Sugarcane or ragi–cowpea on three acres in Mandya
Raman cultivates 3 acres in Maddur taluk, Mandya district, on canal ayacut. For three years the canal has released water only from July to October; his borewell yields enough for about one acre of paddy. He owes ₹80,000 to a cooperative society at 7% and repays in instalments after harvest. The extension officer gives two plans. Plan A: sugarcane on all 3 acres - cost ₹50,000 per acre, expected yield 45 tonnes per acre, factory price ₹2,900 per tonne; the crop lasts 12 months and needs about 2,000 mm of water. Plan B: ragi (cost ₹14,000 per acre, 12 quintals, ₹3,200 per quintal, 4 months) followed by cowpea (cost ₹9,000, net ₹16,000, 3 months), needing about 500 mm in all. Raman's son wants assured annual cash and no risk; Raman remembers the price crash and the factory's delayed payments. The family also keeps two crossbred cows giving 14 litres a day.
1. Calculate net income per acre per year and net income per millimetre of water for both plans. Which comparison should guide Raman, and why?
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Plan A (sugarcane, per acre per year)
- Gross = 45 t × ₹2,900 = ₹1,30,500
- Net = ₹1,30,500 − ₹50,000 = ₹80,500; for 3 acres, ₹2,41,500
- Net per mm of water = 80,500 ÷ 2,000 ≈ ₹40 per mm
Plan B (ragi + cowpea, per acre per year)
- Ragi gross = 12 × ₹3,200 = ₹38,400; net = ₹38,400 − ₹14,000 = ₹24,400
- Cowpea net = ₹16,000
- Total = ₹40,400; for 3 acres, ₹1,21,200
- Net per mm = 40,400 ÷ 500 ≈ ₹81 per mm
Sugarcane pays about twice as much per acre but only half as much per unit of water, and it occupies the land for the full year. Raman's binding constraint is not land but water available only from July to October plus one borewell acre. A pure per-acre comparison would push him into the water-intensive crop. The correct test is return per unit of the scarcest input - water - combined with the timing of cash. On water productivity, Plan B wins; on income per acre, Plan A wins. That is why the answer is a mixed plan, not a single crop.
2. Raman must repay ₹80,000 at 7% and wants cash before the next school year. How do the two plans differ in cash flow and risk, and what would you advise?
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Interest on the loan is ₹80,000 × 7% = ₹5,600 a year, but the timing matters more than the amount.
Plan A cash flow: one large payment after 12–14 months, subject to factory crushing schedules and delayed payments. Until then there is no crop income, so the instalment must come from dairy, from borrowing again, or from distress sale. Price risk and payment risk are concentrated in a single transaction.
Plan B cash flow: ragi income at about month 4 and cowpea at about month 7 - two chances to repay and to buy inputs. Cowpea fixes nitrogen, and ragi straw plus cowpea fodder support the two cows, whose 14 litres a day give daily cash.
Advice: put about 1 acre under sugarcane only on the plot with assured borewell water, and 2 acres under ragi–cowpea. Insure the sugarcane, keep a fodder plot, and schedule the loan instalment after the ragi sale. This keeps some high-value crop, spreads cash through the year, cuts water risk, and protects repayment capacity - diversification is the judgement, not loyalty to one crop.
3. Sugarcane earns less per unit of water and carries delayed-payment risk, yet many farmers in the area continue to grow it. Explain this behaviour and state one policy implication.
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Farmers are not ignoring arithmetic; they are responding to institutions and to risk as they experience it.
- Assured buyer: sugarcane has a factory, a announced price and a harvesting schedule. Ragi has no comparable assured procurement in the local market, so a farmer fears being left with unsold stock.
- Advances and inputs: factories often give seed, fertiliser and advances, which solves the working-capital problem that a poor farmer cannot solve through a bank.
- Irrigation design and habit: canal ayacut was planned around a long-duration crop; labour, bullocks and equipment are geared to it. Switching costs are real.
- Risk perception: one bad ragi year is remembered as a failure of the crop; one delayed sugar payment is remembered as bad luck, because the price is at least announced.
Policy implication: do not lecture farmers about water productivity. Provide a working procurement or price-assurance mechanism for ragi and pulses, crop insurance that pays quickly, and drip irrigation with subsidised credit. If the alternative crop gets a buyer and a safety net, the per-mm calculation becomes a real choice rather than an academic one.