Doubling Farmers Income

There are few fundamental problems in our approach to increasing farmers income. We
equate farmers income to income from agriculture. Most of the policies are made with one size fits
all approach. But agriculture is a different ballgame, where we can’t direct resources everywhere.
We need focus, geographically, methodically. Learning from domestic success stories can also
take us long. Examples like Sula wines in Nasik come as a ray of hope.
Our research findings found different perspectives about challenges which are widely
accepted. Historically land ceiling act followed by fragmentation due to dividation amongst
generations has led our farm sizes in dismally small plots. All our efforts can’t reap fruits because
no economies of scale can be attained in existing land parcels. We can’t say yesterday we had
issues with large land sizes and today we can’t increase farmers income in small land sizes. We
need to find a balanced solution where economies of scale can be leveraged.
Second challenge is middleman who take away all the margins. Governments current
initiative of National Agricultural Market Place is commendable one but there also we are adopting
one size fits all approach. Plus, we are only digitizing the agricultural mandies in ENAM, where
are most of the farmers due to scarcity of funds sell produce with large undercuts to traders who
sell the produce in grey market or mandies. This trade is completely uncaptured because on papers
its equivalent to selling the produce in marketplace by farmer himself.
Third issue about knowledge gap on technical and financial fronts. All our agriculture
graduates are taking call center jobs and farmers are using outdated techniques. Though
government is trying hard to subsidize drip irrigation, soil testing. Because of lack of knowledge
these things are not reaching the bottom of pyramid. Financially farmer distress is a well-known
fact, with all efforts like priority sector lending or curbing private money lenders we are not able
to address the problem. Because are not considering the fact that a marginalized farmer can’t
understand long banking procedures, he has a comfort in getting private funding & with the
financial knowledge gap he can’t understand how expensive is private money lending credit.
After through research with all stakeholders and in depth secondary research administration
tried to implement was on a large scale. Which reduces the intensity of efforts required. Because
farming is very subjective to socioeconomic, geographic & climatic conditions a very narrow focus
is required. There are success stories like Sula Wines in Maharashtra increased farmers income
multifold by producing globally renowned wines.
We propose a three-pronged approach to solve this issue. First, we need to narrow focus
on small parts because increasing income of farmers throughout country at a time is not possible.
Having a focus area like SEZ for a particular crop will help to create synergies. It should start from
testing soil, finding past weather data by satellite mapping and finding what is the right cropping
pattern for the particular area. This has been done in the past for example Alphonso mango is a
foreign fruit that came to India through Goa along with Alfonso De Albuquerque, the Portuguese
explorer. From Goa, the Alphonso mango travelled to different places like Ratnagiri, other Konkan
region and southern side of India as well. In the early 90’s, growers brought grafts from Ratnagiri
to Devgad for experimentation. Today as we know Devgad Alphonso is one of the most famous
Mango breed in world commanding a heavy premium.
The next issue lies in creating economies of scale to make sure modern farm
techniques are viable economically. Creating producer organizations which cluster land by
involving farmers can produce large stretches of land, it also won’t go against the land ceiling law.
Though it is easier said than done because we are drifting towards individualistic society. But
there’s no way out to compete with huge mechanization happening in US or Modern greenhouse
farming in Europe. These producer organizations collectively can buy expensive equipment’s, hire
experts and train local youth who will eventually guide farmers about increasing productivity.
Because we are targeting small areas like one or two districts at max a whole ecosystem can be
built around particular crop. Even corporates can play a major role by creating post processing
industries nearby. They will have a better control on quality of the inputs by this way. We have
seen making AMUL a big success story through cooperative model in Gujrat. The bigger question
is about finding a right model for the cooperatives to work.
The next challenge is elimination of middlemen from the value chain. In our research, we
have found out farmers near Nagpur sell best quality oranges at INR 3 a piece which sells at INR
15 a piece in supermarkets, the gap in export market is even larger. But like solving basic issues
here also there is a lot of diversity in produce and the alternative mechanism. Commodities like
rice and wheat which don’t need any post processing can be directly sold to consumers through e
commerce portals. Today because the farmers want instant money they don’t want to wait but with
cooperatives in places collectively they can have holding power. In some cases, customer
preferences are shifting eg. Urbanites have started to buy readymade ata instead of wheat, in such
circumstances the cooperatives can post process the produce and sell it under a brand name. In
case of perishables like vegetables the problem becomes sever because of short shelf life, but nev
avenues like big basket, or NAM can directly enable cooperatives to sell directly to end consumer
or eliminate at least long chain of middlemen by having only cooperative and end consumer in
chain. The last part lies in commodities which need heavy processing like Soyabeen or Oranges.
Farmer cooperatives can give raw materials to big corporates for which they don’t have to spend
on branding initiatives. With millennials coming into purchase making decisions creating brands
which come from farms directly is also possible because they empathies with poor and want to
contribute their end.

Rough Notes:

Three pillars:
 One size fits all won’t work hence clustering is required & Small Farm Land
 Middlemen elimination is major task to be done
 Technical Knowhow is second major task

Success Stories
a. Sula Wines

Solutions
 Clustering, Geo Mapping, Agro climatic Zones
 Three Categories
a. Fruits or Products which can be post processed
b. Commodities like Rice Wheat
c. Vegetables

ITC and APMC

How r they directly selling
Hoarding the grains
Staples Alibaba
Orange Amul
Perished Farm to fork
Perishables Philippines
Land ceiling
Absentisi Landlordism
Organizational change