Sowing Prosperity :Boosting Agricultural Productivity

Team: Safal SahyogArnab Biswas, Indian Institute of Technology, Kanpur (IITK)Kevin Jose, IITKRitvik Srivastava, IITKS Gautham Raj, IITKShashank Bhandari, IITK

सfal सhyog

The Problems:Small Land Holdings :

Almost 85% of holdings in 2010-11 were small and marginal (less than 2ha) and they operated about 44% of gross cropped area.

Reason: Agriculture has traditionally been a major source of employment and land holding are subdivided for successive generations between siblings.

Consequences: Small land holdings lead to reduced leverage and bargaining capacity with large players and lack of financial assistance due to unavailability of collateral.

Disguised Unemployment:

Productivity is adversely affected by inefficient utilization of human resource in situations where more than the required number of people are employed.

Reason: Lack of employment opportunities, large families cultivating small pieces of land

Consequences: Leads to non-utilization of human resources and a lower income and production per capita.

Lack of Access to Financial Channels:

Small and marginal farmers face major problems in accessing formal credit which plays a major role in the final produce.

Reason: Banks and other sources of formal credit fail to provide credit easily in terms that are favorable to small farmers.

Consequence: Leads to dependence on informal sources of credit with very high interest on lending.

Challenges in Storage, Transport and Marketing:

At least 40% of all fruit and vegetables is lost in India between the grower and consumer level. Small farmers are not able to find ready buyers in large retailers because of low volumes that they have to offer.

Reason: Lack of infrastructure as compared to the gross produce of the country.

Consequences: Widespread food scarcity and inflation in food-prices.

Other problems include lack of technological inputs and overdependence on monsoons

सfal सhyog

The Solution : A Basic Overview

“Our aim is to boost agricultural productivity using a co-

operative based model on the lines of AMUL.”

-> Our solution involves setting up of a nation-wide agricultural

cooperative, „सfal सhyog’ which primarily focuses on

supply, marketing , technology, access to channels of formal

credit and profit for the shareholders.

-> Our cooperative is different from other such prevalent

organizations because it has more than one focus points and

also is majorly concerned with developing a ‘Brand’ that

generates significant profit.

-> The cooperative would also manage post processing, storage

and transport.

-> By virtue of being a profit making organization, it can

provide formal credit.

-> It will engage professionals from relevant fields full-time to

impart important scientific knowledge relevant to agricultural

production. For example, scientific advice on fertility of soil.

-> By using data on the type of crop, size of plantation, irrigation

technique and expected rainfall, we can evaluate the optimum

number of people required to work on a particular holding.

The remaining people can be advised to work on storage

facilities, processing units and in transport.

-> Give incentive to farmers to pool their resources and in turn

gain leverage for bargaining against large players.

सfal सhyog

सfal सhyog

Flow of Technological Impetus and Structure of Manpower

सfal सhyog

Experts panelSeeds

National/International

market

Local market

Farmers

Village Cooperatives

District Cooperatives

State Cooperatives

Provides tabulated data on how much

manpower is required based on

technological availability, cropped area

and crop type.

Manure, fertilizers, hybrid seeds, tractors on lease basis, soil testing

facilities to help identify proper fertilizers to help grow a specific

crop. Also provides advice on manhours/field using data received

Additional workforce (identified as

disguised unemployment) routed to

transportation, storage, processing

units.

Farmers directly associated with

farming

Transportation, deep freeze storage,

packaging, processing plant and

marketing for the local market.

Tie up with govt. based organizations like

National Seed Corporation for provision

of high quality hybrid seeds.

Provides transportation, storage for

goods going out of state

Local colleges which provide agriculture

related training provide these members

सfal सhyog

Flow of Money in the Proposed system

State Cooperative

District Cooperative

Village Cooperative

Farmers

Advertising/Marketing,

To other state cooperatives

Money from sale in other

states/exports and from other

State Cooperatives

For expenditure of District Cooperative

and Village CooperativeProfit from District Cooperative

Salaries, Upkeep of Machines,

Consumables, Transport etc.From local sales

Payment for raw produce, Transport, etc.

Money for raw goods, credit, dividends, etc.Interest on Credit

Overheads, Transport, salaries, etc.

सfal सhyog

Flow of Produce

सfal सhyog

Raw produce (in small volumes)

Collected raw produce in large

volumes

Large volume of shelf ready products for

other states / export

Processed goods supplied to local

businesses

Export / supply to other statesState Cooperatives

District Cooperatives

Village Cooperatives

Farmers

सfal सhyog

Administration and Management of Various Tiers.

Village Cooperative

Comprises of an elected body of farmers who are responsible for managing crop

procurement, arranging for storage facilities, providing seeds and equipment and also for

credit distribution.

District Cooperative

An elected body comprises of members elected by the village cooperative. This body will

be responsible for matters related to processing of goods (thus increasing its market value)

packaging , distribution and marketing for local markets. Provision of a soil testing unit to

help identify proper fertilizers to help grow a specific crop.

State Cooperative

It comprises of members elected by the district cooperatives as well as agricultural and

management experts who will be responsible for cooperating with other state bodies and

marketing „सfal सhyog’ as a national brand. This body will also be responsible for

distribution of the dividends down to the lower tiers which will be further distributed to the

farmers.

सfal सhyog

Solves the problem of microfinance

In modern day scenario of India most of the money that farmers borrow comes

directly from the unorganised sector. Now this has it‟s own fair share of

demerits , the rate of interest is exorbitantly high which results in the

exploitation of small scale farmers. In our model the farmer is the integral part

of the system. To present it more directly our system is “of the farmers, by the

farmers and for the farmers”. The cooperative is a ready source of credit for the

farmers . The village cooperative is in itself a self sustainable unit .

Liquidity of funds

Since all the state cooperatives are connected this will lead to easier flow funds

from area of produce to the area of demand .

Advantages of this system over the existing system

Successfully solves the problem of disguised unemployment

The advisory panel in the State cooperative passes on the recommended man-

hours for a particular field and individuals who are not required at the field can

find employment at the District Cooperative in processing, packaging, etc. Hence

per person productivity can be increased

सfal सhyog

Solving the problem of lack of technological impetus

The village cooperatives will provide agricultural implements to the farmers on

a lease basis. Thus, they will have access to technological impetus.

Elimination of middlemen

Our proposed cooperative model will do away with the burden of approaching

middlemen who drive down the price that the farmers receive. In our system,

the farmer receives the benefit of the value addition that takes place to his

produce at a later stage

Saving of cost and travel time

On an average a small farmer spends most of his time in selling his produce at

the local mandi . With the introduction of this model , it will save his cost and

travel time and he can focus on farming alone or other resource generation

activities.

सfal सhyog

Implementation : Initial Expenditure and Funding

Initial Expenditure is required for:

-> Setting up warehouses for storage.

-> Setting up transportation facilities.

-> Buying agricultural implements for the cooperatives.

-> Recruiting professionals – Scientific Advisers, Management Experts and Advertising Executives.

Funding:

-> Since it is initially floated as a government company, the initial funding will be sourced from both

Central and State Governments in pre-decided ratios.

-> Once the entity starts turning profit, government ownership will be phased out in favor of shares for

the farmers. This serves our major purpose of putting the company in the hand of the farmers while

significantly reducing financial risk. The profit made by the company shall reach the farmers in the form of

dividends on their shares.

-> A small entry or registry fee shall be charged on joining to cover registration costs and to get a decent

amount of liquid cash to start the venture.

सfal सhyog

Challenges and Risks

Large Initial Investment : A nation-wide program of this scale would require a large

amount of seed fund to get started and may be one of the major challenges our model.

Scarcity of Technological and Scientific Professionals: To extend better technology and

inculcate better farming practices at the grassroot level, there is a need for a significant

number of scientific advisers.

Variation in usability with Seasons: Due to the seasonal nature of agriculture, there may

arise a cycle of varying high and low traffic during and after time of harvesting. There

is a challenge to ensure that the infrastructure is fully utilized.

Unwillingness of the farmers: Initially the farmers may be unwilling or hesitant to join

cooperative due to lack of apparent incentive.

Restructuring existing government framework: Slight restructuring of the existing

government framework may be required.

सfal सhyog

References

Amulhttp://www.amul.com/

Sharma, V.P. (2012). Accelerating Agriculture Growth for Inclusive Development. Vikalpa, 37(1)http://www.iimahd.ernet.in/assets/upload/faculty/161638648Vikalapa%20Paper%202011.pdf

World Bank. (2012). India: Issues and Priorities for Agriculturehttp://www.worldbank.org/en/news/feature/2012/05/17/india-agriculture-issues-priorities

Chandra, Tirupati. Business Strategies for Managing Complex Supply Chains in Large Emerging , Economies: The Story of AMULhttp://www.iimb.ernet.in/~chandra/AMULpaper2.pdf