Sarvodaya Samiti

Debasis Pradhan

presents analyses of the management case by academicians and practitioners

DIAGNOSES

CASE ANALYSIS I
L K Vaswani Professor Institute of Rural Management, Anand e-mail: lkv@irma.ac.in

T
entity.

he case presents a detailed and analytical background of Sarvodaya Samiti, Koraput, a state- level NGO and brings out a typical problem which small NGOs face during their transition to a relatively large

SARVODAYA SAMITI: OBJECTIVES AND SCOPE OF ACTIVITIES

The objective of Sarvodaya Samiti, a not-for-profit organization, is to ensure all-round and sustainable development of tribal and other under-privileged communities through social and economic programme interventions. Currently, the Samiti is engaged in sustainable agriculture and development of khadi and village Industries accompanied by social interventions like child and women welfare, education for scheduled tribe girls, consumer welfare, and watershed programmes. Its activities consist of production of khadi, promotion of bee-keeping, and marketing of agro-products like honey, turmeric powder, and arrowroot. The Samiti feels that promoting marketing of rural produce through a profitable enterprise can bring a change in the living standards of the poor.

IMPORTANCE OF HONEY IN SAMITIS PRODUCT PORTFOLIO

The April June 2004 (Vol 29 No 2) issue of Vikalpa had published a management case titled Sarvodaya Samiti by Debasis Pradhan. This issue features three responses on the case by L K Vaswani, Debiprasad Mishra and Rajat Gera. Honey forms a small part of the local economy of Koraput district, but being a labour-intensive activity, it is an attractive business proposition for the Samiti from the viewpoint of employment generation. Secondly, honey brings additional income for the farmers with relatively little effort and only requires local training. Thirdly, plenty of forest honey is available which provides potential livelihood option to local people in the absence or inadequacy of farm land. Lastly, the expert views suggest that the local

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area is suitable for honey production. Given its high employment generation and business potential, the Samitis move to allocate greater attention and resources for expanding honey business from its existing level is a step in the right direction. From the viewpoint of the organization, up-scaling of honey business seems to be desirable in the situation wherein margins and popularity of khadi, the major revenue source for the Samiti, is falling. Honey as a product earns greater margin of eight per cent compared to three per cent in khadi. It seems, at least in the shortrun, that the promotion of honey business has partly compensated for the falling revenues from khadi (Table 1). Also, the contribution of honey to the total sales of Samiti has gradually moved up. In the year 1999-2000, the Samiti received 27 per cent of its revenues from honey and has a potential to go up further in future considering the good response from the consumers. The brand preference for Sarvodaya Samiti honey in its target markets in Orissa is high compared to national brands like Dabur and Himani. Further, the case study reflects that the substantial part of consumer demand for Samiti honey remains unmet due to insufficient supply. The response which the Samiti received in honey sales through participation in melas, fairs, and exhibitions suggests that there is a lot of potential in rural areas provided the Samiti expands its marketing network in rural areas. Undoubtedly, honey offers a promise for further growth and profitability of the Samiti provided efforts are made to gain higher market share and penetrate into the existing and new markets for its brand of honey. The khadi products are less profitable while other products like arrowroot and turmeric contribute marginally to the total sales of the Samiti.

The availability of honey and that too at a lower price facilitated the expansion of Samitis business in the past. The other factors which have helped the Samiti to achieve nine-fold increase in revenue from honey between the years 1991-92 and 1999-2000 were promotion of bee-keeping with the help of the Khadi and Village Industries Commission (KVIC) and the Integrated Tribal Development Agency (ITDA), availability of processing facilities, and financial support provided by the KVIC and the UNDP. Above all, the Samiti achieved marketing success establishing its brand Sarvodaya Samiti which is preferred by consumers over other popular brands like Dabur and Himani. The preference for Sarvodaya honey is clearly driven by the consistence of its quality and superior value proposition to the customers.

PROPOSED EXPANSION OF HONEY BUSINESS: PROBLEMS AND PROSPECTS

The nature of existing problems encountered by the Samiti along with future prospects of honey business have been analysed and described below.

Procurement
The procurement of honey is critical to the proposed expansion of Samitis honey business. The honey procurement approach of the Samiti so far brings out three important dimensions quantum, cost, and quality. In addition, the source of honey, apiary or forest may become a relevant dimension in case the volumes to be procured are large. In the past, Samiti has been able to procure honey at a relatively cheaper price of Rs 60 per kg. Occasionally, it had to procure additional quantities from 24 Pargannas in West Bengal and coastal areas of Orissa which substantially increased the cost due to transportation and in turn the retail price of honey. Overall, the Samiti has not experienced severe procurement problems in the past as its requirements were small due to its limited processing facilities. However, continuation of the existing approach for the proposed larger processing capacity may impart uncertainty in procurement and, therefore, available alternatives need careful evaluation in terms of technical and cost parameters. The Samiti has the option of organizing procurement of apiary honey in future through popularization of new species like A Melliferra which can annually yield an average of 30-40 kg/box against 10 kg/box from the Indian bees. This intervention would go a long way
SARVODAYA SAMITI

SUCCESS OF HONEY BUSINESS: KEY DRIVERS

The events which facilitated expansion of honey business of the Samiti in the past are Agmark certification in 1990-92 followed by shifting of processing centre from Koraput to Bhubaneswar in 1995-97. The impact of these interventions was clearly visible in the quantum jump in honey sales achieved immediately after these interventions were made (Table 1). The Agmark certification imparted the much needed credibility to the product while shifting the processing centre to Bhubaneswar improved its access and connectivity to markets in the state and to other parts of India.

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in improving the productivity of honey production and in saving processing cost. However, this alternative can be made functional in collaboration with ORMAS, working under DRDA, Koraput, wherein honey will be procured from self-help groups (SHGs) and the beekeepers will be provided financial support under Swarna Jayanti Swarojgar Yojana (SGSY). This alternative when attempted without ORMAS might jeopardize the interest of the local honey bee-keepers for lack of technical and financial support. The case suggests that the Samiti has not been in a position to procure adequate apiary honey and could not pay attention to forest honey for want of processing capacity. In order to exercise the option of procuring forest honey in future, the Samiti may have to pay competitive prices, i.e., up to Rs 90-100 per kg as against the current price of Rs 60 per kg, for procurement of forest honey from Koraput and adjacent districts like Phulbani which may further squeeze the Samitis profit margins. Even if it exercises other options like procuring from other parts of Orissa, viz., Similipal, Phulbani, and Malkangir or from other neighbouring states, viz., West Bengal, Chhattisgarh, and parts of Bihar at a lower price of Rs 40 per kg, the transportation cost is likely to neutralize the price gains to a great extent. The availability of honey from two sources apiary and forest is an opportunity for the Samiti to launch product variants of honey, viz., apiary honey and forest honey to benefit more number of bee-keepers and develop the bee-keeping industry in the state.

Marketing
The Samitis honey is currently marketed in local markets, viz., Koraput and Jeypore and other districts of Orissa, viz., Bhubaneswar and Cuttack besides other parts of India under the KVIC banner. The tie-up with KVIC provides the much needed market access and above all a brand name Sarvodaya which is exactly similar to its own brand name. In fact, KVIC sells a range of products like toilet soaps, pickles, agarbattis, and spices besides honey under its own brand name Sarvodaya through its vast national market network consisting of five KVICs own outlets in metropolitan cities, 14 small outlets in nearly inaccessible hilly districts, and around 7,500 outlets as Khadi Bhavans and Bhandars. This vast distribution network is also available to the Samiti for marketing its entire product range of khadi products

which contributes nearly 64 per cent to the total revenues of the Samiti. This marketing support from KVIC is critical to the Samiti for khadi products considering the fact that the popularity of khadi is on the decline. However, against these advantages, the only disadvantage of working under KVIC banner is loss of independence in pricing which has to be decided by the KVIC itself. At the time of this case study, the 1 kg price of a kilo of Dabur was nearly 40 percent higher than Sarvodaya honey. The Samiti has a marketing potential because of the availability of apiary and forest honey. The forest honey can be launched as a premium product to cover its high procurement price and extra filtration cost for removing its turbidity and making it transparent. The Himalaya Drug Company has launched Forest Honey in India and the US by positioning it as 100 per cent natural honey in its virgin form, containing no sugar, preservatives or diluting agents. It has been popularized in the US through cause-related marketing with an appeal that each purchase of Himalaya Forest Honey supports the tribal inhabitants of the Indian forests. The Samiti can evolve its own strategy to launch and position forest honey as a product variant under its existing brand Sarvodaya. The margins for the existing apiary honey, which are under pressure due to the pricing policy of KVIC and taxation payable to the Government of Orissa, have to be improved through productivity improvement in honey production and processing. At the same time, the Samiti should continue its lobbying and legal battle to ensure waiving of or lowering of taxation to four per cent.

Government Regulations: Taxation

One of the major marketing problems faced by the Samiti is of sales tax of 12 per cent on honey charged by the Government of Orissa even in case of products certified by the KVIC and District Industries Centre (DIC). The Samiti officials feel that this sales tax is putting them in a disadvantageous position vis--vis other honey producers and marketers under the KVIC banner in other parts of India. The Samiti seems to be caught between loss of its independence to KVIC in price fixation and its obligation to pay sales tax at the rate of 12 per cent to the Government of Orissa. These limitations seriously hamper the capability of the Samiti to improve its margins from honey even though its annual sales have grown at a phenomenal rate in the recent past.

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Processing
Although the Samiti made considerable gains by starting a new processing centre at Bhubaneswar in 1995, its processing capacity continues to be very small. The lack of adequate processing facility limits its ability to meet the market demand and its loyal consumers are forced to look for other brands like Dabur and Himani. The expansion of processing capacity is a must for the Samiti to not only satisfy the unfulfilled demand for its brand, but also to improve the financial viability of the Samiti itself. The Samiti would also obtain technological advantage with modern processing plant which will facilitate further quality improvement. The Samiti can think of up-scaling its quality standards to the Bureau of Indian Standards (BIS) which is superior to Agmark and is comparable to international standards. It can take its own initiative to include more stringent specifications such as diastase activity, carbon isotope ratio, etc., and apply these tests for the honey produced to access overseas markets, gain consumer confidence, and protect the interests of honey bee-keepers through efficient marketing of their produce.

UNDP funding. Obviously, the KVIC is the linkpin in the tripartite arrangement. ORMAS, an autonomous body under the Panchayati Raj Department, Government of Orissa, is registered as a society to promote linkages between the rural producers and the market. ORMAS provides marketing support to SHGs (nearly 1640) under SGSY in different districts of Orissa and are engaged in activities like leaf plate and cup making, broom making, and processing of rock bee honey, minor forest and agro-products, etc. ORMAS has its own honey product under the brand name, ORMAS Honey, which is marketed through its agents in Cuttack and Bhubaneswar. OMFED, the other likely stakeholder, is engaged in procurement, processing, and marketing of milk and milk products in Orissa and outside with a turnover of around Rs 86 crore in 2001-02. OMFED is one of the few milk cooperatives engaged in the marketing of horticulture products which includes OMFED Honey in 200 gm bottles. However, the product portfolio of OMFED lacks synergy with that of the Samiti and it will be of little help in promoting bee-keeping compared to the KVIC and ORMAS.

RETHINKING BUSINESS STRATEGY

Besides the problems and opportunities identified above, the proposed tripartite agreement between the KVIC, ORMAS, and the Sarvodaya Samiti also raises important questions with regard to future business strategy of the Samiti. The most important issue is whether the Samiti should kill its honey brand Sarvodaya. Secondly, to what extent the Samiti should expand its processing capacity, i.e., one quintal or three quintal per day as it will require up-scaling of procurement and marketing besides efficiency of the processing plant itself.

STRATEGIC CONCERNS
The analysis in the preceding section highlights the strategic concerns which need to be addressed by the Samiti in evaluating the alternatives available with regard to the formation of the proposed Consortium and choosing a possible course of action. The concerns are: procurement in terms of quantum, cost, source, and agencies involved improving margins through cost management and continued lobbying for lower taxation to make the Samiti a profitable entity maintaining its status as an independent marketing entity and owner of a popular honey brand marketing tie-up considering marketing of other Samiti products like khadi range expanding processing capacities with consideration for outsourcing and upgrading the quality standards to BIS which are comparable to international standards organizational tie-up considering synergy, mutual benefits, and sustainability.

ASSESSMENT OF LIKELY STAKEHOLDERS

As mentioned in the case, the Samiti is interested in working with all the stakeholders for the development of bee-keeping with the hope that such option would be sustainable and appreciable. The major stakeholders include bee-keepers, the KVIC, ORMAS, and possibly, the Orissa State Cooperative Milk Producers Federation Ltd. (OMFED). The KVIC and the Samiti have long standing relationship which seems to have immensely benefited the Samiti in the past. The proposed expansion of processing capacity will be supported by the KVIC through

EVALUATION OF ALTERNATIVES
With the above strategic concerns of the Samiti in mind,
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various alternatives proposed in the case study can be evaluated. The second option under Alternative 1 seems to address most of the concerns of the Samiti while other alternatives fall short in addressing one or more concerns raised above. The Option 1 in Alternative 1 does not address the major concerns of the Samiti related to marketing even though it satisfies most of the other concerns. Alternative 2 does not seem to be viable considering the financial position of the Samiti and its inability to make investments in processing and more so in justifying the investment for its exclusive use. The choice of Alternative 3 of severing linkages with the KVIC is likely to paralyse the marketing operations of the Samiti including that of khadi products which contribute to 64 per cent of its turnover. Alternative 4 is not considered for lack of synergy in product portfolio with milk marketing being the core competency of OMFED. Alternative 5 does not seem to be feasible considering the fact that it delinks the Samiti from marketing activities and its well established brand carefully nurtured over the years.

Option 2 of Alternative 1 seems to address most of the strategic concerns of the Samiti. Under this option, the Samiti can outsource its processing facilities to ORMAS at Rs 26 per litre and can also market its own honey through its own or KVIC marketing network. Moreover, ORMAS with support from DRDA and KVIC will promote honey production which ORMAS and the Samiti will buy at the same price of Rs 60 per litre. However, the only limitation in this option is that the Samiti can use only residual processing capacities after meeting the requirement of ORMAS. In order to resolve this problem, the Samiti can create its own space for processing and marketing by going for higher processing capacity at three quintals per day, Simultaneously, it needs to promote high yielding species of honey called A Mellifera to increase apiary honey procurement without a corresponding increase in cost and procure forest honey to launch a premium forest honey product variant under the brand name Sarvodaya. These measures will enable the Samiti to make full and efficient use of its processing capacity in the shortest time period without diluting its long-term goals.

ANALYSIS II
Debiprasad Mishra Professor Institute of Rural Management, Anand e-mail: dpm@irma.ac.in radip Mohanty, Coordinator of Sarvodaya Samiti, has to take a position with regard to the Samitis linkages whether the Samiti should be a part of the proposed Consortium in a forthcoming meeting of the partners of the Khadi and Village Industries Commission (KVIC). As he is the sole Organization Coordinator of the Samiti, and given its long association with the KVIC, this position would be strategic for the organization, both for now and for its future implications. There are broadly two perspectives that he could take recourse to: first, a narrow enterprise perspective and second, a broader institutional one. Understandably, the two perspectives are inter-related; however, in a given context and depending upon the decision-makers approach, they might look independent of each other.

ENTERPRISE PERSPECTIVE
Mohantys present concern relates to the marketing
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arrangement for honey. This is one activity which currently provides 27 per cent of the Samitis revenue and is still rising. Due to a lower margin and also perhaps due to certain external factors, the primacy of khadi is on the decline though it still commands a higher revenue share. This makes the decision situation all the more critical for Mohanty. Mohanty seems to have five alternatives under consideration. Of these, one alternative has two variants and hence, effectively, there are six alternatives from amongst which the best option is to be chosen. These alternatives are broadly of three types: maintaining the status quo severing the linkage with KVIC and charting out a completely independent course entering into some kind of an arrangement either only in marketing or in some combination of the different aspects of honey business.

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The status quo could be seen as the default option; any other alternative that provided some identifiable and significant advantages over this in terms of revenue could be taken.

Alternative 1: Maintaining the Status Quo

The Samiti sells in four pack sizes 1 kg, 550 gm, 200 gm, and 100 gm. The 1 kg pack sells at Rs 130. It gives a retail margin of 15 per cent and pays sales tax of 12 per cent. The cost of transportation is roughly 60 paisa per kg. Thus, as a net of retailer margin, sales tax, and transportation cost, the Samiti earns about Rs 96 per kg of honey. The Samiti procures honey from the local area as well as from distant places. It pays a procurement price of Rs 60 per kg. It then processes, bottles, and puts the labelled bottles of honey in the retail shops. Thus, if we take out the procurement price of Rs 60 from the earning of the Samiti per kg of honey, we arrive at a margin of Rs 36 per kg that accrues to Samiti. This includes the eight per cent margin on retail mark-up plus the costs of processing, packaging, and distribution on the part of the Samiti.

that the long existence of Samiti in Koraput has earned it some credibility here; the same does not seem to translate into market positioning in distant markets. Coupled with this is the observation regarding rudimentary nature of branding and marketing communication efforts. Thus, though the case seems to suggest that there is a supply constraint, in the absence of data regarding procurement and processing volumes, it could be inferred that without a major repositioning and reconfiguration of marketing efforts, the Samiti could not be too optimistic about higher revenues due to increased price. In any case, if the supply constraint suggestion is taken on its face value, it would also seem that a lions share of the price increase would have to be shared with the farmers through higher procurement price in order to balance the volumes at both ends. Thus, from a revenue point of view, nothing much lies in store in this option.

Alternative 3: Partnership/Consortium Arrangement

There are three options under this alternative. First is to join the tripartite consortium consisting of the KVIC, ORMAS, and the Samiti. Under this there are evidently two variants. The first variant is where ORMAS would procure and market leaving only the processing responsibility to the Samiti. The Samiti would receive Rs 26 per litre of honey processed while incurring a miscellaneous expenditure of Rs 20 per litre on this account. ORMAS would sell the bottled honey to a food company at a 5 per cent margin. This variant of the option has the primary advantage of obtaining UNDP funding for setting up a new processing facility and some tie up with the DRDA for farmer organization activities. However, prima facie, there are two disadvantages. The first is that the food company would receive the major chunk of the consumer rupee and the Samitis presence would be wiped out from the market. The second disadvantage is that the Samiti would have to make do with Rs 26 whereas in its present operations it is earning Rs 36 per kg of honey. From the case facts, it is difficult to ascertain what the miscellaneous expenditure of Rs 20 pertain to. However, it is clear that this arrangement would leave the Samiti with high dependence on ORMAS and an inferior revenue position. The second variant of this option is for the Samiti to retain its market linkage by using the residual processing capacity. The implications of this variant is too uncertain for further consideration. The second and the third options under this alterSARVODAYA SAMITI

Alternative 2: Breaking Free from KVIC Fold

The primary constraint of staying within the KVIC fold is that the Samiti has to be a price-taker. Mohanty feels that if the Samiti were to move out of the KVIC banner, it would be able to fix a price higher than the Rs 130 per kg. In the 1 kg pack size, Dabur seems to be the only competitor. Daburs honey is priced at Rs 180 per kg. Price data of only the 200gm pack sizes of all other competitors is available. One could note a price difference of at least Rs 9 in this segment. Thus, it could be inferred that the Samiti could hike its price upto a maximum of Rs 45 per kg (Rs 9 multiplied by 5) and still stay at a level lower than the price of its competitors. If indeed the Samiti is able to do so, and share a large proportion of this price rise with the local farmers, it may succeed in procuring a larger proportion of the local forest honey. However, the feasibility of this proposal must be examined in the context of the current market share data. Despite a big price differential, the Samiti has a predominant position only in the local (Koraput) market. In the larger markets of Bhubaneswar and Cuttack, the Samiti has only a 12.5 per cent market share. It could be inferred

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native are to tie up with OMFED alone or to tie-up with both ORMAS and OMFED. In either case, the Samiti would have the responsibility of processing and bottling and would receive a sum of Rs 26 per kg of honey. In terms of revenue considerations, this is no different from the proposal of tripartite consortium arrangement. What is more, in these variants, the attraction of obtaining the UNDP funding is also not clearly visible. Given the evaluation of alternatives from an enterprise logic, wherein the primary criterion is the revenue potential of the alternatives for the Samiti, it would appear that retaining the status quo is the best option for the Samiti.

INSTITUTIONAL PERSPECTIVE
The Samiti is a state-level, non-governmental, nonpolitical organization. Starting out as Narayanpara Kshetra Samiti in 1959, it renamed itself as Sarvodaya Samiti later. The organization was formally registered in 1970-71 under the Societies Registration Act of 1860. The primary objective of the Samiti is to contribute to the all-round and sustainable development of tribal and other under-privileged communities of the society. The Samiti is a not-for-profit developmental organization. Its registration under the Societies Act of 1860 precludes it from engaging in commercial activities; however, its association and registration with the KVIC has enabled it to engage in rural enterprise promotion through organization of farmers, assistance in valueaddition, and marketing. It would, therefore, be untenable for the Samiti to severe its linkage with the KVIC unless it simultaneously plans to launch an organization under a different legal framework to pursue its enterprise goals forward. The case does not suggest the contemplation of such a course of action and hence we might avoid considering it here. Both ORMAS and OMFED are government promoted/controlled cooperatives and para-statals at best. Linkage with them may help the Samiti leverage some

of their strengths but it would also have to reckon with the usual downsides of both. There is the likelihood of clash of perspectives and culture between the partners which would, in the medium to long run, prove to be detrimental. The present arrangement of being an NGO and staying within the KVIC fold looks optimal from an institutional point of view. It enables the Samiti to pursue rural enterprise promotion and there seems to be vast untapped potential for honey in Koraput district itself. The Samiti is also familiar with new varieties of honey which promise higher productivity while not being too demanding on the resources of the tribal farmers. As a developmental NGO, the Samiti could access the resources of Swarna Jayanti Swarojgar Yojana (SGSY) for promoting farmers organizations (SHGs) and obtaining funding for setting up their bee-keeping operations. It also has enabling conditions for accessing other developmental resources for furthering its own rural marketing activities. As a developmental agency, the Samiti would be a recipient of funds for offsetting its agency cost thus making its worries of viability rather superfluous. The farmers of Koraput are already receiving between Rs 90 and Rs 100 per kg of honey from the traders. Thus, there already exist market channels. Enhancing the base and productivity of honey production through training and introduction of new varieties would have strong positive implications for the livelihoods of the farmers. The Samiti could keep its rural marketing channel going only to provide a stronger bargaining power to the farmers of the area.

CONCLUSION
At present, while Mohanty is seized with the decision problem, sticking to the status quo seems to be the option where both the institutional and enterprise goals connect. Using his imagination, he could innovate and introduce newer initiatives that would assist the Samiti move closer to its mission of all-round development of the tribals and other under-privileged communities.

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ANALYSIS III
Rajat Gera Assistant Professor, Marketing FORE School of Management New Delhi e-mail: gera@fsm.ac.in

he objectives of the Sarvodaya Samiti are to generate employment and income for the tribals and farmers in Orissa while ensuring the profitability of the Samiti. The Samiti has been increasing its focus on procurement, processing, and marketing of honey due to the bee-keeping potential of the area and higher realizable margins on honey production. For its honey business, the Samiti received financial support from KVIC and UNDP and technical support from ITDA and KVIC. It used the distribution network of KVIC. Mr Mohanty has to take strategic decisions about the scope of activities and the type and nature of partnerships with other government developmental organizations which will enable the Samiti to realize its objectives.

SARVODAYA SAMITI: A REVIEW

The Samiti has been involved in honey production and marketing since 1970. It procured apiary honey from Koraput and adjacent districts in Orissa and from KVIC certified partner cooperative societies of adjacent states. The honey was processed at its plant in Bhubaneswar. The honey, graded as Standard by Agmark, was marketed under the brand name of Sarvodaya Samiti in bottles of 1 kg, 500 gm, 200 gm, and 100 gm through cooperative stores and medicine and grocery stores in Bhubaneswar and Cuttack. The Samiti also promoted the product by participating in melas and fairs. The Samiti was considering ways to increase its volume of production and market presence (by focusing on forest honey in addition to apiary honey) to meet increasing demand and to increase prices (which could not be changed without the concurrence of KVIC).

STRATEGIC OPTIONS
There was a proposal to form a consortium between the Samiti, KVIC, and ORMAS, working under DRDA, Koraput. ORMAS would find ways to increase productivity of honey in the district with necessary support from KVIC and the Samiti and DRDA would provide financial support to the producers (bee-keepers) through

SGSY to encourage bee-keeping activity. ORMAS and the Samiti would procure the honey through some financially supported SHGs of producers to meet the target of 30 tonne per annum. KVIC would fund setting up of a processing plant of 30-tonne/annum capacities to be later upgraded to 90 tonne/annum. The processed honey would be marketed by ORMAS. The following strategic options are available to Mr Mohanty: Option I Be a part of the consortium. The honey would be procured by ORMAS, processed by the Samiti, and marketed by ORMAS. ORMAS would pay the Samiti Rs 26/litre as processing fee. The miscellaneous expenditure incurred by the Samiti for processing would be Rs 20/litre. Thus, the Samitis margin would be Rs 6/litre for processing and the procurement cost would be Rs 60/litre. The total cost of production would therefore be Rs 86/litre. ORMAS was planning to sell this bottled honey at 5 per cent (Rs 4.3/litre) margin, i.e., at the rate of 90.3/kg to a food company. The Samiti had two sub-options: Option Ia: Focus only on processing and withdraw from marketing completely. Option 1b: Join the consortium while doing independent marketing of its own procured honey. Option II: Not be a part of the consortium. KVIC would not finance the proposed new processing plant. The Samiti would have to set up its own processing plant and Agmark testing unit with an investment of Rs 0.45 million to Rs 0.65 million. The Samiti would be responsible for independent procurement, processing, and marketing of honey as is currently being done. Option III: Exit the KVIC network and establish the Samiti as an independent marketing entity. The advantage would be pricing independence and an option to sell to food companies. Option IV: Enter into long-term contract with Orissa State Cooperative Milk Producers Federation (OMFED) to process at the rate of Rs 26/kg and marketing of honey under the OMFED brand name. This would ensure a
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market for bee-keepers. Option V: Tie up with ORMAS and OMFED, i.e., accept both the offers/options I and IV.

SAMITIS OBJECTIVES
According to Mohanty, the objectives of the Samiti are: to help the farmers as well as the consumers to develop the bee keeping industry in Orissa so that production increases with a number of farmers taking up bee-keeping to get a good response from the market.

Analysis
The cost structure of the Samiti (as per the Case) is as follows: Retail selling price-Rs 130/kg (Table 4) Retailer margin at the rate of 15%=19.5 Sales tax at the rate of 12%=13.9 Manufacturers price=Rs 96.6 Mark up=8%=Rs 7 Manufacturing cost=Rs 89.6/kg Procurement cost =Rs 60/kg =66.9% Transportation cost=Rs 12/kg=13.3%(calculated) Other costs=Rs 17.6/kg=19.6% (derived)

and constraints of the Samiti. The market seems to be segmented into price-sensitive and quality-price-sensitive. Dabur and other brands like Himani have significant market shares especially in the smaller packs (<200 gm) even with a 55-60 per cent price premium. Though there seems to be a significant demand for Samiti honey, the major constraint is in ramping up procurement and processing which is growing at an average rate of 47 per cent annually since 19911992 (Table 1). Therefore, increasing production to the level of 30 tonne per annum at the current rate of growth in procurement may take three years which may also delay the setting up of the processing plant as operating at low volumes may make it impossible to sell the product at the given price. Thus, given the objective of the Samiti to develop the bee industry in Orissa, it requires the support of KVIC for marketing volumes of 30-90 tonne per annum.

Procurement
The Samiti seems to have the plans to procure additional 15 tonne per annum of rock bee honey though the transportation costs and procurement rates have not been mentioned. As the Samiti is already incurring additional costs of transportation due to scale inefficiencies, it is arguable if the cost of procurement would be reasonable as the Samiti is marketing its current produce at a very thin margin. Another issue is whether the Samiti would be able to command the current price as the quality of apiary honey is supposed to be higher than the planned rock bee honey. Also, the Samiti plans to enhance procurement by encouraging the adoption of Mellifera species so that the processing plant could be run at 24 tonne per annum though the time required and the resources for the adoption of the same have not been explicitly mentioned. Thus, ramping up procurement of good quality honey to the level of 30-90 tonne in the short run does not seem feasible on its own. It, therefore, seems that it would require the assistance of ORMAS in procurement of the targeted quantity of honey at a cost of Rs 60/kg through self-help groups. Thus, option I or V seems to be the only feasible alternative as it is not clear how the Samiti can ramp up production in the short run under option IV, i.e., the OMFED option. Option I also ensures continual support of KVIC and ORMAS, both financial and operational. Among the given options, the concerns related to the lack of direct market presence

The manufacturing cost structure is as follows:

Total cost=Rs89.6/kg=100% The size of the current market as given in Table 3 of the case is 67.9 tonne in which the Samiti has a market share of 10 tonne, i.e., 14.7 per cent vis-a-vis Dabur which is the leader with a market share in volumes of 57.4 per cent. The primary objective of the Samiti requires that it becomes a volumes player so that more and more farmers take up bee-keeping activity. This would ensure better returns to the farmers and would also bring down transportation costs.

Marketing
If the Samiti takes Option III and exits KVIC, it will have to develop its own distribution infrastructure at the national level to market volumes of 60-90 tonne per annum as developing the market as given in Table 3 by six to nine times (assuming same market share, i.e., 14%) does not seem feasible in the short run. The resources, both financial and managerial, along with the necessary processing capacity to support a regional or national distribution effort does not seem feasible given the size
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can be overcome by ensuring that the product is cobranded if marketed by OMFED or by ensuring that option 1b is accepted taking up the processing activity for OMRAS while also processing and marketing its honey procured independently. This would allow it to scale up both in procurement and market while increasing cost efficiencies. The loss of margin, i.e., (Rs 7-Rs 6) * 10 tonne, i.e., Rs 10,000 per annum can be overcome by the additional earning, i.e., Rs 6 * 14 tonne assuming 24 tonne processing, i.e., Rs 84,000 per annum which can be spent on

development activities. Thus, option 1b or option V seems to be the only feasible alternative though option I allows the Samiti to insure itself by ensuring brand presence in the market. The core competence of the Samiti seems to be in processing which is confirmed by the good quality of the product for which there is a substantial demand. The Samiti can also increase its margins by increasing efficiency in transportation and processing which is scale sensitive and/or negotiating price increases with the concerned parties.

All the worlds a stage, And all the men and women merely players: They have their exits and their entrances; And one man in his time plays many parts, His acts being seven ages. At first the infant, Mewling and puking in the nurses arms. And then the whining school-boy, with his satchel And shining morning face, creeping like snail Unwillingly to school. And then the lover, Sighing like furnace, with a woeful ballad Made to his mistress eyebrow. Then a soldier, Full of strange oaths and bearded like the pard, Jealous in honour, sudden and quick in quarrel, Seeking the bubble reputation Even in the cannons mouth. And then the justice, In fair round belly with good capon lined, With eyes severe and beard of formal cut, Full of wise saws and modern instances; And so he plays his part. The sixth stage shifts Into the lean and slipperd pantaloon, With spectacles on nose and pouch on side, His youthful hose, well saved, a world too wide For his shrunk shank; and his big manly voice Turning again towards childish treble, pipes And whistles in his sound. Last scene of all, That ends this strange eventful history, Is second childishness and mere oblivion, Sans teeth, sans eyes, sans taste, sans everything. William Shakespeare As You Like It

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SARVODAYA SAMITI