Case7-September-2017
Despite all the constraints in agriculture, the biggest success of Indian agriculture has been its ability to be self-sufficient in food grains. The significant contributions of green revolution in the last 30 years are as follows.
However, all this does not mean that farmers have no issues or that rural India has solved all its problems. The methods of the Green Revolution often replaced low-impact traditional crop varieties and farming systems that had developed over hundreds of years in consonance with regional soils and climate – without absorbing the accumulated indigenous knowledge. Other prominent losses during green revolution are topsoil depletion, groundwater contamination, the decline of family farms, etc.
Along with these factors, the liberalisation and the rapid change in marketing have increased the gaps between the haves and have nots, thereby the inequality which is seriously expressed in the form of farmers suicides. The death toll increasing day by day and new states are also getting added to the list. The issue has to be recognised rightly instead of arguing for and against on the number and reason for the suicides. It is clearly evident that the farming community is suffering due to low productivity, low income, lack of institutional credit support and low water availability.
The need of the hour is cultivating the hope and building resilience among the farmers by way of introducing and identifying suitable and sustainable technologies/practices for each of the contexts. Climatic change adaptation and mitigation for production increase and marketing should be the core also systems perspective is essential to bring sustainability. The system is envisioned in its broadest sense, from the individual farm, to the local ecosystem, and to communities affected by the farming system both locally and globally. Hence, every individual farmer should be empowered with knowledge and skills and they have to work together to influence the policies and market trends. With this perspective, the producer groups are now promoted by many development organisations for increasing the production and income. Similar to economic movement of women which was achieved through SHGs, farmer’s economic movement has to be started with the focus on introducing sustainable agriculture practices with climatic change adaptation and mitigation.
In a nutshell – establishing economic movement of farmers and bringing the behavioural change among the farmers on the production and consumption practices is the important intervention to be made by all the stakeholders to bring hope to the farmers and to transform agriculture into a viable livelihood option.
With the continuous challenges – (low yield, lack of credit, market asymmetries, etc.) and the absence of an effective organisational structure, farmers, especially the small and marginal farmers are on the verge of either becoming incompetent in the market or find themselves in a captivate position under local buyers or village level brokers. These constraints bring out the need for local collectivisation of farmers. Many other countries which have introduced such structural changes are successful in agriculture production and income and satisfying the demand of the farmers.
Collectivisation helps in introducing economies of scale, bringing down the input costs, better bargaining power and magnifies the voices of farmers as collective voice. The most common form of collectivisation that Indian farmers have adopted over the years are cooperative societies, federations of self-help groups, joint liability groups, farmer clubs, common interest groups. These structures are always been inward oriented, i.e. focusing on the requirements of farmers and acting as a facilitating organisation to them while completely ignoring the outward orientation, i.e. the market needs, suppliers and end consumer demands and changing accordingly. Only few have become successful demonstrations such that AMUL and the reasons for the success of these producer institutions are strong leadership, contextual factors and entrepreneurial traits of a community, legal and environmental support to these institutions and a robust design.
With the need for an institutional structure that consists of ethos of cooperation on one side and the business resilience on the other side, the Government of India came up with a new institutional form called ‘Producer Companies’(PC) in 2003. The PC will be promoted locally and will be networked at larger level like Confederation of Indian Industry and The Federation of Indian Chambers of Commerce and Industry in future. The concept is popularised only from 2013 after successful demonstrations in few of the pockets. This initiative is spearheaded by NABARD and Small Farmers' Agribusiness Consortium (SFAC) and promoted more than 2000 producer organisations for different crops and in different regions across the country. Many resource institutions have been identified and assigned to handhold the producer organisations.
Promoting the producer organisations based on the principles of cooperation alone is not sufficient to sustain the organisation because the Producer Organisations have to exist amidst the tough market situation. Hence, the enabling ecosystem should be created initially both by the government and the facilitators. The enabling ecosystem includes the institutional architecture, capital, access to technology, market, etc. Appropriate architecture of producer companies at panchayat, block and district levels have to be promoted considering the key design variables such as size, scope, technology, management and ownership and these variables need to be simultaneously optimised for sustainability. The main objective of this structure should be facilitating optimal roles and responsibilities at different levels and to establish long-term stable business relationships among the producer organisations at different levels. This networking architecture can optimise production, reduce transaction costs, increase efficiency and ensure sustainability of farmers/producers.
Like the SHG movement, enough resources, time and capacity building should be provided by all the stakeholders. Enough time should be given both for promotion and growth of the organisation. A minimum of three years of time is needed to build the capability of producers to handle the business and sustain it.
Patient capital is another name for long-term capital. With patient capital, the investor is willing to make a financial investment in a business with no expectation of turning a quick profit. Instead, the investor is willing to forego an immediate return in anticipation of more substantial returns down the road. This sort of capital has to be infused by the investors and the banks to encourage the inexperienced farming community to venture into the business and make it sustainable.
A favourable ecosystem is a must for development of these producer companies because they have to deal with the most vulnerable part of agri-value chain which starts from the farm and goes on till processing and the faraway markets. The critical ecosystem services include emergency credit, consumption credit, production credit, retail services of inputs for agriculture and other agricultural production services required by the small and marginal farmers. Unless these services are provided by a producer company, it cannot divert the surplus produce from the local trader or shop keeper to the producer company. In addition, the producer company can take up other services related to facilitating linkage with the banks and departments for ensuring the infrastructure access for the business. The multiple services will enhance the scope of the producer company and become financially viable much faster. It does not have to seek economies of scale from the surplus agricultural produce alone which will have adverse impact on the producer company due to its seasonal nature.
Suitable crop, seed, correct recommendation of inputs and proper harvest and post-harvest technology should be evolved and adapted for the each of the contexts with the perspective of climatic change adaptation and mitigation. Sustainable agriculture practices and kit (SAP and SAK) needs to be evolved through farmers research and field experimentation/demonstration. The indigenous seeds and practices have to be validated and disseminated.
The market practices of farmers and the system established by the government is not converging anywhere. The government infrastructures and practices are fit to larger farmers and the small and marginal farmers largely depend on the agents and brokers due to low quantity of products. There is a need for collectivisation of products and the understanding on the market for the small producers. Along with this, consumer need and demand has to be understood by the farmers for deciding their crop and quality of production. Hence, thorough knowledge on the customer food safety, environmental protection and the market should be developed and integrated as the component of the production.
The infrastructure for the producer company includes the basic facility for conducting the day to day operations, storage facility for the surplus produce of the farmers, processing facility for drying, grading and value addition. As the producer company increases its volume of transaction, it will require its own transport and marketing facilities. Government facilities such as warehouse, godown and machineries should be available on lease to the PCs. The government can also allocate some common land for the PCs to establish such an infrastructure. The policies on the public procurement at the regulated market should be relooked and consider the need of the small and marginal farmers.
The Startup Hub is a platform for entrepreneurs to connect with other entrepreneurs, advisers, consultants, mentors, guides, impact investors, incubators and accelerators & venture capital firms. This platform helps them to connect, collaborate, learn, and seek advice and network with fellow members. The startup hub should
Building a sustainable community system which is a producer and market driven organisation is indeed highly knowledge intensive and resource intensive. Collaborating with experts who can think out of the box for sustainable solutions can be the way forward. The startup hub should create such a platform for the PCs to work with the local (district or state) level academic, social work, agriculture and management institutions.
In 2004, DHAN Foundation promoted producer organisations for sustaining the production and linking them to the larger market. The first farmer’s producer company in India was promoted by DHAN Foundation on organic chillies. Ten such producer organisations were promoted on different crops and were piloted. Based on the experience from the pilot, with the support of NABARD and SFAC, DHAN Foundation has expanded the producer organisation concept across four states of India viz., Tamil Nadu, Karnataka, Telengana and Andhra Pradesh and promoted 52 producer organisations from 2015. All the companies are just one-year old and in the formative stage. The producer company is promoted by the Primary Producer Groups (PPGs). The PPGs are promoted at village level with 15-20 producers from the same village and they are the members of SHG or farmers association.
The producer organisations are promoted as the collective organisations of the thematic federations. To have a common identity and to promote a network for collective action across, the producer companies of DHAN are branded as JEEVIDAM. During the last one year, JEEVIDAM producer companies have enrolled 50,000 farmers as members and have done a business for rupees four crore within six months of promotion even at the severe drought scenario. The major focus of the producer companies are promoting and strengthening the governance system for production and market stabilisation, creating access to credit for production, introducing technology for production and collective marketing of produces.