Bengaluru :
With farmers’ suicides in Karnataka touching 800, the highest ever in the state, the government is quickly pushing through an initiative to promote cash-rich horticulture farming by linking up the poor and marginal farmer directly to private companies that deal with agri-produce.
Using a programme devised by the Congress-led United Progressive Alliance ( UPA) in its second term for integrated agriculture development through private-public-partnerships (PPP-IAD), the state’s horticulture department is dovetailing state, central and corporate initiatives to turn the farmer into a horti-business entrepreneur.
Karnataka, with lakhs of small and marginal farmers, has the third largest area under horticulture crop in the country. It is the seventh in production. The state is the highest exporter of cashew, roses, gherkins, rose onion, spices and condiments, earning a whopping Rs 8,453 crore annually.
Tomatoes grown in Kolar travel all the way to Kolkata for sale, while lemons from Bijapur are sold in Bihar. Income generation from the sector is Rs 36,000 crore. Still, Chawla sees a vast, untapped market for horticulture crop and value-added products from the state. “Why can’t the extraspicy Byadgi chilli become as famous as Mexican chilli?” he asked.
The area that the state wants to fix is the 20 to 25% post-harvest losses in the sector. The idea is to find value additions to the horticulture produce that will use up the highly perishable items without causing any loss to the farmers.
They want to do this by facilitating private intervention, rather than set minimum support prices for all products. Chawla pointed out that the government-sponsored HOPCOMS (Horticultural Producers Cooperative Marketing and Processing Society Ltd), which purchases vegetables and fruits from the farmers and sells them to consumers through stalls, covers hardly 3% of the 12,000 tonnes consumed in Bengaluru city.
Government Intervention
The horticulture department has studied several models including the PPP-IAD implemented by Maharashtra, which began functioning in 2012. Karnataka is also looking to scale up through government intervention two private, successful models in horticulture.
The sale of vegetables from groups of farmers through linked-up groups of vendors under the Samriddhi brand by IIM-A alumnus Koushalendra Kumar in Patna is one model the state wants to replicate. The other is that of the Siddhivinayak group in Maharashtra, where everything from seeds to modern, efficient technology to turning of the grown potato crop into chips and their sale is handled by the company, through agreements with farmers.
Here’s how the Karnataka model, inspired by those from the other states, works: about 20 farmers first get together and form an interest group. About 50 such groups join together and register a farmer producer organisation (FPO) under the Companies Act, complete with a board of directors with two representatives from each interest group.
The FPO is adopted by either the Indian Institute of Horticulture Research or the University of Horticulture Sciences, Bagalkote, which provides technical support. The government pitches in by paying for a technically qualified chief executive to run the FPO as management support for a period of three years. Besides this, the government gives the FPO members all the subsidies provided in the sector and Rs 90 lakh towards permanent infrastructure such as cold storages, on the condition that the FPO puts in Rs 10 lakh.
The state is expecting a range of companies, including the Big Four consulting firms like PricewaterhouseCoopers and Ernst & Young, to come forward to bid for tenders to provide manpower to support this project on the marketing, BPO and IT side. The government is likely to give each FPO seed money of Rs 25 lakh, while the centrallyfunded Small Farmers Agriculture-Business Consortium (SFAC) will give an equity linked grant of Rs 10 lakh that the state will facilitate. Besides this, NABARD is committed to give each FPO Rs 5 lakh.
The FPO draws up a detailed project report with help from the horticulture department and focuses on a specific area. For example, Yogananda of the alreadyregistered FPO in Chikkamagaluru district, told ET Magazine that their FPO will focus on vegetables including tomato, potato, cabbage, beans and green chillies. And they are planning a cold storage to store them and sell them to FPOs in districts that don’t grow vegetables, or to other private outlets. “Farmers are not getting good prices, so these FPOs that we have formed among ourselves are a very good idea to ensure that we don’t suffer.
The FPO will get fertilisers and pesticides at cost and sell them to all of us shareholders, who have paid Rs 1,100 to join it, at cost. We will also get all benefits and no taxes. There will be no intermediaries and we will sell directly to the consumers or the company that links up with us,” Yogananda explained. The state is aiming to register 92 FPOs this financial year and get them off the ground.
The horticulture department insists that the FPO model will work better than the cooperatives that have been racked with politics and power play. Yogananda pointed out that he was a BJP supporter, but Congress and JD(S) farmers were also present in his FPO. Rudresh, a director of another registered FPO in Davanagere district, said: “Politics may come in at some point, but currently, we are all just farmers who are working together for the welfare of all. We can plan who will put what crop and work out benefits for everyone.
As an initiative, this FPO idea is very good and can work at the ground level.” The government is further incentivising FPOs by giving them trader licences in the agriculture produce market committee (APMC) markets that sell agriculture products in each district. The FPO can itself sell to consumers directly at these markets without going through any agents, as they are a group of farmers and not individuals. The FPOs also get priority storage space in all APMCs.
IT Support
All FPOs will be linked up through a database that can be accessed by any company which wants to work with them. The horticulture department will identify five local resource persons who will geo-map the land owned or leased or used by each FPO member. There will be constant updates in all the project area and at any point in time, the state of the land, the fertilisers that have been used, the state of the crop and how it is progressing towards harvest, can be accessed at fingertips.
“A package of practices, which is a set of prescribed practices like the seeds, pest and disease details, pesticides and fertilisers and so on, recommended by University of Horticulture Sciences, Bagalkote will be given to the farmers. These will be monitored at every step through an app, developed for the purpose,” Kshama Patil, deputy director of horticulture (project monitoring unit), told ET Magazine.
Chawla has written to several companies that linked up with the contract farmers in Maharashtra and other states, besides all food processing majors and super-markets including Hindustan Unilever and Metro Cash and Carry, inviting them to attend a workshop on the project and begin the linkage process. “The companies can directly link up with the FPOs and control the whole process of growing their raw material, like providing the seeds, the fertilisers, the know-how and finally purchase the product.
However, unlike contract farming, if the farmers want to sell the produce to someone else who will give them a better rate, they are free to do so. They are not bound to the company. So the company will have to pay them market rates,” Chawla explained. Prabhakar Rao, trustee of the Sri Sri Institute of Agricultural Sciences and Technology Trust, said he has expressed interest in attending the workshop. “I believe the PPP-IHD model has great potential as demonstrated by the Sri Sri Farmers Market we have going in Madhya Pradesh. It is fully run by The Art of Living as a direct linkage between farmers and consumers.
With government support, we believe that there is tremendous potential to take it further,” he told ET Magazine in an emailed response. Hemant Gaur, managing director of Siddhivinayak Agri Processing, pointed to the success of his model in Maharashtra, where everything from seeds to the final marketing of potatoes was done by his company, benefitting everyone along the line. “I don’t believe that the middleman or the dealer has managed to make a lot of money between the consumer and the producer as, if that was the case, the middleman should now be very rich. That has not happened. But what we are looking at is control of the quality of the product that we deliver to the consumer and, for that, this system is very effective,” he said.
source: http://www.economictimes.indiatimes.com / www.etsmallbiz.com / ET Home> Small Biz> Entrepreneurship / by Sowmya Aji, ET Bureau / November 29th, 2015