The general body meeting of the Wardha Soy and Cotton Producer Company Ltd. (PC), set up under the Sukhi Baliraja Initiative at Deoli in Wardha district, was distinctly different from most rural gatherings. The 730 farmers, complete owners of the producer company, listened to their Board of Directors, farmers themselves, as they detailed the PC's achievements during the past years, and opened the discussion about producer trading, processing and marketing of red gram (tur dal) and sourcing agri-inputs.
Annaji Vote, a middle-aged farmer, passionately advocated upscaling the initiative. Annaji owns eight acres of land in Sinegainbai village, and until last year, he had been purchasing inputs on credit from the local retailer. Though unhappy about the retailer's monopoly and recommendations on agri-inputs, he, like other farmers in his village, had no choice but to heed the retailer's demands. He also had to sell his crops at harvest to pay back the retailer each month at 3-4% interest. What was worse, he often had to purchase his supplies from the black market if the demand was high and the retailer ran out of a specific product. This year, Annaji obtained Rs50,600 worth of fertilisers and pesticides from the Deoli PC, saving Rs7,500 in the bargain. This saving is a whopping 6.25% of the total Rs120,000 that he earned from cultivating soy bean, cotton and wheat during the kharif and rabi seasons in 2012.
He was not the only beneficiary. The PC earned a profit of Rs2,500 from this transaction alone. These savings would go right back to member farmers as dividends, or be utilised for income generation activities. A simple calculation showed that every year, transactions worth Rs10,000,000 take place on inputs in a village of 500 households, on which the retail chain earns a premium between 10-40%. Even if the PC charges a lower margin, it can earn between Rs2-5 lakh per village. Deoli village, which set up its agri-input centre towards the end of kharif 2012, had a turnover of Rs17 lakh within six months of operation, with a profit of Rs83,000.
The PC had dual success — they had succeeded in reducing the costs for their customers and increased profits for the members. What was even more crucial from the farmers' point of view, says Annaji, was the impartial advisory services. He was very proud of his ownership of the PC and the initiatives that were taken by the PC to reduce his, and others', dependence on market players. The initiatives benefited farmers like him who earn their livelihood from gradually depleting agricultural resources.
The Board of Directors (BoD) confirmed that this feedback was unanimous, and that they leveraged this to reach out to more farmers. They conducted village meetings to discuss input needs and guidance and application strategies to attract farmers to the centre. However, their journey to provide solutions and build their business capacity has not been without bumps. Village meetings thrust the limelight on them and instigated traditional agri-input centre owners to complain to dealers. At the same time, the PC had to compromise their strategy of no credit, since the farmers demanded the same allowance they had been granted by the traditional retailers. Initially, the PC had to evolve a system where producer groups (PGs) took orders from their members, purchased inputs from the PC, and then sold the inputs to members on credit with lower interest rates. The interest so earned was distributed among the PG members, and thus stayed in the village financial ecosystem.
However, the sales on credit have reduced over the past year, and will be stopped in the coming kharif season. The rigour of business planning and the vision of the Deoli PC for agri-input initiatives have shown commendable progress. The success of the pilot input centre model at the PG level in the Deoli cluster enabled the procurement of the agri-input license at the PC level. The PC now envisions establishing agri-input malls which will encourage the use of organic inputs, self-grown seeds, drip irrigation, plant growth regulators, via proper planning on marketing, sales, strategy and pricing. This will help them reach a total of 41 villages, catering to 2,500 small and marginal farmers. The projected turnover for the coming year is Rs60 lakh.
A few years from now, the PC might also partner with the Krishi Vigyan Kendras and agricultural universities to introduce low-cost Package of Practices, and get dealerships of tractor companies and other equipment. Currently, their biggest success is making Annaji and others like him very happy by changing the power balance in their equation with the outer world.