Facilitating the integration of tribal women farmers into markets by promoting sustainable agricultural practices.
Connecting tribal women to markets
The process of collectivizing small and marginal farmers to promote Non-Pesticidal Management (NPM) compliant cultivation practices poses a notable challenge, particularly when aiming to ensure equitable financial returns. Several promoting institutions and Farmer Producer Organisations (FPOs) embark on the transformative journey from being more conventional middlemen to becoming advocates for farmers and sustainable agriculture. In this context, a pioneering NGO named SPS and one of the earliest FPOs in the region, RRPPCL(a FPO), offers valuable insights into fostering an entrepreneurial ecosystem with various stakeholders to facilitate sustainable transitions.
This FPO case highlights the importance of FPCs evolving and discerning their strengths. Rather than attempting to cover the entire value chain, FPO emphasizes leveraging its strengths. This strategic approach has led the FPC to relinquish certain business models in favor of forward contracts with selected partners for the processing and marketing of specific crops native to the region. The role of the NGO as a promoting institution with substantial social and intellectual capital is crucial, addressing the need for and challenges associated with accessing working capital from financial institutions. The case study delves into how this FPO named RRPPCL effectively navigated these challenges through innovative partnerships in the market, all to the benefit of over 5000 women farmers who own and operate this enterprise.
A significant proportion of the farmers served by FPO are adivasis and fall into the small and marginal category, lacking the necessary resources to access fair markets. As the NGO initiated its efforts in produce aggregation, it confronted the challenge of the closest mandi (Agricultural Produce Marketing Committee) for the sale of agricultural produce being situated more than 80-90 km away in Indore, rendering it inaccessible to these small-scale farmers.
This FPO case highlights the importance of FPCs evolving and discerning their strengths. Rather than attempting to cover the entire value chain, FPO emphasizes leveraging its strengths. This strategic approach has led the FPC to relinquish certain business models in favor of forward contracts with selected partners for the processing and marketing of specific crops native to the region. The role of the NGO as a promoting institution with substantial social and intellectual capital is crucial, addressing the need for and challenges associated with accessing working capital from financial institutions. The case study delves into how this FPO named RRPPCL effectively navigated these challenges through innovative partnerships in the market, all to the benefit of over 5000 women farmers who own and operate this enterprise.
A significant proportion of the farmers served by FPO are adivasis and fall into the small and marginal category, lacking the necessary resources to access fair markets. As the NGO initiated its efforts in produce aggregation, it confronted the challenge of the closest mandi (Agricultural Produce Marketing Committee) for the sale of agricultural produce being situated more than 80-90 km away in Indore, rendering it inaccessible to these small-scale farmers.
In its inception, FPO emerged as a transformative force, challenging the conventional middleman-centric model in agricultural markets. As a member-owned enterprise, it played a pivotal role in ensuring fair pricing for the produce of soybean, wheat, and chickpeas, benefitting women farmers. Noteworthy buyers, including Ruchi Soya, Reliance, Godrej Agrovet, Olam Agro, and SHPL, acknowledged FPO's contributions.
The FPC witnessed early success, aggregating around 3000 quintals of soybean and maize in its first year, setting the stage for a flourishing venture in Dewas' Ghat Neeche area. Notably, over 1000 women collaborated to determine rates, dates, and aggregation locations, fostering a sense of community ownership.
Initially relying on the Agricultural Produce Market Committee (APMC) mandi system, FPO encountered challenges stemming from traders' advantages, leading to a strategic shift away from APMC. Diversifying into initiatives such as soybean seed production, maize-based animal feed, and neem products, FPO demonstrated adaptability and resilience.
Advocating for FPCs to be listed on the National Commodity and Derivatives Exchange (NCDEX) marked a significant milestone. However, recognizing the need for focus, FPO discontinued certain initiatives and concentrated on native crops like red gram, chickpeas, wheat, and jowar.
This consolidation was a good strategy. Dealing in few things allowed FPO to focus on them properly. Besides, FPO does not want to be seen as “just another trader.” Towards this, they stopped the practice of going home to home in the villages to sample crops, a practice that they had begun to compete with local traders. It was decided that a better idea is to let farmers come and submit samples to the collection center.
Costs have also reduced due to less wastage since quality has gone up. A major decision taken by the management and the board was to do away with centralized grading of produce and introduce spiral graders that use nothing but gravity to grade the produce, are low cost (Rs. 6000), and can be easily operated by women and children. This, along with decentralized collection centers, has been a major reason for bringing the costs down for the company. The rates are decided based on primary processing by the farmer and on the test results of NPM parameters.
This “course-correction” by FPO has resulted in the promotion of native crops, diversification in agro-ecology, and price correction in the market due to higher prices being offered by the FPC. Such practices have resulted in better profits, and although the FPC is still not in a state to pay out bonuses, it gives incentives in the form of discounts on input prices and a premium on output aggregation. An example of price incentive provided by FPO is paying the seven-day best price in commodities like soybean where the price fluctuates too much. More information is needed here to look at fluctuations in prices and price corrections by FPC.
The operations of FPO involve selling seeds from companies such as Syngenta, Hytech, Balram seeds, etc., and biopesticides. The FPC is helped by community resource persons called mitaans and the agricultural extension team of NGO for introducing better varieties of commodities viz. wheat, chickpea, jowar, red gram, etc. The women farmers are organized as SHGs and formed into clusters and federation. Each mitaan is responsible for 19-20 SHGs comprising around 350 women farmers. Farmers cultivating NPM crop are known to the FPC and NGO, and aggregation of produce happens from such women farmers at the collection centers. Farmers are motivated to do the primary cleaning, grading, and drying of the produce to get higher prices. The mitaans, aided by the collection center supervisor, check the samples provided by the farmers for moisture content and other quality parameters before accepting the lot. Farmers whose produce is accepted for procurement based on physical parameters are asked to aggregate. Samples are picked up from the aggregated lot and sent to TUV India laboratory in Bengaluru to test for more than 120 pesticide compounds as per Jaivik Bharat (FSSAI) standards. As mentioned above, the prices are dependent on the quality of the aggregated lot and the test results.
The actual process of deciding the price involves mitaans, collection center supervisor, and BoD members. Information is gathered on the market prices and those being offered by the other traders. The prices are discussed every day in the procurement season and finalized by the CEO by factoring in the previous years’ prices, the costs involved in logistics, production levels in the season, prices offered by the traders, and the MSP offered by the government. This does not mean that the women farmers are passive price-takers. They are aware of the market prices and those being offered by the traders and negotiate well to get the best price for their produce. In an instance, a farmer simply told FPO CEO and the collection center supervisor that she will only sell her chana to the FPC if they offer something above Rs. 4800/Qt as that was the rate in the market. The deal was closed at Rs. 5000/Qt!
The Mega Food Park is where the processing and packaging for wheat used to take place. FPO has leased a facility that can process up to 80-120 MT/day of wheat or pulses and package 6-10 MT/day depending on the SKU size. The unit processes and packs daliya, urad daal, whole urad, Bengal gram, chana daal, Kabuli chana, etc. However, FPO had to recently move their wheat milling operations to Asha Industries Ltd., Ujjain, since the wheat milling plant at Avantee has been leased to ITC for a year. The milling of chickpea and reg gram to make dal takes place at Snehal Enterprises, Ujjain. The MFP facility is used only for storing processed flour and pulses to be packed and transported.
The procured commodities are sorted using a color Sortex facility available at Avantee after being manually checked for external material, farm waste, etc. The FPO facility at Avantee has hermetic cocoons for the storage of processed flour. Manual packaging is done according to the demand of the key forward partner SHPL for their Delhi-NCR, Hyderabad, Bengaluru, Pune, Mumbai, and Chennai markets. However, the bags are sealed and stamped using machines. FPO has warehouses in Bagli and Dewas of 500 MT capacity each and has leased a chamber in the cold storage in the Mega Food Park. The chamber capacity is 1100 MT for storing unprocessed pulses and wheat.
Though there are other forward partners of FPO, apart from SHPL, such as Kasyap Sweeteners Ltd. and the urban SHG federations mentioned above, SHPL’s role is much more than a buyer. Interaction with the SHPL operations manager reveals that SHPL is involved in capacity-building efforts through hand-holding and exposure visits to Hyderabad, where SHPL is headquartered. SHPL also impacts business planning and strategizing since it is the key buyer, and FPO has a stake in SHPL through shareholdings.
FPO has been able to provide competitive prices to member farmers, especially in chickpea (black gram), consistently buying at rates above the mandi and the MSP price. FPO has been able to buy wheat and maize also at prices very near, even if lower than the mandi or MSP. Since the farmers are saved from the drudgery of arranging for transportation and also save on costs, they sell to FPO even if the FPC is paying slightly lower than the mandi or MSP.
FPO has brought positive changes in the market too. Due to a competitive yardstick function, other traders have started offering higher prices to the farmers, and there has been a reduction in fraudulent practices. FPO balances the use of technology for quality assessment with the experience of locals, who are innovative and devise methods for the quality assessment of crops that are cheap yet reasonably accurate. Due to the FPC's interventions, women farmers in the region have become aware of market prices and do not let even FPO become the price giver. They actively negotiate. The women who were interviewed had started other activities in their villages such as kirana shops, campaigns against alcohol abuse, etc., with the savings of the SHG. Some of them have built pucca houses and have started taking part in local self-governance at the village level. They have aspirations beyond just marketing through partners such as SHPL. Many of them want to have FPO’s own brand with their name and the village name declaring the origin of the produce!
The FPC witnessed early success, aggregating around 3000 quintals of soybean and maize in its first year, setting the stage for a flourishing venture in Dewas' Ghat Neeche area. Notably, over 1000 women collaborated to determine rates, dates, and aggregation locations, fostering a sense of community ownership.
Initially relying on the Agricultural Produce Market Committee (APMC) mandi system, FPO encountered challenges stemming from traders' advantages, leading to a strategic shift away from APMC. Diversifying into initiatives such as soybean seed production, maize-based animal feed, and neem products, FPO demonstrated adaptability and resilience.
Advocating for FPCs to be listed on the National Commodity and Derivatives Exchange (NCDEX) marked a significant milestone. However, recognizing the need for focus, FPO discontinued certain initiatives and concentrated on native crops like red gram, chickpeas, wheat, and jowar.
This consolidation was a good strategy. Dealing in few things allowed FPO to focus on them properly. Besides, FPO does not want to be seen as “just another trader.” Towards this, they stopped the practice of going home to home in the villages to sample crops, a practice that they had begun to compete with local traders. It was decided that a better idea is to let farmers come and submit samples to the collection center.
Costs have also reduced due to less wastage since quality has gone up. A major decision taken by the management and the board was to do away with centralized grading of produce and introduce spiral graders that use nothing but gravity to grade the produce, are low cost (Rs. 6000), and can be easily operated by women and children. This, along with decentralized collection centers, has been a major reason for bringing the costs down for the company. The rates are decided based on primary processing by the farmer and on the test results of NPM parameters.
This “course-correction” by FPO has resulted in the promotion of native crops, diversification in agro-ecology, and price correction in the market due to higher prices being offered by the FPC. Such practices have resulted in better profits, and although the FPC is still not in a state to pay out bonuses, it gives incentives in the form of discounts on input prices and a premium on output aggregation. An example of price incentive provided by FPO is paying the seven-day best price in commodities like soybean where the price fluctuates too much. More information is needed here to look at fluctuations in prices and price corrections by FPC.
The operations of FPO involve selling seeds from companies such as Syngenta, Hytech, Balram seeds, etc., and biopesticides. The FPC is helped by community resource persons called mitaans and the agricultural extension team of NGO for introducing better varieties of commodities viz. wheat, chickpea, jowar, red gram, etc. The women farmers are organized as SHGs and formed into clusters and federation. Each mitaan is responsible for 19-20 SHGs comprising around 350 women farmers. Farmers cultivating NPM crop are known to the FPC and NGO, and aggregation of produce happens from such women farmers at the collection centers. Farmers are motivated to do the primary cleaning, grading, and drying of the produce to get higher prices. The mitaans, aided by the collection center supervisor, check the samples provided by the farmers for moisture content and other quality parameters before accepting the lot. Farmers whose produce is accepted for procurement based on physical parameters are asked to aggregate. Samples are picked up from the aggregated lot and sent to TUV India laboratory in Bengaluru to test for more than 120 pesticide compounds as per Jaivik Bharat (FSSAI) standards. As mentioned above, the prices are dependent on the quality of the aggregated lot and the test results.
The actual process of deciding the price involves mitaans, collection center supervisor, and BoD members. Information is gathered on the market prices and those being offered by the other traders. The prices are discussed every day in the procurement season and finalized by the CEO by factoring in the previous years’ prices, the costs involved in logistics, production levels in the season, prices offered by the traders, and the MSP offered by the government. This does not mean that the women farmers are passive price-takers. They are aware of the market prices and those being offered by the traders and negotiate well to get the best price for their produce. In an instance, a farmer simply told FPO CEO and the collection center supervisor that she will only sell her chana to the FPC if they offer something above Rs. 4800/Qt as that was the rate in the market. The deal was closed at Rs. 5000/Qt!
The Mega Food Park is where the processing and packaging for wheat used to take place. FPO has leased a facility that can process up to 80-120 MT/day of wheat or pulses and package 6-10 MT/day depending on the SKU size. The unit processes and packs daliya, urad daal, whole urad, Bengal gram, chana daal, Kabuli chana, etc. However, FPO had to recently move their wheat milling operations to Asha Industries Ltd., Ujjain, since the wheat milling plant at Avantee has been leased to ITC for a year. The milling of chickpea and reg gram to make dal takes place at Snehal Enterprises, Ujjain. The MFP facility is used only for storing processed flour and pulses to be packed and transported.
The procured commodities are sorted using a color Sortex facility available at Avantee after being manually checked for external material, farm waste, etc. The FPO facility at Avantee has hermetic cocoons for the storage of processed flour. Manual packaging is done according to the demand of the key forward partner SHPL for their Delhi-NCR, Hyderabad, Bengaluru, Pune, Mumbai, and Chennai markets. However, the bags are sealed and stamped using machines. FPO has warehouses in Bagli and Dewas of 500 MT capacity each and has leased a chamber in the cold storage in the Mega Food Park. The chamber capacity is 1100 MT for storing unprocessed pulses and wheat.
Though there are other forward partners of FPO, apart from SHPL, such as Kasyap Sweeteners Ltd. and the urban SHG federations mentioned above, SHPL’s role is much more than a buyer. Interaction with the SHPL operations manager reveals that SHPL is involved in capacity-building efforts through hand-holding and exposure visits to Hyderabad, where SHPL is headquartered. SHPL also impacts business planning and strategizing since it is the key buyer, and FPO has a stake in SHPL through shareholdings.
FPO has been able to provide competitive prices to member farmers, especially in chickpea (black gram), consistently buying at rates above the mandi and the MSP price. FPO has been able to buy wheat and maize also at prices very near, even if lower than the mandi or MSP. Since the farmers are saved from the drudgery of arranging for transportation and also save on costs, they sell to FPO even if the FPC is paying slightly lower than the mandi or MSP.
FPO has brought positive changes in the market too. Due to a competitive yardstick function, other traders have started offering higher prices to the farmers, and there has been a reduction in fraudulent practices. FPO balances the use of technology for quality assessment with the experience of locals, who are innovative and devise methods for the quality assessment of crops that are cheap yet reasonably accurate. Due to the FPC's interventions, women farmers in the region have become aware of market prices and do not let even FPO become the price giver. They actively negotiate. The women who were interviewed had started other activities in their villages such as kirana shops, campaigns against alcohol abuse, etc., with the savings of the SHG. Some of them have built pucca houses and have started taking part in local self-governance at the village level. They have aspirations beyond just marketing through partners such as SHPL. Many of them want to have FPO’s own brand with their name and the village name declaring the origin of the produce!
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