Because of the exploitation of the joint stock companies in the Ahmednagar district in India, farmers of the area collected a share capital and registered the Pravara Cooperative Society to set up the Pravara Cooperative Sugar Factory.

The Ahmednagar district is located in India’s western Maharashtra state, in the Pravara region. This area lies in the arid “rain shadow” belt and records an average annual precipitation of only 10 to 12 inches. Drought and near famine are common conditions in the area. Small and marginal farmers run sugarcane plantations on their land by joint stock companies which hold long-term cultivation leases on the land at nominal rates. Private sugar factories set up by the joint stock companies pay very low prices to the sugarcane farmers working on the leased lands. Moreover, the lease conditions do not oblige factories to purchase the full crop, obliging farmers to often burn the unsold crop, resulting in large-scale indebtedness and negative environmental impacts. Although a largely arid region, there has been a large canal since 1910. However, sugarcane farmers were not using the canal water for irrigation. Another canal in a nearby area was being used for commercial flower cultivation and this inspired the founders of the Pravara Nagar cooperative to establish irrigation facilities and start a cooperative for sugarcane farms.

The Pravaranagar Sugar Cooperative was born to end the exploitation of the mainly illiterate small and marginal sugarcane farmers farmers by the joint stock companies companies and promote rural living standards through agricultural diversification, agro-processing and agro-industrial diversification. It is a farmers’ cooperative with small and marginal farmer members from 44 villages. The members pooled financial resources backed with financial support from Maharashtra State Cooperative Bank to set up sugar factory run on cooperative principles with democratic member participation. Established nearly 60 years ago with a budget of approximately Rs. 2,26,000 (cost of machinery). The Cooperative had increased the capital investment increased to Rs. 600 million by 1993 and more than eight times by 2009. The goals of the Cooperative are:

- Ensure regular market and remunerative prices for their crop to small and marginal sugarcane farmers - Increase sugarcane farm productivity

- Promote local food and livelihood security in drought-prone region by developing alternative irrigation systems for crop diversification

- Promote farm value-addition through processing of sugarcane and industrial use of byproducts leading to improved incomes of small farmers

- Invest cooperative income from value-addition and industrial diversification to improve living standards of the local community by establishing health care, education, credit and transport infrastructure

The Cooperative is currently undertaking the following activities:

• Sugar Factory

The factory was established over 60 years ago and directly employs small and marginal farmers.

• Biogas Production

First biogas plant was set up by cooperative sector in India in 1977. The initial generation capacity of 24,000 cubic metres has now grown to 40,800 cubic metres a day generating 362.5 cubic metres of gas a day. The biogas is used to power the sugar factory’s large-scale distillery (formerly using thermal energy from coal burning), which in turn uses bagasse, a major residue of sugarcane juice extraction and other ancillary activities. The composting residue from biogas production is a rich fertilizer distributed to farmers for better yield. Whereas the surplus biogas is piped to 196 households in the neighbouring residential complex to meet home cooking energy needs. Biogas production has cut down environmental pollution greenhouse gas emissions from the sugarcane facility.

• Ethanol Production

The bagasse-based plant was established in 2002 with a capacity of 50,000 litres per day. Its products serve petroleum companies which need it to meet national government mandate for petroleum blending with 5% ethanol, and pharmaceutical companies. During 2008-2009 the facility produced over 11 million litres, of which 3.2 million were quickly sold, earning cooperative about Rs 29 million.

The cooperative sugar factories has introduced many social, educational and cultural features as part of its total contribution for the well being of both farmer members and environment. It is member controlled, non-government organisation. Loyalty of the members, based on the reciprocal assistance given continually by the factory and also on economic consideration is special characteristic of cooperative. From the social angle, the cooperative society pay special attention to small farmers. It takes step for the welfare of its factory labour as well and provides them with all the necessary amenities. With its activities the Cooperative was able to achieve:

• Employment: 1,444 technicians and villagers directly employed in sugar factory and about 5,000 rural people find work on sugarcane farms in crop harvesting and transport to factory.

• Agricultural development: 39 percolation tanks with 153 million cubic feet capacity are irrigating 1,480 ha and also recharge ground wells, achieving substantial reduction in soil salinity and improved ground water level and crop productivity.

• Rural economy & transport: 2,565 km rural roads were built, 175 farm and non-farm livelihood cooperative enterprises created, and credit cooperatives promoted.

• Comprehensive health and education infrastructure: set up with cooperative’s income resulting in significant improvement in social indicators – 20% increase in literacy for farmers (now 83%), reduction in child and maternal mortality from 7 and 4% to 3.5 and 1.8% respectively, crude birth rate decline from 2.3 to 2%.

Enabling factors:

• Favourable policy and legal environment for renewable and for bagasse-based power generation – new policy allowing private participation in power generation has allowed Pravara Sugar Cooperative to tap large-scale capital resources of Rs. 15,000 million.

• Cooperative institutional setup underpins the success of the scheme as it allows for participatory, democratic and equitable equitable decision-making and sharing of benefits, and enhances social solidarity

• Sugarcane farming is a traditional rural livelihood activities, both farm and non-farm feedstock sources are readily available

• Financial support from state institutions for renewable energy development

• High demand for ethanol by oil companies for blending mandates and by pharmaceutical companies, as well as high demand for electricity

Challenges:

• Procedural delay in obtaining clearances from government departments

• Negative perception of cooperative institutional setup as politically controlled has made it difficult to access finances from commercial lending institutions and banks

• Slow decision-making by cooperatives due to democratic set-up

• Sugarcane production declining due to frequent drought conditions, severely affecting capacity utilisation of sugar cooperatives to meet commitments

• Government control/levy prices on molasses causing heavy losses to sugar factory

• Fragmented land holdings and increased soil salinity

• Fluctuating oil prices

• Renewable energy buy-back tariffs not consistent across states, leads to conflict by sugar mills.