decade. Although greater industrial demand for water is partly responsible, agriculture is the primary culprit, accounting for roughly 84 per cent of the country’s total water use. Falling water tables add to farmers’ costs, making it more expensive to pump water up to ground level. This contributes to rising food prices.
Bhavarlal Jain, founder and chairman of Jain Irrigation Systems, fears the water crisis, its consequences and possible solutions are not fully appreciated by India’s decision-makers. “The low level of awareness of the looming water scarcity frightens even the most optimistic mind,” he says.
However, drip irrigation is a proven solution to both of these challenges.
The Sri Lanka-based International Water Management Institute estimates that drip irrigation reduces water use in agriculture by 30-60 per cent, depending on the crop.
It also decreases labour costs, as less weeding is required than with conventional flood irrigation, and raises crop yields because it gives plants consistent access to water and spares them the stresses of traditional irrigation, such as overwatering followed by relatively long dry periods.
Jain believes New Delhi should be doing much more to promote drip irrigation. This includes increasing the annual government budget for drip-irrigation subsidies – which would allow more farmers to install the technology – and making it easier for farmers to get credit to help them pay their share of the initial cost.
Jain’s slogan is a pledge to deliver “more crop per drop”. That’s something India’s economy urgently needs.
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