Establishing Static Soil Testing

Establishing Static Soil Testing

1.    Introduction
Fertilizer consumption in India is highly skewed with wide inter-state, inter- district and inter-crop variations.  The NPK ratio - a measure of balanced use of fertilizer - shows wide inter-state disparity. Though there has been an impressive growth in the consumption of fertilizers in post green revolution period, their reckless use has been one of the reasons for declining productivity in recent years. Investigations have revealed that one reason for the unbalanced fertilizer use is lack of adequate soil testing facilities that forced the farmers to rely on fertilizer dealers for advice on the fertilizer requirement.
2.    Constraints in functioning of existing Soil Testing Laboratories (STLs)
In spite of the proven benefits of the soil testing service for farmers, the service is suffering on financial, management and technical fronts. Receipt of large number of samples by each of the STLs makes it difficult for them to analyze and send the reports in time to the farmers. This may be one of the reasons for lack of required success in the programme, as time taken between collection of samples and receipt of recommendations by the farmers is too long. In other words, it can be stated that the huge network of STLs has not yet rendered the services of a watchdog for monitoring the soil health under major cropping systems in the country.

There is a need to organize soil testing laboratories at block level so that farmers need not travel far to get the soil tested and wait endlessly to get the results and recommendations.  Keeping this in view, a scheme is formulated to serve as guide to aspiring individuals / institutions in establishing a static soil testing laboratory offering services of soil and water testing, consultancy on problems like soil reclamation etc.
3.    Objectives:

The scheme has the following objectives:-
i.    Undertake soil testing and testing of irrigation water for quality
ii.    Provide recommendation on fertilizer application including bio-fertilizers.
iii.    Provide guidance on soil reclamation and related areas.
4.    Need for new Soil Testing Laboratories at Block Level:
The annual installed analyzing capacity of soil samples at STLs has also grown to 8.0 million samples with the annual growth rate of 11% during the last two decades. The analyzing capacity per 1000 ha of Gross Cultivated Area (GCA) has more than doubled during the last 20 years from 26 samples in 1980 to 56 samples in 2000. There is also a wide disparity in the analyzing capacity in terms of number of samples per STL across the regions. The annual analyzing capacity per STL has decreased in nineties in all the regions (except for north-east region) which may be due to the fact that the new STLs being set up are either mobile vans or are of less analyzing capacity (about 5.0 lakh samples per year). In all the regions, potential of STLs are not efficiently utilized and their utilization efficiency varies from 64% in northern region to as low as 16% in North-eastern region. The utilization efficiency of STLs has drastically reduced in all the regions. It has been reduced by more than 50% in eastern and north eastern region followed by 27% in northern region and about 11% both in southern and western regions during the last 10 years resulting in a net reduction of 20% (from 76% to 56%) at all India level. Since challenges ahead are to encourage precise and balanced fertilization in irrigated areas (northern & southern region) and ensure adequate fertilization in other area, especially dry land area of western & southern regions, there is a need for maintaining or improving soil fertility, correcting inherent soil nutrient deficiency and restoring productivity of the land that has been degraded by exploitative activities in the past. It also highlights that the need for intensive soil tests for developing specific nutrient management scenarios/strategies at more desegregated level is enormous in all the regions. Thus, it reveals that the creation or establishment of new STLs in the country at each block level is essential to cater to the needs of the farming community.
Though there is enormous scope for the project, lack of awareness among farmers on the importance of soil test based fertilizer use limit the commercial scope. A laboratory with a capacity to test 8000 samples per year will be adequate to cater to a few villages in one block. The scientist manning the unit could also engage in providing guidance in the areas of land reclamation, compost making, use of bio-fertilizer etc.
5.    Project requirements
5.1 Location
Such a unit has to be located in block head quarters.  The unit could also be housed in a laboratory of the Junior college to take advantage of the facilities and expertise available. Vocational course for S.S.C. students may also be run in those junior colleges on collection of soil samples for testing and laboratory analytical methodologies during summer months so that these students become expert trainees and they may be absorbed as soil health workers at block level to facilitate soil testing programme with fair degree of success.
5.2 Capacity of the Laboratory
Though it is possible to test 10000 -14000 samples in a year, the installed capacity is considered at a moderate level of 8000 samples annually and the capacity utilization is considered at 35%, 50%, 75%, and 80% in the first three years and fourth year onwards in that order.
5.3 Equipment
The equipments suggested for the laboratory are given in Annexure I.  These equipments can be used for finding out pH, electrical conductivity, available Nitrogen, Phosphorus, Potassium, Organic Carbon, available sulphur and calcareousness of soil etc.
5.4 Transport
As the Laboratory is static, there is need for transport to initially canvass for the work and collect samples.  As the awareness about the facility builds up in the villages, farmers would come to the laboratory with the soil samples for testing. The trainees of vocational course may be deputed and their services may be utilized for collection of representative soil samples as well as transfer of them to the nearest laboratory.
5.5 Raw Material
Glass ware and chemicals required are available with leading scientific equipment manufacturers and chemical suppliers.
5.6 Manpower
    One post graduate in agriculture with soil science specialization will man the laboratory supported by two semi-skilled persons for collection, preparation of samples and other laboratory/field related works.
    Financial aspects

    6.1 Benefits
    The laboratory is primarily used for soil testing as also for water testing. Testing fee of 150/- per soil sample (excluding micro-nutrients) and 150/- per water sample is considered in the model. The benefits in the first three years, and fourth year onwards would be 4.200 lakh, 1.536 lakh, 3.936 lakh and 4.416 lakh respectively.

    6.2  Project Cost
    The project cost comprises of 8.60 lakh towards capital cost and 4.104 lakh for operational cost in the first year.  The detailed operational cost has been furnished in Annexure II.  The operational cost in the second, third and fourth year onwards is 4.464 lakh, 5.064 lakh and 5.184 lakh respectively.

    6.3 Margin Money

    The margin money / down payment considered in the model is 15 % of the unit cost which works out to 190000.

    6.4 Bank Loan

    Bank loan of 85 - 95 % of the total cost shall be available from the financing institution. Bank loan considered in the model is 85%.  It works out to 1080000 in the model.

    6.5 Rate of interest

    Banks are free to decide the rate of interest within the overall RBI guidelines issued from time to time. However, the ultimate lending rate has been considered as 12 % for working out the bankability of the model project.

    6.6 Security

    Banks are guided by RBI guidelines issued from time to time in this regard.

    6.7 Financial analysis
    The techno economic parameters assumed in the model are given in Annexure III.  The cash flow statement and detailed financial analysis are shown in Annexures IV & V respectively.  The financial analysis indicates that the scheme is viable. The major financial indicators are given below:
    NPV :  2.98 lakh
    BCR : 1.12 : 1
    IRR  : 28.79 %

    6.7 Financial analysis 

The techno economic parameters assumed in the model are given in Annexure III.  The cash flow statement and detailed financial analysis are shown in Annexures IV & V respectively.  The financial analysis indicates that the scheme is viable. The major financial indicators are given below:
NPV :  2.98 lakh
BCR : 1.12 : 1
IRR  : 28.79 %
6.8 Repayment schedule 
Based on the cash flow the detailed repayment schedule has been worked out and furnished in Annexure VI.  The repayment period works out to six years.

Establishing Static Soil Testing

Annexure I Establishment of Soil Testing Laboratory and Soil Health Counseling Facility  Capital Costs

1 Laboratory Equipment  (Amount ) i) pH meter 20000 ii) Electrical Conductivity  Meter 20000 iii) Kjeldahl unit for Nitrogen distillation (Automatic) 200000 iv) Spectro photometer 50000 v) Flame photometer 50000 vi) Nephlometer for sulphur analysis 10000 vii) Analytical balance (Electronic) 40000 viii) Top loading single pan balance 20000 ix) Mini Rotary Shaker 35000 x) Gas Connection 10000 xi) Drying oven 30000 xiii) Furniture for lab including wooden cabinets for storing soil samples 50000 xiii) Generator and Stabilizers 65000 2 Office equipment i) Motor cycle 50000 ii) Office furniture 10000 iii) Computer with accessories 30000 iv) Telephone connection 5000 3 Chemical & glassware (initial stock) 115000 4 Miscellaneous and contingencies 50000 Total cost 860000 Annexure II Establishment  of Soil Testing Laboratory and Soil Health Counseling Facility Operational Cost (Amount ) Sl No. Item Year 1 Year 2 Year 3 Year 4 onwards 1 Power, Water @ 1000 per month 12000 12000 12000 12000 2 Manpower – Soil scientist @ 12,000/ pm and two Semi-skilled @ 5000/ pm 264000 264000 264000 264000 3 Chemical and Glassware @ 30/ per sample 84000 120000 180000 192000 4 L.P.G 500/ per month 6000 6000 6000 6000 5 Stationery @ 500 per month 6000 6000 6000 6000 6 Repair & maintenance 7200 7200 7200 7200 7 Telephone @ 1000 per month 12000 12000 12000 12000 8 Travel for canvassing and collection of samples @ 1000 per month 12000 12000 12000 12000 9 Misc. expenses like Printing of literature etc. @ 600 per month 7200 7200 7200 7200 10 Total 410400 446400 506400 518400 Annexure III Establishment of Soil testing and  Soil Health Counseling Facility Techno-economic Parameters A team of one specialist and two Semi-Skilled workers can analyse 50 samples per day. Analysis work will be done for five days in a week, sample collection, report writing etc will be done on the remaining one day. Monthly 1000 samples will be analysed and yearly 8000 samples will be analysed. Sample collection and analysis will be done only eight months in a year depending upon cropping pattern. Capacity utilization will be 35%, 50%, 75% and 80% of the installed capacity in the first three years and 4th year onwards in that order. Charges for testing would be 150/ per soil sample and 150/ per water sample. The chemicals and glassware consumption is considered @ 30/ per sample. Establishing Static Soil Testing Annexure IV Establishment  of Soil Testing Laboratory and Soil Health Counseling Facility Cash flow Statement (Amount ) Sl  No. Item Year 1 Year 2 Year 3 Year 4 onwards 1 Capacity Utilization (%) 35 50 75 80 2 Soil Samples tested 2800 4000 6000 6400 3 Income  from soil sample testing @ 150/ per sample 420000 600000 900000 960000 4 Expenses incurred - 446400 506400 518400 5 Net Income 420000 153600 393600 441600 Annexure V Establishment of Soil Testing Laboratory and Soil Health Counseling Facility Financial Analysis Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Capital Cost 860000 - - - - - Operational cost 410400 446400 506400 518400 518400 518400 Total cost 1270400 446400 506400 518400 518400 518400 Benefit 420000 600000 900000 960000 960000 960000 Net Benefit (850400) 153600 393600 441600 441600 441600 Discount Factor at 15% 0.870 0.756 0.658 0.572 0.497 0.432 PW at 15% (739848) 116122 258989 252595 219475 190771 NPW at 15% 298104 NPW at 25% 60224 NPW at 30% (19177) Benefit Cost Ratio (BCR) 1.12 Internal Rate of Return (IRR) 28.79% Annexure VI Establishment of Soil Testing and Soil Health Counseling  Facility Repayment Schedule Total outlay                        :  1270000 Margin money (15 %)        :  190000 Bank loan  (85 %)              :  1080000 Rate of interest                    :  12% (Amount ) Year Bank loan Outstanding Net Income Repayment Net Surplus Principal Interest Total 1 1080000 420000 180000 129600 309600 110400 2 900000 153600 - 108000 108000 45600 3 900000 393600 200000 108000 308000 85600 4 700000 441600 250000 84000 334000 107600 5 450000 441600 250000 54000 304000 137600 6 200000 441600 200000 24000 224000 217600