Fostering Farmer’s Organization’s with Business Rigor through ICT

Advancing local development through meso-credit, Farmer Private Ltds and economic chain development

AuthorUtpal Chandra(I.C.T Head) and L.P.Semwal (Chairman)Shri Jagdamba Samiti (NGO), Rishikesh, Indiamailto:utpalchandraa@gmail.com

Abstract – Apple service project India is a livelihood development project promoted by FFT consortium, in the year of 2007. The consortium is promoting sustained economic development in rural areas by setting up healthy agro processing enterprises in which farmer group themselves gradually gain economic ownership with the help of both NGOs and experienced private entrepreneurs. It has undertaken this project for the small and marginal farmers of Uttrakhand and Himachal Pradesh. The involvement of ICT with this project is indispensible as it plays an important role starting from information dissemination to ownership sharing. This paper discusses the impact of Information and Communication Technology(ICT) on agriculture knowledge transfer on farming to small and marginal apple farmers of remote villages of the Himalays and establishing their agro processing enterprises through farmer organizations.

Keywords: ICT, Small and Marginal Farmer, Economic Ownership, Agro-Processing Enterprise, Farmer Organizations.

Introduction In India, Apple farming is practiced only in high hilly areas. Villages there are much scattered. Again apple orchards are located in the remote hills slopes in dense forests, where there are no modern ways to reach. In some cases orchards are 12 km inside the forest. Till a few years back, it was common for the farmers to grow apples in an age old conventional process. Though apple production generates good revenues they hardly took care of right time of harvesting, transportation to market and selling at a reasonable price. This was due to small and marginal farming, harsh and unpredictable weather condition, lack of communication, knowhow of quality and economy.

Fortunately, a new approach of socio-economic development approached to the Nagaon area of Uttrakhand and Jubbal area of Himachal Pradesh

through Apple Service project India which is initiated by a consortium of partner organizations named Fresh food technology (FFT)1, Agriculture & Organic Farming Group (AOFG) and Shri Jagdamba Samiti (SJS). The advent of ICT with this consortium has changed the scenario of cultivation and the livelihood of these unreachable villages. It is convinced that ICT is the right step for supporting agriculture into a new dimension as it plays an important role by giving solution to the challenges faced by the farmers as well as the organization and also accelerate earnings.

Aim - The aim of the new approach is to create a profitable partnership between investors and farmer groups, by setting up ICT enabled joint venture of agro-processing enterprises based on solid feasibility studies and business plans. Similar to the self-help groups and cooperatives, the aim is to set-up healthy business in handling, processing and trading farmer’s commodities on a commercial basis. The main difference of the new approach is that the farmers, along with social-conscious corporate partners become equal business partners of the investor. The farmers will only gain full economic ownership once the investment is repaid fully. The economic ownership of the companies, however, can be fully transferred to the farmer groups solely.

THE SOLUTION

In India, small and marginal farmers tend to get caught in the powerful grip of middlemen, informal lenders and other intermediaries. They have lack of collective action and on the other hand private sector is hesitant of giving ownership of the value chain to the farmers and sometimes it is exploitative in nature.

The vision of FFT is to provide solution for socio-economic empowerment of small and marginal farmers through livelihood improvement that tries to address the above mentioned problems through a new system of institutional design. Here a new form of partnership on a loan cum investment basis is being tried out. This is tried by organizing the farmers to form fair and feasible business entities based on feasible business planning.

Therefore, an approach is targeted towards setting-up healthy agro-businesses through joint venture of farmers and private investors with the help of FFT consortium. It

1 FFT is consortium leader for the project, AOFG is overseeing the organization of farmer groups and coordinating the implementation in the field, whereas and Shri Jagdamba Samiti (SJS) support the farmer groups’ directly on location. This consortium is under the financial assistance of SHGW (A Private Dutch Foundation).

aims to set up healthy farmer owned businesses in handling, processing and trading farmer’s commodities collectively.

The main constraints hampering the growth of industries in the hilly states of nation are summarized below:

Geographical and environmental constraints in the regions;

Lack of availability of infrastructure including roads in remote areas;

Lack of marketing opportunities and avenues; and Non-availability of raw materials locally; Poor ICT infrastructure and services.

An Apple farmer group involved in a meeting with SJS officials to create Farmer Trust as it is first step towards the solution. Source:- SJS Collection Center office, Nagaon, Uttranchal

PROJECT RATIONALE

The proposed Solution’s relevance (in terms of investments in agriculture development through concept of farmer joint ventures)

Some of the guiding principles are – To enable farmers to move up in the value chain. Loan, No Free Money. Farmers involvement in joint venture company

through farmers groups. Profit/Ownership distribution among the

participants of the joint venture companies. Reinvestment of profit, partially, for building

infrastructure of the company.

Implementation of the model

The partnerships are of following kinds.

Joint Ventures for Primary Business Units – Six apple Grower Groups, called as Farmer Trusts, have been registered. Here the ownership/benefit distribution shall be in the ratio of the contribution pooled by the farmers. These farmer associations have entered into joint ventures with FFT to form four Farmer Limited Companies. These farmer limited companies are involved in level one value addition of grading, sorting, packing and marketing as the primary operation in the value chain.

Joint Ventures - Secondary Business Unit - These Farmer Trusts have representatives in a holding Trust called E Trusts, in order to move up in the next level of value chain. This has entered into a Joint Venture with the FFT to form a Processing Company called the FFT Himlayan Fresh Produce Private Limited Company and is going to undertake construction of Cold Storage at Naogaon, Uttarkashi. This model provides ample opportunities for the farmers to improve the supply chain businesses. By investing in infrastructure like long-term storage facilities, grading and sorting machines, so that the products can give them a good return when it is to be sold in a better form.

Business Cycle Planning (Value-addition and marketing)

Each year Business Planning is done by keeping in mind Input Planning Working Capital Planning Storage, Transportation and Marketing Sales and Distribution Management Price Buildup Profit Realization and Premium Distribution

Sustainability of the investments Investments are sustainable as they are meant to

be returned through the profits of these business cycles over the next few years.

Further such investments shall then be made in similar such enterprises.

Based on the above principles the joint venture companies can get loans and subsidies from financial institutions and from the government which is presently only accessible by private sector in urban areas. Through these joint collectives we are trying to extend the reach of the farmers to these schemes.

The Basic ICT Model with Stakeholders in Apple Project:

Figure1: ICT model with key Stakeholder

The impact of an ICT deployment with Apple Project In-dia is incremental. Apple Project India comprises of dif-ferent stakeholders. Each and every stakeholder has an equal importance in the ICT model; this includes small and marginal farmers to farmer trusts, management team, funding agencies etc. Thus, ICT identified the different stakeholders involved in this project and inte-grated them with the ICT work flow structures.

Each internal wedge of this model represents a stake holder. The central “ICT Apple Project India”, works as a facilitator of information exchange between different stake holders. It also maintains an ICT team at different levels to identify and cater to the demand of information required by the different stake holders. Finally this fed-erated structure is tested with a set of case studies and is found suitable for this project. Title:

Stakeholder Agency Information to provide by

Small and Marginal Farmers

--------------- Agriculture Infor-

mation for Apple farming.

Weather forecast-ing.Farmers

GroupSixteen farmer groups four each in Uttrak-hand and Hi-

Planning

Forecasting

Trust of Farmers

Six farmer trust in six dif-ferent location

Profit distribution

Ownership alloca-Joint Venture Companies

FFT Consor-tium with six farmer groups

Budget

PlanningSupport Orga-nization Shri Jagdamba

Samiti, NGO Maintain ICT

team and provide Funding Agency SHGW (A Pri-

vate Dutch Budget and Ex-

penditure.

Advantages of this ICT model :-

The new structure offers many benefits to Apple Project India.

1. The main purpose to accommodate all the key stake holders has been solved.

2. Centralized ICT management with distributed activities.

3. Ease of development and deployment of techno-logy.

4. Information sharing among different stake hold-ers and to make them familiar with ICT.

5. Cost effective.

Figure 2: ICT Work Flow Model of Apple Service Project India

ICT Work Flow in Apple Service Project India:

The entire workflow of ICT is divided into three different levels. This is due to the similarities of scope of works at each level. Each level should perform well defined ICT activities. Level boundary denotes the exchange of information.

Level 1: ICT activity in this level is concerned with remote villages, apple farmers and village center offices.

Level 2: The important ICT activity of Collection center offices is to provide support and training and bridging between the levels.

Level 3: Head Office- Shri Jagdamba Samiti, FFT, Controlled Atmosphere Store and Funding Agency etc., are the main entity of ICT. ICT Services

Establishes link between Apple Producers, Village Centers, Collection Centers and Head Office.

Agricultural information transfer and sharing. Farmers Database Management Information System. M.I.S. on planning and target of Apple collection -

prior to apple season. Current market price analysis such as Price Build up

and Finding best buyers. Quality control of apples. Purchasing Apples from the farmers. Processing and Centralized Inventory Management

System. M.I.S. on Ownership transfer and profit distribution

to the farmers. ICT kiosk at different village centers.

For organizing and ease of management, different nearby villages are connected to village center offices. The main activities of the village center offices are to work as a resource center for the framers, to look after agriculture related problems, to give weather related information, to provide training on apple farming, honey bees keeping, fruit processing, price buildup etc.

The other activities of the village center offices are to work with Farmers Database Management Information System, where the detailed information of the farmers are kept along with their personal details, information of land details, numbers of trees they have, average age of trees etc. The process of ICT work flow begins with this primary information that is very much crucial for further analysis and decision making. Farmer Database Management Information System also involves registering new farmers, feeding information of newly registered farmers, providing ID cards, feeding data of expected apple production on a periodic intervals etc. Beside these, every village center runs an ICT kiosk which also has an internet connection for the communication with the next level offices as well as for the benefit of the villagers.

Village center offices, in turn are controlled by the Collection Center offices. Collection Center offices work as a second level resource center for these village center offices and also control other villages nearby to the centers. From this level planning, forecasting and target of apple collection related activities are conducted. ICT plays an important role by providing different M.I.S. reports on planning, forecasting and also other reports of day-to-day activities to the head office. The other activities of collection center offices are to provide training to the village center officials and farmers.

During the apple season, purchasing apples, grading apples, packaging apples, billing, dispatching, inventory management related activities are also managed from Collection Center Offices. All these activities are fully controlled by the customized software which is developed and maintained by in-house ICT team. The head office controls and monitors the overall ICT activities of different branch offices located in the far flung areas. It provides a technical support to different branch offices. Besides controlling and monitoring of various ICT activities of different offices, it is also involved in price buildup management system for different branch offices. Price buildup is one of the important activities during apple season as it offers the best price for selling apples for the farmers, according to market condition. With this, exploitation through middleman and other buyers is completely overcome.

Central inventory management system is one of the most crucial activities of the ICT as it keeps track of every record of transaction of every farmer during apple season. Farmer participation is meant for partnership towards the organization. This partnership leads the farmer to earn their profit by their participation and gradually get the percentage of ownership of the company.

Grading of apples in the Collection Center. Source:- SJS Collection Center office, Nagaon, Uttranchal

THE SOLUTION’S SUCCESS/IMPACT

Progress So Far - Four collection centres (for grading, pre-cooling and packing centers - two each in Himachal and Uttaranchal) have been established in 2007 and two more centers in Uttranchal were established during 2008 in the proximity of apple growing areas. While preliminary processing activities like grading and packaging were done in the first three business cycles, the second business cycle of secondary value addition is

expected to be done next year through cold storage unit. During harvesting season of 2008, 2009 and 2010, all the centers purchased apples from the participating farmer groups, individuals and committees and sold the processed produce ( sorted, graded and packed) in the market at comparatively higher price.

Table1: Financial Review of Apple Project IndiaYear Apple Boxes Profit(Rs.)  Targeted Achieved  2008 50000 37,000 Rs 3,75,420.002009 50000 20,000 Rs 1,03,020.00 2010 60000 35,000 so far N.A

Three business cycles have been completed. In the year 2008 and 2009 the turnovers of 37,000 and 20,000 boxes (926.2 MT and 558.52 MT) are achieved respectively, while in 2010 till now 35,000 boxes have been collected (500 MT). Operating profits of Rs 3,75,420 and Rs 1,03,020 are generated as a result of the sales of the apples. The same was distributed amongst the members as premium and as capitalization fee.

Table2: Villages and Farmers involved with Apple Project India

YEAR Total Number of Collection Centers

Total Number of Villages

Farmers Involved

2007 4 12 3002008 6 35 15002009 6 72 25672010 6+1 Central Cold

Store72 2567

FUTURE PLAN OF ICT

Encouraged by the positive outcome of the use of I.C.T on Apple Service Project India, some ambitious I.C.T based plans are being considered in the coming financial years. Extensive research is being carried out on different aspects of those I.C.T plans and also looking for deriving benefits from different government ICT schemes.

Future plan Mobile information services- Introducing Small

Message Services for the farmers, Local Weather Forecasting for next 24 to 48 hour.

News -Agri News, Horticulture News. Soil testing and Input Application advices. Net Banking for the farmers, Mobile banking

services.

ICT kiosk with internet facility for the farmers/ villagers

All the participating farmers will get daily updates on weather forecasting, alert messages through SMS on apple cultivation on their mobile phones. They will obtain technical support in terms of managing their orchards, improving the quality of their yield, harvesting and post-harvesting activities. Field extension officers have conducted a detailed survey of 2567 apple growing farmers covering their land, socio economic status and estimated production for the improvement of ICT workflow. ICT is also planning to provide training on financial management, operational management to different official levels.

CHALLENGES AND PROBLEM USING ICTS FOR APPLE PROJECT

ICT experiences many challenges in respect to information dissemination and accessibility with the remote village center offices and the farmers also. These include lack of information and communication facilities, poor infrastructure of information and communication delivery channels in these high hilly regions, sometimes unavailability of communication services also contribute.

Collecting information about the farmers, farming and their crops is also a challenging job for our ICT team members, as the villages are very much scattered. Although it is very time consuming to go to the villages and collect the information about them, still it is a routine duty (visiting the villages and information collection) of the village center office staff members. As many of the information fields about the farmers still remain blank, it affects ICT for further processing of information and preparing MIS reports.

Again adaptability and readiness to involve with the new technology and services is a major problem. Even though, agricultural expertise and knowledge is available, majority of farming community still resort to their old methods and are unwilling to take advices like honey bee keeping, spraying of hormones on the trees at right time etc. Excessive rain and snowfall also affect the functioning ICT.

CONCLUSION AND SOCIAL IMPACT OF INNOVATION

As a result of implementing ICT, all the four project centres have selected various schemes and projects for getting support from other agencies (both government and non-government) and are looking forward for better business planning during 2010-11. By gaining technical know-how through attending the training on marketing,

quality grading and packing apple collection, estimates have been prepared and harvesting of apple is scheduled as per the demand of market/buyers. The stakeholders have now started planning for the next season in advance to cover the essential managerial costs for full year and also to capitalize the center as quickly as possible. Farmer groups are now convinced to invest in infrastructure out of their increased returns for the betterment of the project and the livelihood.

REFERENCES

§ L.P. Semwal (SJS) and Edwin Willemsen (FFT) (2009) – Fostering Farmer ‘s Organisation with Business Rigour.

§ Obayelu Abiodun Elijah -Effects of the Emerging Information Communication Technologies (ICTs) on Agricultural Knowledge Transfer to Smallholder Farmers in Nigeria.