Farmers As Owners
This is a success story all the way from the vales and hills of four districts of Uttarakhand where a remarkable partnership between a social investor, a technology provider, an Indian voluntary organisation led to the creation of a value chain for apples which is worthy of emulation elsewhere. Most importantly, it shows that farmers can own and run commercial enterprises even as the land holdings continue to be small. It all started with the efforts of Sheri Jagdamba Samity (SJS), a voluntary organisation which started working in the Bhilangana valley in Tehri Garhwal district from 1991. Today, it is spread over 263 villages in eight blocks: Doiwala and Rajpur (Dehradun), Bhilangna and Jakhnidar (Tehri), Chinyalisaur, Dunda and Bhatwari in Uttarkashi and Jakholi in Rudraprayag. Of the ten functional Controlled Atmosphere (CA) stores in the country, one has been established under this project, and to celebrate the success, a seminar under the title “farmers as owners’ was organised last fortnight at New Delhi by the stakeholders and One World Foundation India.
The background runs like this. Even though farmers owned apple orchards, their economic position left much to be desired as they neither received technical assistance from the state horticulture department, especially with regard to quality and post-harvest management, and were at the mercy of intermediaries both for price discovery, and for transactions. To minimise, and finally eliminate the role of intermediaries from their entrenched position—from credit-based procurement to marketing of the end product, the Apple Project India was launched in 2007 by the SJS in partnership with a Dutch foundation and Fresh Food Technology. The fundamental assumption is that while the project is viable in the long run, in the initial years, the capital costs for the-state-of-the-art technology can and should be provided by a social entrepreneur or foundation. Over the years, the farmer producer company will redeem the capital loans that have been extended to them.
So while retaining several elements of a co-operative, it does not fit into the typical model of a co-operative because the technology provider and professional management are key elements to the success of the project. Therefore, the project recognises the potential as well as the limitations of farmers in managing their business. The focus is on ownership not management. Farmers must get returns, but decisions with regard to technology and markets have to be with professionals, and this is what SJS has been able to convince farmers to participate in the project in a meaningful way. As in the case of a joint stock company where the ownership is delinked from management, this is a concept where professionals run a company which will finally be owned by the farmers.
The other important aspect of the partnership is the reliance on Information and Communication Technology (ICT). This has enabled the farmers in the remotest villages where apples are grown to be in touch with other stakeholders. It works as an information exchange, besides maintaining work flow structure in a unique manner. The services include a link between apple producers, village collection centres and the market, farmers data base, MIS on planning of apple production and planning , MIS on ownership transfer and profit distribution to farmers, current market prices as well as future trends, inventory flows, transport schedules and information kiosks in villages which also provide multiple services, including travel-related reservations, government notifications, forms, results etc. All this has helped create additional employment and incomes, technology skills and capacity building for the apple growing farmers. In fact, the neatly packaged boxes from the CA stores have also given a distinct identity and brand recognition to this produce from the Garhwali Himalayas.
Let us take a look at how it actually wor ks. The task of setting up collection centres is with the SJS. Farmers provide details about the fruit bearing trees , and the expected produce. This is important for sending out the crates to the farmers field. As soon as the produce is collected, the farmer gets a formal acknowledgement of the stock, quality (classified by grades) and the expected value of the produce. Each collection centre is equipped with one grading/sorting equipment and one pre-cooling container. Once the apples are pre-cooled and packed in wooden boxes, they are sent to the CA stores for long-term storage of up to eighteen months. This is where the price arbitrage takes place. From between Rs 25 and Rs 40 at farm gate to the consumer price of Rs 150 per kg the margins which were earlier going into the hand of the intermediaries now stays with the farmer. In fact, wherever CA stores have come up in the private, public or social sector, the first impact has been on farm gate prices, and even more importantly, on the farmers attitude to his own farm. Earlier, farmers were quite happy to ‘rent out’ their orchards , and not really ‘invest’ in them for the returns were not really commensurate with the effort. Under the new dispensation farmers not only feel like owners, they are empowered owners who understand how the system works.
A word about the business model. As mentioned earlier the capital investment in the project is treated as a loan to the Farmer Producer Company, which redeems it year after year. Half the profits made in the initial years are to be used for loan redemption, and the other half as premium to farmer members based on the extent of their ‘patronage’ to the FPCO!
The project continues to grow, and now it has eight collection centres and a CA store and a juice plant. The challenge is to spread it to other crops and commodities, and this writer has no doubt that over the next few months, there will be another positive story this time on the efforts being made by them to consciously reach out to women farmers and the impact increased incomes have had on the rural economy.
By Sanjeev Chopra
(An IAS Officer, the author is Joint Secretary & Mission Director, National Horticulture Mission, Government of India. The views expressed are personal.)