Crop Residue Management Guidelines 2023-24 welcome move for bioenergy industry but concerns remain

The Government of India released Crop Residue Management (CRM) operational guidelines 2023-24 for Uttar Pradesh, Haryana, Punjab, Madhya Pradesh and the national capital territory of Delhi in July 2023. 

The main objectives of the CRM guideline are to reduce the amount of pollution generated when stubble is burnt and to encourage more industry-farmer participation in the agri-residue supply chain to support bioenergy plants. Burning one tonne of paddy straw releases 3 kilogramme particulate matter, 60 kg CO, 1,460 kg CO2, 199 kg ash and 2 kg SO2 into the environment.

The CRM initiative can help avoid this pollution through the establishment of an agri-residue biomass supply chain from the farmers to the bioenergy industry like power generation units, compressed biogas (CBG) plants, 2G ethanol factories, which could strengthen their feedstock supply chain and benefit the biofuel industry as a whole. 

Under the scheme, the machinery required for biomass aggregation that includes tractors, balers, rakers, among others would need a 65 per cent investment from the government, 25 per cent from the industry and the remaining 10 per cent from the farmer-producer organisation.

According to the guidelines, the indicative expenditure for setting up the paddy straw supply chain machinery comes up to around Rs 1 crore (for 3,000 tonnes paddy straw per season) and Rs 1.8 crore (for 4,500 tonnes paddy straw per season), out of which the government will give subsidy on the rounded off amount of Rs 1.5 crore.

The Department of Agriculture & Farmers Welfare (DA&FW) and State Agricultural Departments have been chosen as the central regulatory bodies for this scheme. The scheme aims to collect 1.5 million tonnes of paddy straw in the next three years by establishment of 333 collection centres with a total financial assistance of Rs 600 crore.

The farmers and the industry both benefit from this scheme, as it becomes an extra source of income for the farmers and provides the industry with suppliers of feedstock.

The supply chain that can be built through this project will help the farmers and the industry identify one another and work together while gaining financially. Add to this the fact that this helps produce green energy, and it sounds like a win-win situation. 

However, this CRM guidelines document was released in July, and the project still does not have a given timeline, making it difficult to gauge the urgency with which the government wants to begin implementation.

The Union Ministry of Petroleum and Natural Gas also posted on the microblogging platform X (formerly Twitter) on January 22, 2024 that the Centre has approved financial assistance Rs 564.75 crore from FY 2023-24 to FY 2026-27 for compressed biogas producers to buy biomass machinery aiding biomass collection, with a subsidy cap of 50 per cent on the procurement cost. The scheme is expected to support 100 CBG plants in the first phase.

However, the details of the scheme have not yet been shared and it is unclear whether this applies to the Crop Residue Management project as well, or if the two are linked in any way.

Additionally, while the document is a progressive development from the last crop residue management initiative, some things could be clarified to help farmers and the industry execute this on the ground level. 

The authors of the document noted that the farmers or the farmer-producer organisations (FPO) will get their subsidised amounts through direct beneficiary transfer, but there isn’t any clarity on whether the transfer will happen to the equipment supplier after deducting the subsidy amount (which will then be credited to the equipment supplier’s account), or if the farmers will have to pay the entire required amount in advance to the equipment supplier, and then avail the subsidy amount.

If it is the latter, it might be difficult for farmers to procure machinery even while contributing only 10 per cent of the share, as the required machinery for this project will be expensive and could be out-of-budget for most farmers intending to participate. 

The farmers or the FPOs are also directed to identify and bargain with the industry independently. This would require the farmers to have adequate knowledge of the bioenergy industry in their area and the correct market price for their produce. Since the industry is just taking off, it is unfair to assume that the farmers would have this information already. Putting this much onus on the farmers might hinder the process of the scheme taking off as this would require a substantial amount of time and energy from the farmers. 

The equipment purchased by the beneficiaries (farmer-producer organisations) and the industry will only be in use three months out of 12. Its utilisation and revenue-sharing model on the remaining nine months and the responsibilities of the industry and the beneficiaries respectively need to be laid out clearly in the guidelines document. 

However, the CRM 2023-24 document, when compared with the CRM 2020-21 document, also showed the government’s efforts in making the scheme more effective. The 2020-21 document focused solely on management of crop residue through custom hiring centres, while the 2023-24 document talked extensively about the use of this biomass in the bioenergy industry. The system is now more decentralised, making it easier for states and nodal agencies to establish a supply chain and focus on areas that need the most attention. 

The bioenergy industry has been struggling with issues of financing, and identifying sources for  procurement of feedstock. They have also been struggling as the prices of different kinds of feedstock increase. The CRM project ensures that the industry has suppliers (farmers) of feedstock while also supporting them financially. Farmers are also active shareholders in the bioenergy ecosystem rather than just raw material providers. 

While the implementation of these guidelines may face some roadblocks due to the challenges one faces on ground, the scheme overall is a positive step in the direction of adoption of bioenergy in India. The aspect of decentralisation and involvement of all stakeholders will make it easier to make decisions and implement them on the ground level when one is not left waiting for approvals from the Centre. This change also benefits the farmers directly financially and in terms of capacity building. The early stages of the intervention may be a challenge, but this can bear good results in the long term.