Efficiency of Organic Input Units under NPOF Scheme in India

India had developed a vast and rich traditional agricultural knowledge since ancient times and presently finding solutions to problems created by over use of agrochemicals. Todays’ modern farming is not sustainable in consonance with economics, ecology, equity, energy and socio-cultural dimensions. The entire agricultural community is trying to find out an alternative sustainable farming system, which is ecologically sound, economically and socially acceptable. Sustainable agriculture is unifying concept, which considers ecological, environmental, philosophical, ethical and social impacts, balanced with cost effectiveness.The answer to the problem probably lies in returning to our own roots. Traditional agricultural practices, which are, based on natural and organic methods of farming offer several effective, feasible and cost effective solutions to most of the basic problems being faced in conventional farming system. With having such a due importance of organic farming in India, the government has initiated the programs like National Programme for Organic Production (NPOP) in 2000 and National Project on Organic Farming (NPOF) in 2004. Availability of quality organic inputs is critical for success of organic farming in the country. Setting up of organic input units are being financed as credit-linked and back-ended subsidy through NABARD and NCDC under NPOF Capital investment subsidy scheme. Three types of organic input production units namely; fruit/vegetable waste units, bio-fertilizer unit and vermi-hatchery units are being subsidized @ 25 per cent of their total project costs respectively. Around 455 vermi-hatchery units, 31 bio-fertilizer units and 10 fruit and vegetable waste units were sanctioned across different states by NABARD till May, 2009. But, NCDC has so far sanctioned only two bio-fertilizer units in Maharashtra state. This paper made a humble attempt to know the present status of these units, capacity utilization and their efficiency. A sample of 40 vermi-hatchery units were selected for the present study from four states namely; Gujarat, Maharashtra, Punjab and U.P respectively based on their weights in total population. A model based non-parametric Data Envelopment Analysis (DEA) was used for analyzing the efficiency of organic input units. Multiple regression models are also used to estimate the drivers for efficiency in vermi-hatchery units. The average installed capacity of the sample unit was 150 TPA. But, the mean production was around 76.2 TPA. The average capacity utilization rate was only 50.8 per cent which indicates nearly half of its full potential. Across different states, this value was the highest in Maharashtra (124.6%) followed by U.P (70.0%), Punjab (22.0%) and Gujarat (16.1%). The main reasons for low capacity utilization were lack of demand, poor production skills and insufficient infrastructure. The estimated mean technical, allocative and economic efficiencies of sample vermi-hatchery units under DEA-CRS model were 63.7, 50.95 and 32.95 per cent respectively. The results clearly indicate the low technical, allocative and economic efficiency of sample units. Correspondingly, the mean values for DEA-VRS model were 83.39, 59.42 and 50.24 per cent. These values conclude that organic inputs are suffering from both allocative inefficiency as well as scale inefficiency. Factors like size of the unit, contribution of family labor have shown positive relation with technical as well as scale-efficiencies. Participation in the training programs was also enhancing technical efficiency. The age of the unit and subsidies discouraged the scale-efficiency.