Utkarsh Ghate
Self sustainable models of CBOs have created newer opportunities for small farmers and rural entrepreneurs to increase and sustain rural incomes. This innovative initiative by CCD has helped in meeting rural demands of food, health, energy and employment and also creating market access for rural products.
The problem of lower incomes in agriculture is due to lack of local value addition. Much of the produce is sold raw. Value addition happens in the cities often reaching back the village at a higher price. This can be avoided by setting up value addition facilities at villages and marketing value added products to cities at a higher price. Value addition as a rural enterprise has a potential to generate more local jobs, better income and services also reducing rural migration.
Aharam Producer Company
CCD, an NGO working in Madurai district in Tamil Nadu, facilitated the formation of a farmer owned organization – Aharam Traditional Crop Producers Company Limited, to help small farmers and rural entrepreneurs to increase and sustain their incomes. Aharam is dedicated towards empowering small farmers and rural entrepreneurs through the coordination of Community Based Organisations (CBOs) and the delivery of integrated value chain services. Aharam combines market access for rural products through collective purchase from suppliers, providing access to credit and building capacities by a coordinated network of NGO partners.
Aharam has a profit sharing business model that links 3 levels of the agricultural economy – the markets, the NGOs and the CBOs. The Aharam Business Model works through a network of NGO partners that coordinates CBOs to collectively purchase inputs, process outputs and uniformly brand their product. The NGOs then facilitate the sale of the processed goods to Aharam’s wholesale buyers or regional and local retailers under the “Aharam” brand name. Aharam Company manages these transactions through logistical coordination with bulk buyers and partner NGOs. Aharam also engages in the wholesale purchase of CBO output for value added resale (higher profit margins are obtained in the products’ off season or in regions where the product is in high demand).
Few hundred families of villagers near Madurai started bulk purchase of grocery (pulses, oil & spices) at a discount, from quality suppliers. They are members of self help groups (SHG) promoted by CCD. CCD helped them in buying this produce and processed it through selected SHGs. CCD used project grants that remain unused for few months to buy the farm produce. This was paid back into the project accounts for training activities, after recovering from sale of the produce.
CCD also helped in building infrastructure to enable farmers to generate additional income. Processing machinery such as dhal mill, flourmill, oil mill, pulverizer were established. A team of women were trained on processing. Consumers get items at 5% lesser price than the market. Producers (farmers) get 10-15% extra income owing to elimination of middlemen and cutting losses in pilferages like faulty weighing. This consumer co-operative began with 300 families each consuming Rs.500 worth groceries amounting to about Rs.1.5 lakh per month. The enterprise has now grown ten times and involves around 3000 families with monthly grocery budget of Rs.300 each. Thus, the monthly turnover is Rs.9 lakh and annual turnover is one crore.
Apart from sales, Aharam has also set up Business Development Services (BDS) to impart training to farmers in low cost farming and teach traditional recipes that have been long forgotten. Farming costs were reduced by 20% (savings from pesticides, fertilizers and seeds) while simultaneously farmers’ income raised by 20% (10% increase in yield and a 10% increase due to direct sales to buyers).
Marketing Processed Products
Also, the groups have ventured into processed foods. Farmers ‘aggregated’ and ‘pooled’ their produce such as chilly and mango. Initially, it was sold raw with a margin of 3-4% profit. Also, looses were incurred due to transport delays, loss of weight during transport, storage etc. But, after 4 years of trading in fruits, the company has set up mango pulp making factory and is selling pulp to companies like Parle Agro. Generally, these companies sell the ‘Frooti’. The price of two kilos of village variety mango fruits cost Rs. 10 and equal amount of processing charges (labor, factory, canning loan interest etc.). Hence, the pulp production cost is Rs.20/- per kg but sales price is 22/- indicating 10% profit. Similarly, chilly and turmeric valued at 7 to 10/- per kg as raw produce earns Rs.80-100 per kg when sold as powder to SHGs, with 10% profit. The processing units also create rural jobs and prevent migration to cities.
Aharam Company has been recognized globally and is shortlisted as a finalist in 2006 round for the Equator award of the United Nations that promotes biodiversity conservation based business. CCD’s successful initiative is a source of inspiration to many NGOs and CBOs to take up eco-friendly rural enterprises.
Utkarsh V Ghate
Director- CCD
