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Improving Lives through Community Procurement of Pump-sets for Irrigation
Assam Rural Infrastructure and Agricultural Services Society (ARIASS)
India

The Problem

Assam is located south of the eastern Himalayas in north-eastern India. It comprises the Brahmaputra and the Barak river valleys, comprising 27 administrative districts covering an area of 78,440 square kilometers. The State Government took up a World Bank financed project namely ‘Assam Agricultural Competitiveness Project (AACP) in the year 2005, with an over-riding objective to stimulate growth of Assam’s agricultural economy. The project aims to increase the productivity and market access of targeted farmers and community groups. Key indicators of success of the project are increased yields of crops, fish and livestock products - complemented by an increase in the proportion of marketed surplus. Project activities are predominantly pro-poor, directed primarily at small and marginal landholders, poor fishing communities and the landless. The Government of Assam entrusted the responsibility of implementation, monitoring and coordination of the project to an autonomous agency called – ‘Assam Rural Infrastructure and Agricultural Services Society’, in short ‘ARIASS’.
Irrigation was the anchor intervention of the Assam Agricultural Competitiveness Project. Of the project’s 15 interventions, irrigation was the one from which the majority of benefits flowed. Towards this, the project provides a 50 percent grant to small-scale farmers groups consisting of three to five farmers (land holdings below 2 hectares), to purchase a shared irrigation pump. This was to exploit Assam’s significant but largely underused (22 percent) groundwater resource. Most of the state’s cultivation — including 70 percent of its rice crop — is carried out during the monsoon season. Without access to water in the dry winter months, farmers are unable to increase their yields, improve their cropping intensity, or diversify away from rice cultivation.
The project had tried four times to carry out International Competitive Bidding (ICB) process for procurement of tranches of 10,000 pumps. None had been successful (worth some $ 5 million each). Low-priced, poor-quality, unsupported, and unpopular pump sets kept winning the tenders. Uptake by farmer groups was slow, since they were unfamiliar with the brands. And the pumps that they got, experienced frequent breakdowns and received little after-sales service from suppliers-resulting in a large number of complaints from farmer groups. Without the assured efficient irrigation the poor farmers of the State were suffering due low productivity and less opportunity to enhance cropping intensity. But by midterm review, the project had reached only 16 percent disbursement, fewer than 3,000 STW (shallow tube well) pump sets (out of a target 60,000) were installed, and there was a suggestion that the project should be closed
The ARIASS took cognizance of the critical importance of the irrigation component of the project in delivering the project benefits and understood that, if this component did not work, the whole project would not be able to deliver the level of benefits commensurate with a sensible economic return on the overall investment of about $200 million under the project. This galvanized the attitudes of the project’s management and ARIASS, who decided that resolving the issues surrounding irrigation pumpset procurement and distribution was the key priority in project implementation.

Solution and Key Benefits

 What is the initiative about? (the solution)
Improving Lives through Community Procurement of Pump-sets for Irrigation: ARIASS considered the problem from the viewpoint of farmers, and devised an innovative solution that addresses their needs. The managers of the project devised and adopted an innovative process of ‘demand-driven community procurement’. This model was based on the following principles:
(a) Farmer groups should be able to choose the pumps themselves- from a preselected list of products drawn up through a state selection process, but based on an analysis of popular irrigation pumps in the state.
(b) Preselected suppliers would offer lower prices for the potential size of the market opportunity. With large numbers of orders by farmers, suppliers would commit to provide better after-sales service for their pumps.
(c) A physical asset audit process would be introduced to verify that pumps are delivered, installed, and used by the farmer groups.
To help farmer groups to procure the pump that met acceptable standards and at reasonable prices, the project carried out the following exercises as a facilitation service to the farmers:
1. Technical standards for the pumps were set by ARIASS.
2. The project published ‘Floating of Enquiry’ that sought willingness of manufacturers to sell the pumps to farmer communities at predetermined competitive prices, against laid-down technical specifications and after-sales service. After evaluation, the project published the shortlist of brands and models.
3. Farmer groups could then procure the pumps of their choice from this list, and at a time of their own preference, either from manufacturer’s local outlets or from their authorized dealers.
4. Farmer groups contribute 50 percent of the full cost of pumps plus the installation costs. They paid their share in cash to the manufacturer’s authorized dealer/ local outlets.
5. The project bears remaining 50 percent of the cost, which was released to the supplier, once the bill was submitted along with necessary endorsements by the concerned agriculture engineer and by the leader of the farmers’ group.
The innovative community procurement process, allowed farmers groups to select and procure pumps of their choice, by themselves, from a pre-selected databank (consisting of 25 models and 13 manufacturers).

Community procurement is a demand-driven process for farmers-by farmers and is transparent, economic and efficient. 1st-farmers choose and procure themselves. 2nd- purchase by farmers too has economy of scale. 3rd-dealers provide proactive after-sales service. 4th, an audit process verifies delivery and use. 5th-ownership and consumer surplus. The Community Procurement process, had transformed an apparent failure into a significant success story. As the process was commensurate to the priorities of Government to involve and empower farmers, it had immediate acceptance and was widely acclaimed.
This innovative process resulted in better uptake of pumps, ownership and better after-sales service and also enhanced productivity and cropping intensity. Assured irrigation enabled farmers to grow up to two additional crops: winter vegetables and an early summer paddy crop. This empowerment resulted increase in productivity by more than 95 % and cropping intensity from 128% to State average of 186%. More than 80% of the farmers got cropping intensity in the range 150% to 225%.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The innovative community procurement model was initially proposed by the then Procurement Engineer (PE) for the ARIAS Society in the year 2004/2005 and again in the year 2008.
The then State Project Director, in 2008, being convinced about the community procurement model, proposed the same to the World Bank. With active guidance from the then Senior Procurement Specialist of the World Bank, and support from the then Task Team Leader, AACP, World Bank, the innovative community procurement model was adopted for implementation.
The Engineering wing of the Directorate of Agriculture being a line department of the project had implemented it in the field and the farmers of the State were the key stake-holders. The implementation required active support from the Non-Government-Organizations (NGOs) working with the project and they being convinced about the acceptability of the model amongst the farmers, provided active support. A massive mission mode information dissemination campaign all over the State was organized through the NGOs. Apart from the NGOs, the field level engineers of the engineering wing of the Directorate of Agriculture also provided vital support. Subsequently, the next State Project Director of AACP has continued to actively support implementation of the model in the field and assisted in leveraging the model into other non-AACP schemes of the Government.
Considering the unique innovative nature of the community procurement model, Global Procurement Innovation Challenge Platform of the World Bank Institute has recognized the model as one of the top five innovations in public service delivery and given an award to the innovator.
The World Bank and the Ministry of Finance, Government of India, had jointly published the case story and the Government of India has circulated the innovative community procurement model to all the States of India for adoption, as appropriate. This document may be seen at the following url:
http://siteresources.worldbank.org/INDIAEXTN/Resources/295583-1320059478018/innovations-projects-assam-issue3.pdf

The International Finance Corporation (IFC), a wing of the World Bank had also published the case-story in the Smart-Lessons of January 2012 edition. This document may be seen at the following url:
https://wbchallenge.imaginatik.com/wbchallengecomp.nsf/x/DE62F3B4B898812F852579CE006DE958/$File/AACP%20Smart%20Lesson.pdf

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
Although Assam has an abundance of rainfall in the monsoon season and the land is fertile, farmers are unable to maximize the income from their fields because they lack access to water during the long dry winter months. This is largely because they lack the capital to invest in shallow tube wells to tap into the region’s high water table and abundant groundwater. To enable farmers to irrigate their fields in winter, the Project sought to provide groups of 3-5 small and marginal farmers with irrigation pumps for shallow tube wells.
At first, the project focused on the centralized procurement of these pumps to ensure that a large number of pumps were quickly delivered to farmers across the state at low costs. This, however, proved to be difficult. With Assam being a northeastern state, few qualified manufacturers were willing to bid. Moreover, to ensure that the pumps were of good quality, only manufacturers who had the requisite turnover and capacity were allowed to bid, reducing the number of bidders even further. In the end, while the pumps procured were cheap, the farmers were unfamiliar with the brands on offer and the uptake of pumps was slow. Moreover, farmers raised questions- when they are paying 50% of the cost, why should the project solely decide which brand/model of pumpset they should acquire.
The project then thought of an innovative process of community procurement that would allow farmer groups to procure the pumps of their choice themselves from a pre-selected databank. The strategy adopted was-
1) Project would prepare a list of manufacturers, brands/models of pumpsets with respective prices, through a competitive process, in short called the ‘Rate-Bank’ and the farmers would select and procure the pumpsets themselves from the manufacturer’s local dealers;
2) The Rate-Bank would be given wide publicity through newspapers, pamphlets etc.
3) Massive information dissemination would be organized through the NGOs. The capacity of the NGOs will be augmented in providing this facilitating service.
4) NGOs would conduct village level meetings and distribute application forms.
5) Workshop with Manufacturers, departmental engineers and Zonal Coordinators engaged by project would be organized to enlighten them about the new community procurement model.
6) Terms of Reference of Chartered Accountancy (CA) firm engaged for Financial Auditing would be amended to conduct 2% test check of the pumpsets installed under the new model
7) Another independent consultant would be engaged to verify at the site every 10% of every 4000 pumps procured under the community procurement model.
All the above strategies were implemented meticulously by the Project Coordination Unit of the ARIAS Society in association with the NGOs, Engineering wing of the Directorate of Agriculture and the results were phenomenal. The review by the CA and independent consultants helped the project in identification of deficiencies and areas of weakness in systems, controls, and the equipment’s field performance. But above all, it reassured the project that the pump sets were being used by the selected beneficiaries and the consumer surplus

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
To deal with the issue of slow uptake of pumps through centralized procurement and the large number of complaints received, the project devised an innovative process of community procurement by adopting a demand-driven model.
The community procurement process was based on the following principles:
First, farmer groups should be able to choose the pumps themselves from a pre-selected item/rate databank drawn up through a state selection process.
Second, the bulk purchase of pumps should lead to economies of scale whereby suppliers offer the low prices that are typically associated with centralized procurement.
Third, with large numbers of orders, suppliers should commit to provide better after-sales service for their pumps.
Fourth, an audit process to verify that pumps are delivered and installed with intended farmer groups should be introduced.
The implementation steps and the chronology was-
1) Project would prepare a list of manufacturers, brands/models of pumpsets with respective prices, through a competitive process, in short called the ‘Rate-Bank’ and the farmers would select and procure the pumpsets themselves from the manufacturer’s local dealers;
2) The Rate-Bank would be given wide publicity through newspapers, pamphlets etc.
3) Massive information dissemination would be organized through the NGOs. The capacity of the NGOs will be augmented in providing this facilitating service.
4) NGOs would conduct village level meetings and distribute application forms.
5) Workshop with Manufacturers, departmental engineers and Zonal Coordinators engaged by project would be organized to enlighten them about the new community procurement model.
6) Terms of Reference of Chartered Accountancy (CA) firm engaged for Financial Auditing would be amended to conduct 2% test check of the pumpsets installed under the new model
7) Another independent consultant would be engaged to verify at the site every 10% for every 4000 pumps procured under the community procurement model.
The change in the procurement process transformed the project:
• Increased distribution. More STW pumps were distributed in the six months of the 2009–2010 winter dry season than in the project’s previous four and a half years.
• Acceptability to the community. The community procurement process allowed manufacturers with varying capacities and sizes to apply. Instead of a single supplier being selected through International Competitive Bidding, the process resulted in 13 suppliers and 25 models for the farmer groups to choose from.
• Lower costs. In most cases, the unit cost of pump sets showed a reduction of up to 7 percent.
• Better after-sales service. Since the pumps were delivered by the suppliers’ local dealers, communities were ensured of improved after-sales service from their local dealers.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
The process being new to everyone had gone through a gestation period and initial difficulties were overcome through perseverance. Since the process is demand driven, no one knew which model and brand the farmers will choose. Some of the local dealers ran out of stock due to sudden spurt of bulk orders by the farmers. This resulted in delays in delivery of the pumpsets. This has now stabilized in all the districts. Farmers of a particular village generally go for the same brand and model, induced by the demonstrative effect of other good pumpsets in the village and the after-sales service availability. Local dealers have now got a fair idea about the number of pumpsets they should keep in stock. In order to streamline the process, payment to local dealers is now decentralized to the district level so that local dealers do not have fund crunch for prompt stock replenishment.
There were delays in certifying the depth of borehole for Shallow Tube Wells (STW). This glitch was removed by opening up the certification of STW boreholes to a wider number of officials available to farmers. Bi-Annual workshops with the shortlisted manufacturers along with some farmers have ensured that the process goes without any hiccup.
ARIAS Society’s determination to empower the farmers, World Bank’s support and farmer’s willingness were the main success factors. As Market driven dynamics played the role, manufactures quoted reasonable prices, supplied good quality products and provided after sales support, including training to farmers for routine maintenance.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The innovative community procurement model was developed under a World Bank financed project in Assam. No separate resources were needed for developing or implementing the community procurement model.
1) Pumps were procured by the community/farmers from local dealers of the manufacturers. There was rather saving in as the procurement process through International Competitive Bidding (ICB) involves a lot of cost in advertisement.
2) The existing programs of community development are used for the capacity building program

Sustainability and Transferability

  Is the initiative sustainable and transferable?
Building upon the success and experience gained from this model, the Government of Assam has mainstreamed this innovative community procurement process for the procurement of irrigation pumpsets as well as for other farm machinery such as tractors, power tillers etc. The state’s Department of Agriculture has incorporated this process in their regular operations. The Government of India has circulated this Community Procurement model to all the States of India for adoption. The community procurement model has been sustaining and the Project, since 2009 onwards, is following the procedure.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
The innovative community procurement process increased uptake of the shallow-tube well pumps by the farmers and helped farmers to increase their crop production. Monitoring and evaluation (M&E) activity has shown that yields, market surplus, and cropping intensity have all increased. Each three-farmer group, in aggregate, will amount to some two hectares. After the introduction of the pump sets, cropping intensity increased from 128 percent to 186 percent.
Farmers were able to grow summer (boro) rice, which is higher yielding, as well as an irrigated winter vegetable crop on a portion of their farm. Practically, this means that a typical group of three small farms sharing a single diesel shallow-tube well pump set will almost double their production of paddy.
Home consumption of rice has also increased by about 10 percent (from about 1,670 kilograms to 1,833 kilograms per family, or from 5,000 to 5,500 kilograms per irrigation group), while marketed surplus has increased over fivefold, significantly boosting farm net incomes. In total, the project has increased paddy production in the state by over 300,000 tonnes and vegetables by about 100,000 tonnes. This process was credited with switching Assam from being a net importer of rice to having a surplus to export, and enabling the state to win a national award for improved food security. In total, the incremental income increase of the 285,000 beneficiaries of the whole project is about $225 per family per year. This was estimated as a total of over $60 million in FY2010, rising to some $100 million in FY11, of which 70 percent is directly the result of the success of the irrigation component implemented through the community procurement process.
Lessons learnt:
In community oriented development initiatives, it is always advisable to devise implementation mechanism from the viewpoint of farmers, and that reflects the Farmers’ desire and that it should empower the farmers to take decision for themselves.
Under community procurement mode, market driven dynamics plays the key role, and therefore manufactures quote reasonable prices, supply good quality products and provide after sales support, including training to farmers for routine maintenance.
Since the process is demand driven, no one knew which model and brand the farmers will choose. Some of the local dealers ran out of stock due to sudden spurt of bulk orders by the farmers. This resulted in delays in delivery of pumpsets. This has now stabilized in all the districts. All new implementation process goes through a gestation period and initial difficulties, However, perseverance can eliminate all problems when determination is firm.
Farmers of a particular village generally go for the same brand and model, induced by the demonstrative effect of other pumpsets in the village and the prompt after-sales service availability.
For any community procurement model, prompt cash flow is essential, to streamline the process. Payments shall be decentralized to the district level so that local dealers do not have fund-crunch for prompt stock replenishment

Contact Information

Institution Name:   Assam Rural Infrastructure and Agricultural Services Society (ARIASS)
Institution Type:   Government Agency  
Contact Person:   Kailash Chand Samria
Title:   State Project Director  
Telephone/ Fax:   +91 361 2332125 / 2332564
Institution's / Project's Website:   www.arias.in
E-mail:   spd@arias.in  
Address:   ARIAS Society, Agriculture Campus, Khanapara, Guwahati
Postal Code:   781022
City:   Guwahati
State/Province:   Assam
Country:   India

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