Hi Friends,

                Continuing from where I left.....

The case studies offer empirical data to infer that the Small producers have benefited from being a part of a value chain. Of the 14 case studies 12  are ‘farm to fork’ value chains of fresh vegetables, cotton, rice, shrimps, honey, coffee and broiler chickens, and two non-food products, slippers and incense sticks. None of the chains were large. Six of the chains were for products destined for export markets and these establishes categorically the fact that whenever all the parties, including government get involved with commitment there is profitable growth for everyone involved. The role of the government is a minor one, and in some cases existing government regulations had to be removed in order to allow the value chain to succeed. Government’s role was to do less, not more. Many livelihood and value chain interventions are undertaken by financial institutions, or institutions providing technical training, or marketing, or administration, or some other service.

Small producers were organized into cooperatives in order to achieve economies of scale and bargaining power. There have been some dramatic successes, like the Amul milk producers’ societies in Gujarat. “Success was achieved through higher quality, rather than by lower prices. Small producers were treated not as the ‘weaker sections’ but as economic actors with their own peculiar strengths. Five of the 12 food chains were producing organic crops, in which small producers have particular comparative advantages. Organic cultivation requires an intimate knowledge of the land, which small farmers have, and on-farm labour is often used for weeding or composting, replacing purchased chemicals or other inputs. The emphasis was on exploiting these strengths, for the advantage of all parties, rather than on protecting and thus preserving their weaknesses”.

An analysis of few Case studies would provide more clarity and provide valuable inputs for planning such chains on a larger scale.

Namdhari Fresh Limited.

          This case study is from Karnataka where poor procurers collect farm produce for a commission for small-scale traders who in turn sell it to the whole sale traders or commission agents. These whole sale traders and commission agents usually manipulate the rates for their own benefit. The farmer has to sell his products or produce like fruits and vegetables as they are perishable and have a low shelf life. The involvement of these many intermediaries has neither benefited the farmer nor the consumer.

          The super markets started operating sometime in late nineties and have stated selling fruits and vegetables.  This single point system of mass retailing for all house hold requirements attracted the small families which find the convenience as a time saving shopping experience. The majority of companies involved in mass retailing have streamlined the existing value chains only. Namdharis’ has set up complete system for production, quality control, grading, cold storage, packaging, refrigerated transport etc.

          The company in the beginning was in the business of producing quality seeds and for this purpose it leased lands of small farmers. It developed the land and the farmers worked as labourers. After five years the developed land reverted to the original owners. Now there more than 4000 farmers producing, quality seeds, fresh vegetables and fruits for the company. Each one has benefited with this inclusion.

The second case is that of ITC Choupal Fresh. ITC trained farmers to grade their produce in to three categories and bought the top two grades. Because of the grading the farmers are assured of returns. The company also organised transport storage and distribution. This increased the net income of farmers by one third.

There are twelve more such studies which reinforce the argument that with a level of commitment and perseverance value chains can be established to benefit the small producer or farmer, the end user- the customer and make these people partners in the rapid change happening in retail marketing. The good will, the feel good factor that gets generated would avoid feeling of ‘left-out’ of progress or alienated from the main stream.

At this time, the Value chains systems may be are in less number. But these success stories, ideas and examples would catalise the growth of such chains in the coming years.

  Hi Friends,

        

The 14 case studies in the book establishes that it would be possible to build value chains which can include and benefit small farmers, producers and artisans by opening new opportunities of increase in demand at faraway places, which were not accessible earlier to them because of their minimal capacities.

The case studies include the experience of poorest producers and Studies products such as fresh produce, food grains, forest products, fish, poultry and handicrafts, featuring producers from Gujarat, Madhya Pradesh, Bihar, Orissa, Andhra Pradesh, Maharashtra, Karnataka and Tamil Nadu. The author acknowledges the courage of these pioneers who have decided to venture into this unknown and new territory. Their courage and boldness have to be appreciated in the context of the fact that in case the judgment turns out to be a mistake they would have lost their entire livelihood.

The book will be a source of inspiration and information to all other small producers to learn from those who have already been part of the supply (Value) chains. To quote: “This book explains the usefulness of the value chain approach in general, and offers both evidence and optimism that  a large company and unorganized producers can work together to transform the landscape of a particular sector, and to create an inclusive win-win situation for major stakeholders in the value chain.” 

India is a place of contradictions in several aspects. There is a section of group which is highly motivated, talented and marketable capabilities. This section is enjoying the fruits of globalization and liberalization. But on the other hand there is another section that has mismatched capabilities and competencies that  is not in tune with the new world. “This India is a country of small farmers. About two-thirds of its 1.1 billion people still live in rural areas and farming is the mainstay of their livelihoods. India’s call centers and software houses, and the lavish lifestyles of its billionaires may be internationally well known, but for the average urban middle-class Indian, one of the most dramatic changes has been the long-delayed retail revolution. ‘Modern’ retailing – in the form of self-service supermarkets – has come late to India”.

This Modern retailing is something novel, exciting and at the same time that creates a sense of déjà vu with the scale of operation and magnitude of business.   It also creates apprehensions about its potency to demolish the more known, comfortable Kirana Shop, and Maa-baap establishments, which were offering a more comfortable and personal, touch to the business than the new one that is more impersonal but offers an efficient but cold service. However from the point of view of the supplier or the small time producer of products creates a new opportunity or the Value chain. The value chain occurs with the elimination of the middleman or dallal and creating a direct link with the retailer thereby with the last person in the chain- the customer.

Inclusive Value Chain

Hi everybody there in blogosphere,

This is Akshay, and this is my first attempt at blogging. I had heard, read and was also told about blogs, but somehow I was not into it. However there were times I wanted to reach out to people and share my views, opinions and just being with several people without a façade or attitude. The Blogging has bogged me continuously in the recent past and that is why this essay.

I am doing my PGDM and in the final year. Recently after classes my friends and I had an animated discussion on impacts of GLOBALISATION (What else?) and finally centered around Inclusion and Exclusion of certain sections of our beloved India from the fruits (?) and benefits of it. Obviously the library beckoned me for further reading and the book I selected was-”INCLUSIVE VALUE CHAINS IN INDIA- Linking the smallest producers to Modern Markets” by Malcolm Harper.

      The book exposes the reader to a silent but a sure change that is happening in rural markets and also the Inclusiveness as well as the inevitability of linkages of big players with small fries.

Introduction: There is a growing feeling and unease that the benefits of liberalization in the Indian economy have been cornered by a few sections of the society and majority of the population has been left out. Worst still is the impression that the rich are growing richer and the poor are becoming still poorer.

          The economic liberalization has brought in Foreign Investments in to various sectors fuelling employment opportunities and tremendous growth in the GDP. Many sections could not derive the benefits mainly out of lack of Information, Knowledge and Skills. Few other sections are out of the loop because of systemic deficiencies and little concerted efforts to streamline production, distribution and marketing of especially agro products.

          With the opening of retail trade for FDI and the entry of corporate sector, the older order of retail trade feels threatened. However the up scaling efforts of the corporates the small farmers and producers can benefit provided proper linkages are put in place and streamlined.

          The book Inclusive Value Chain in India takes an analytical look at these opportunities. It evaluates the existing linkages and arrives at conclusions which strongly advocates for strengthening of linking Small producers to Modern Markets.

          To quote from the Book: “the inclusion (or exclusion) of the poor, particularly small farmers and artisans, from modern value chains such as supermarkets and export markets is a highly topical subject in India. This book addresses the issues in a positive way by showing that the poor can be and are being included, not as an “act of charity” or “corporate social responsibility”, but because their inclusion is profitable for all parties, including the producers themselves”.

          The book endeavors to establish that “modern” integrated value chains need not necessarily exclude the smallest producers and to emphasize the arguments, 14 case studies are presented to illustrate how it is being solved in practice. The book also discusses the impacts of organized retailing on small-scale traders, and finally analyses the case studies and draws conclusions from them.

          The author argues that by putting in place a value chain it is possible to create an inclusive win-win situation for major stakeholders.

Thats it for now..
  I would post my next blog to share and also to learn, as and when I stumble upon interesting aspects of this difficult yet interesting subject of " Rural Marketing"