(Re)Thinking About Farmer-Led Irrigation
This post was written by Nick Brozovic, Director of Policy, Daugherty Water for Food Global Institute.
There’s growing appreciation for “farmer-led” irrigation in the global development community. Farmer-led irrigation describes a range of generally individual-focused and private sector-involved approaches to improve smallholder livelihoods and food security. Such approaches can be adapted to local needs and culture, potentially at low cost compared to large infrastructure projects.
We can agree on the broad goals of farmer-led irrigation: improved crop yields; more nutritious, higher-value crops; and buffering of rural livelihoods from the impacts of drought, climate change and food insecurity.
In agreeing on desired outcomes, it’s important to reflect on whether we’re making any assumptions about the way to get there. If we are — and I’d suggest that it’s human nature to make such mental shortcuts — then we must also consider whether those assumptions are leading us to limit consideration of potential policies, technologies and business models. Here, I’ll focus on just one such implicit assumption.
We typically assume that the way to succeed in improving irrigation access for smallholder farmers is by encouraging as many farmers as possible to own their own pumps. This seems straightforward. Farmers who own pumps can irrigate and benefit from higher crop yields, buffering from drought and climate risk and so on.
Now, pumps are expensive pieces of machinery for smallholders. Solar pumps, the preferred solution from a longer-term climate change perspective, are very expensive. They may cost the equivalent of several years of income for a smallholder farmer. So, policies that increase affordability and availability seem like the right way to go. This means subsidies, pay-as-you-go schemes and grants to solar pump distributors to offset their channel marketing costs.
While the logic above is correct, it’s also not the complete picture. Increasing pump ownership will lead to higher crop yields; more nutritious, higher-value crops; and buffering from drought. In some contexts, it may be the most effective way to reach those worthwhile outcomes. In other contexts, different options may exist that are more cost-effective and lead to quicker transitions to a more resilient agricultural system.
In addition to encouraging as many farmers as possible to buy pumps, we might also consider whether it’s worthwhile to encourage farmers to obtain irrigation through rental services. On the ground, informal pump rental markets and irrigation-as-a-service schemes are ubiquitous in smallholder settings. A diverse range of tubewell and hosepipe markets, as well as community solar irrigation schemes, are well described in South Asia. In parts of sub-Saharan Africa, it’s estimated that at least a quarter of irrigated land is already served by pump rentals of one kind or another.
Irrigation-as-a-service solutions, such as pump rental markets, are underappreciated in serious policy debates about farmer-led irrigation. As a result, the larger business ecosystem that is supporting, or might scale, farmer-led irrigation is also underappreciated and under-researched from a business perspective. This includes analysis of equipment supply chains and distribution and marketing strategies, the interaction of national-level policies with entrepreneurial activity and alternate business models for supporting smallholder irrigation.
While recognized by researchers and policymakers, smallholder irrigation-as-a-service seems to be viewed as a transitory side effect of capital constraints and inferior to widespread pump ownership. It’s assumed that the desired end-state is a landscape where everyone owns their own pumps.
Is this assumption correct? It may not be. There may be landscapes, particularly in regions where land tenure is fragmented or ambiguous, where extensive irrigation-as-a-service schemes may be structurally stable in the long-term. Such systems may reach policy goals around crop yield, nutrition, and income more cost-effectively than equivalent landscapes with full pump ownership.
How might we go about comparing ownership and rentals of pumps from a policy perspective? It’s helpful to look at the issue through an economic lens. I’m going to touch on three things that are worth considering when comparing owning irrigation pumps and paying for irrigation services. None of the underlying concepts are new or controversial. My goal is to present them in a way that encourages rethinking the underlying policy choices being made.
1. It may not make sense to own an expensive, depreciating asset that you don’t use very often.
Mechanized agriculture requires a lot of specialized equipment. Buying an expensive, depreciating asset that is only used for a relatively short portion of the year is a well-known issue in agriculture. Such purchases tie up a lot of capital that could be deployed elsewhere.
Multiple creative solutions exist all around the world. In brief, these can be divided into renting an asset rather than owning it and figuring out how to extend the usefulness of an asset into applications beyond what it was designed for.
Examples of the first approach include custom harvesting in the United States (e.g., U.S. Custom Harvesters, Inc.) and tractor rental schemes in Africa (e.g., Hello Tractor). Note that the goal here is increased asset utilization rates and this can be done either by renting someone else’s equipment or by renting your equipment to someone else.
The best examples that I know of the second approach — extending asset usefulness — are from India. So-called “jugaad” solutions are widespread. Motorbikes are used as irrigation pumps and irrigation pumps are used as farm truck engines (I’ll leave readers to browse YouTube for themselves).
2. It may not make sense to own items that are bulky, heavy, need attention and are coveted by your neighbors.
From a farmer’s perspective, irrigation pump ownership can represent a significant disutility. A pump can weigh 20 kg or more. That’s not all though. With it you also need to carry around hundreds of meters of flexible pipe and other bits and pieces. You must worry about security, maintenance and the aggravation of maintenance and repairs.
While there are numerous sources of gender bias in irrigation access, the disutilities of pump ownership are used as rationalizations for predominantly male ownership of mechanized irrigation equipment.
What’s a potential solution to these problems and inequities of pump ownership? You could choose not to own a pump and pay someone to provide you with irrigation services. In that case, the service provider deals with the hassles and is compensated for their efforts. Service provision may also increase access to irrigation for female farmers by removing gender biases related to ownership and use rights for mechanized equipment.
3. Just because something gives you a positive return on your investment, it doesn’t mean you should buy it: other investments available to you may be even better.
It’s also important to think about the opportunity cost of capital. You may expect to get a positive return on buying an irrigation pump. But — if you have other ways to access irrigation during a growing season — you may get a much larger return on your capital by making some other investment. Examples might be renting more land or buying high-quality seeds and inputs.
From a purely economic viewpoint, if the expected return to some other investment that is available to you is more than the expected return to buying a pump — by an amount more than the price differential for leasing irrigation services — then you should lease the pump and put your money elsewhere. This can lead to the apparently irrational result of leasing equipment even though you have enough money to buy it.
It’s unlikely that strong support and financing for irrigation-as-a-service is the correct policy solution everywhere. But, it’s very likely that it’s a correct solution somewhere. What are steps that will help us to learn how large that somewhere might be?
We could look to existing irrigation-as-a-service markets, including informal pump rental markets in sub-Saharan Africa and community solar irrigation schemes in South Asia. We can learn how participants think about these markets and to what extent this matches the economic reasoning above. We can look at the business models operating, including value propositions, channel marketing and revenue strategies.
It’s important to understand that existing informal pump markets will not provide universal templates for scaling. What we can learn from them is the extent to which they function as we’d expect from an economic perspective, and where we might need to revisit our understanding of the underlying decisions and economic drivers. We can also study where their bottlenecks are (Establishing customer trust? Building distribution networks?), as these represent leverage points that need resolving to scale.
Once we’ve done this, we can apply economic and policy analysis tools to model the likely performance and cost-effectiveness of alternate irrigation-as-a-service systems. This will provide further insights on where supporting and expanding schemes may work, and where it likely won’t.
We should always be looking to improve the effectiveness of our irrigation and mechanization investments to achieve the longer-term goals of farmer-led irrigation. The kind of (re)thinking I’ve described here, including reflecting on the assumptions we may have made unconsciously and their implications, will certainly improve our decision-making process. It might also unearth creative, new approaches and policies.