Financial Viability of Sugarcane Cultivation Under Drip Method of Irrigation: A Field Study from Tamil Nadu

Abstract

Drip irrigation method (DMI) is a water-saving technology introduced during the 1990s to reduce water consumption in crop cultivation in India. Because of various promotional schemes with heavy capital subsidies, the area under the DMI has increased from 70,589 hectares in 1991–1992 to about 5.96 million hectares in 2019–2020 in India. Though studies are available on the benefits of DMI, not many studies have attempted to find out the financial viability of DMI in water-intensive sugarcane crop cultivation using the discounted cash flow technique. In this study, therefore, we attempt to empirically examine the financial viability of DMI using field survey data collected from 300 sample farmers in Tamil Nadu, a large state in South India. The study shows that while saving the cultivation cost by about 19 per cent, water consumption by about 48 per cent and electricity use by about 728 kWh/acre (1 acre = 4,047 m²), the adoption of DMI helps increase the productivity of sugarcane by about 38 per cent over the same crop cultivated under flood method of irrigation (FMI). The net present worth and benefit-cost ratio estimated at different discount rates using discounted cash flow technique confirm that the investment in DMI is financially viable for farmers.