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  1. 1. Sowing Prosperity : Boosting Agricultural Productivity Team: Safal Sahyog Arnab Biswas, Indian Institute of Technology, Kanpur (IITK) Kevin Jose, IITK Ritvik Srivastava, IITK S Gautham Raj, IITK Shashank Bhandari, IITK सfal सhyog
  2. 2. 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
  3. 3. 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
  4. 4. Flow of Technological Impetus and Structure of Manpower सfal सhyog
  5. 5. 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
  6. 6. 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 Cooperative Profit 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
  7. 7. Flow of Produce सfal सhyog
  8. 8. 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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. References Amul Sharma, V.P. (2012). Accelerating Agriculture Growth for Inclusive Development. Vikalpa, 37(1) alapa%20Paper%202011.pdf World Bank. (2012). India: Issues and Priorities for Agriculture agriculture-issues-priorities Chandra, Tirupati. Business Strategies for Managing Complex Supply Chains in Large Emerging , Economies: The Story of AMUL