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Overview of apple project concept & status
in Uttrakhand, India (Initiated in 2007)
From Idea of partnership with small apple farmers
collectives, Social organisation (SJS) and social
investor (SHGW) to Improve the situations of farmers
by providing opportunity to them for moving up in
value chain through structural Solutions for qaulity
production, collection, handling, grading, storage,
distribution and marketing of Apples by farmer
owned joint venture companies.
By L.P. Semwal
Vision of the project
 The aim is to set into motion a self-perpetuating model that can be applied
throughout India, for the benefit of small scale farmers. The important aspects
of this model are :
 Business driven socio-economic development of small farmers and
agriculture sector through sound partnerships of producer, organizers,
entrepreneurs and investors.
 This approach is fully in line with the methodology of promoting,
farmer-owned socio-economic ventures adding value at the various levels
of the processing chain of their produce with structural solution.
Farmer’s Perspective: Gaps in
Traditional
Supply Chain
 Price Uncertainty and
Distress Sales.
 High marketing cost due
to small scale
 Delay in payment.
 Entire risk (from farm to
market) borne by farmers
 Seasonal focus and lack
of quality consciousness.
Traditional Apple Supply Chain
Farmer’s Perspective:
Value addition through
modern supply chain
 Assured pricing and more
bargaining power.
 Low marketing cost due to
shared resources and economy
of scale.
 Prompt payment in a
transparent manner.
 Stress on Quality/Drive
towards building a brand rather
than selling commodity.
 Market risks are shared with
social investor
Supply Chain Post-Intervention
Present ownership Arrangements
Principle of repayment of investment & ownership
transfer
Annamrit farmers as owners
foundation an entity set up by
SHGW & SJS
Available bank loans,
subsidies and private equity
can introduced directly in Jvs.
Comparative benefit of farmers
roadsideprice
priceatgatecollectionpoint
priceatgatelong-termstorage
priceatgatewholesaler
Consumerprice
betterprice farmers at CP
premiumfarmers per kg at CP
premiumfarmers per kg at LTS
Operatingcost & profit CP
Operatingcost & profit LTS
EXTRA FARMER INCOME
InterventionApple
Project
Tradtionalsupplyto
middlemen
Traditional supply chain development cooperation
Vs. apple project model
Cooperative model
• Main aim: Sustain production and improve farmer income
• Value drivers: Farmers income maximization
• Daily control: Farmers have direct control over the appointed management.
Conflict between short-term interest of farmers and long-term
interest of the company.
• Strength: Backward linkages with famers. Economic benefits go to
farmers. Focus on increased production. Financial risks (partly)
covered by government programs. Focus on single product
value chain.
• Weakness: Limited forward linkages to market. Limited competition in open
market. Limited diversification. Limited partnerships with other
cooperatives. Little investment in product development.
Government support/interventions lead to political interference.
Traditional supply chain development cooperation Vs.
apple project model
Private sector model
• Main aim: Profit maximization for shareholders.
• Value drivers: Optimize profit, secure continuity at minimum cost
• Daily control: Investors have direct control over appointed management.
Maximizing profit for dividend to investors. Social and
environmental sustainability are not on priority.
• Strength: Strong drive for innovation & leading in market. Strong drive to
diversification. Partnerships with market players & other
companies. Driven by competitiveness in open market. Focus
on quality & reliability of supply. Ability to diversify.
• Weakness: Weak linkage with farmers. Limited concerns for social and
production sustainability. Opportunistic relation with
suppliers/vendors in any step of value/supply chain
Traditional supply chain development cooperation Vs.
apple project model
Partnership model
• Main aim: Profit maximization for farmer through business development
across the agro product value chain for rural prosperity.
• Value drivers: Optimize profit for benefit of farmers, secure continuity and
• growth through increased quality production.
• Daily control: Farmers together with investor/private sector partner, oversee
daily management to balance the short-term interest of farmers
with long-term sustainability of the business.
• Strength: Farmers treated as equal business partners. Strong linkages
with farmers as suppliers to secure premium prices based on
market development. Capitalization of value addition business to
secure investments. Fair procurement prices strong need for
innovation, latest technologies & efficiency Involvement of
multiple stakeholder & use their individual competencies.
•
Traditional supply chain development cooperation Vs.
apple project model
Partnership model
• Strength (Cont…): Synergy between farmers, businesses, investors and
knowledge institutions. Easy diversification, based on
local production and market connections. No political
interference. Competitive in open market. Full value chain
approach.
Weakness: Potential conflict among partners: lack of understanding of each
other & conflicting agenda's. Risk of partners to fall back to their
old practices/values. Finding investors as a new financial
product. Who will/can carry financial risks in start-up phase or
cost of capacity development? How to measure the balance of
social and economic returns?
Thanks to all producers,
organizers, entrepreneurs and
social investors

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Apple project concept to Annamrit foundation

  • 1. Overview of apple project concept & status in Uttrakhand, India (Initiated in 2007) From Idea of partnership with small apple farmers collectives, Social organisation (SJS) and social investor (SHGW) to Improve the situations of farmers by providing opportunity to them for moving up in value chain through structural Solutions for qaulity production, collection, handling, grading, storage, distribution and marketing of Apples by farmer owned joint venture companies. By L.P. Semwal
  • 2. Vision of the project  The aim is to set into motion a self-perpetuating model that can be applied throughout India, for the benefit of small scale farmers. The important aspects of this model are :  Business driven socio-economic development of small farmers and agriculture sector through sound partnerships of producer, organizers, entrepreneurs and investors.  This approach is fully in line with the methodology of promoting, farmer-owned socio-economic ventures adding value at the various levels of the processing chain of their produce with structural solution.
  • 3. Farmer’s Perspective: Gaps in Traditional Supply Chain  Price Uncertainty and Distress Sales.  High marketing cost due to small scale  Delay in payment.  Entire risk (from farm to market) borne by farmers  Seasonal focus and lack of quality consciousness. Traditional Apple Supply Chain
  • 4. Farmer’s Perspective: Value addition through modern supply chain  Assured pricing and more bargaining power.  Low marketing cost due to shared resources and economy of scale.  Prompt payment in a transparent manner.  Stress on Quality/Drive towards building a brand rather than selling commodity.  Market risks are shared with social investor Supply Chain Post-Intervention
  • 6. Principle of repayment of investment & ownership transfer Annamrit farmers as owners foundation an entity set up by SHGW & SJS Available bank loans, subsidies and private equity can introduced directly in Jvs.
  • 7. Comparative benefit of farmers roadsideprice priceatgatecollectionpoint priceatgatelong-termstorage priceatgatewholesaler Consumerprice betterprice farmers at CP premiumfarmers per kg at CP premiumfarmers per kg at LTS Operatingcost & profit CP Operatingcost & profit LTS EXTRA FARMER INCOME InterventionApple Project Tradtionalsupplyto middlemen
  • 8. Traditional supply chain development cooperation Vs. apple project model Cooperative model • Main aim: Sustain production and improve farmer income • Value drivers: Farmers income maximization • Daily control: Farmers have direct control over the appointed management. Conflict between short-term interest of farmers and long-term interest of the company. • Strength: Backward linkages with famers. Economic benefits go to farmers. Focus on increased production. Financial risks (partly) covered by government programs. Focus on single product value chain. • Weakness: Limited forward linkages to market. Limited competition in open market. Limited diversification. Limited partnerships with other cooperatives. Little investment in product development. Government support/interventions lead to political interference.
  • 9. Traditional supply chain development cooperation Vs. apple project model Private sector model • Main aim: Profit maximization for shareholders. • Value drivers: Optimize profit, secure continuity at minimum cost • Daily control: Investors have direct control over appointed management. Maximizing profit for dividend to investors. Social and environmental sustainability are not on priority. • Strength: Strong drive for innovation & leading in market. Strong drive to diversification. Partnerships with market players & other companies. Driven by competitiveness in open market. Focus on quality & reliability of supply. Ability to diversify. • Weakness: Weak linkage with farmers. Limited concerns for social and production sustainability. Opportunistic relation with suppliers/vendors in any step of value/supply chain
  • 10. Traditional supply chain development cooperation Vs. apple project model Partnership model • Main aim: Profit maximization for farmer through business development across the agro product value chain for rural prosperity. • Value drivers: Optimize profit for benefit of farmers, secure continuity and • growth through increased quality production. • Daily control: Farmers together with investor/private sector partner, oversee daily management to balance the short-term interest of farmers with long-term sustainability of the business. • Strength: Farmers treated as equal business partners. Strong linkages with farmers as suppliers to secure premium prices based on market development. Capitalization of value addition business to secure investments. Fair procurement prices strong need for innovation, latest technologies & efficiency Involvement of multiple stakeholder & use their individual competencies. •
  • 11. Traditional supply chain development cooperation Vs. apple project model Partnership model • Strength (Cont…): Synergy between farmers, businesses, investors and knowledge institutions. Easy diversification, based on local production and market connections. No political interference. Competitive in open market. Full value chain approach. Weakness: Potential conflict among partners: lack of understanding of each other & conflicting agenda's. Risk of partners to fall back to their old practices/values. Finding investors as a new financial product. Who will/can carry financial risks in start-up phase or cost of capacity development? How to measure the balance of social and economic returns?
  • 12. Thanks to all producers, organizers, entrepreneurs and social investors