Sowing Prosperity: Boosting Agricultural Productivity

Anurag Kanodia

Kushal Shah

Prateek Singhal

Sangram Gupta

Vinay Suthar

Major Problems hampering Agricultural Productivity

A) Fragmentation of Lands:• A large section of land is divided into small holdings and this results into a smaller

produce.• Inference: Smaller produce has to be sold in a smaller market with marginal profit.

B) Dependence on Climate:• Most of the farmers depend on suitable climatic conditions for a good harvest (be

it harsh winters, heat waves or irregular rainfall).

• Inference: Since India is a tropical country, erratic nature of climate plays a major influence on the harvest.

C) Loans from Non – Institutionalized sources:• Local money lenders provide quick financial assistance to the farmers, forcing the

farmers to give a large share of the output to money lenders.• Inference: High Interest rate has to be paid to the lenders by the farmers along

with the collateral and often forming a vicious cycle of bonded labor.

Implemented SolutionsSteps to tackle land fragmentation

• Various initiatives have been set up at panchayatlevel to prevent farmers from splitting up their land.

• Government is also incentivizing the farmers if a greater harvest is obtained from the farms.

• Problem: There is no proper management to keep a tab on the fragmentations. Fertile land is given to industries instead of the barren lands.

Steps to tackle climate dependence

• Water harvesting, various innovative drip irrigation methods have been implemented.

• Green house effects have been implemented in some farms. • Problem: Most of the farms do not have proper irrigation techniques,

there is irregular water supply, water harvesting is rarely implemented and green house is not cost effective.

Steps to monitor credit

• Regional rural banks have been established to promote institutionalized credit.

• NABARD and SIDBI have been started.

• Problem: People do not trustthe bankers and refrain from following the lengthy procedures required to obtain credit.

Our Model

Non – Government OrganizationsIndian Postal Services

Commercial Banks and Agricultural Industries.

Agro Retail Industries

Checking Balance and Monitoring authenticity.

Providing reach and Infrastructure.

Providing funds/loans and tracking of finances.

Group of farmers having adjacent farms.

Outcome Success: Credited money to be given back to the farmers with minimal

interest.

Failure: Agro Industries will take the farm on lease for three years

employing the farmers.

Buy – Sell / LeaseProvide Funds

Consider a scenario where a joint family owned a large farm. Now as the family detached, the land was fragmented into small parts.

Now these farmers started growing different crops in these small fragments, which in turn causes low productivity of land hence decreasing the yield.

As most of the harvest is consumed by the family itself, he is not able to sell sufficient produce. So he is not able to earn enough to satisfy the material needs.

What if we can collaborate the farmers and combine the small fragments into one? If all the farmers having adjacent lands grow similar crops, the harvest will be large enough to sell in the market leaving ample for the family to feed. This will in turn increase the productivity of land.

Problem

Now we will be giving loans to the farmers who need money to buy seeds, fertilizers and necessary materials.

Our Solution

Now, according to the new companies bill it is compulsory for the companies to donate a part of their profit to the Corporate Social Responsibility (CSR) initiatives.

We will be incubating a microfinance institution in collaboration with all major corporative banksand major Agriculture industries. As all these institutions will be giving the money as a part of their CSR initiatives, it will lead to fund raising.

The catch

We will not give loan to any farmer that will come to our institution.

The following conditions should be satisfied for the loan to be granted.

• Farmers must come in groups of 4-5, and they should have adjacent farms.

• Once the loan is given the farmers should grow the same crop.

• The farmers should agree to let scientists study their land for the best harvest.

But we need to take some collateral from the farmers for safekeeping the money given.

Collateral and failure.

• We will be taking some part of land as collateral.

• If the proper output is not obtained and farmer is not able to return the money for two consecutive years, then Agro industry will take over the farm for 3 years.

• The industry will employee the farmer help them in stabilizing the harvest, and return farm back to the farmers after 3 years.

Improving our reach

Now the problem will come in building the network and monitoring the transactions.

• With the help of our partner institutions and the government we will spread awareness about our campaign with proper marketing and publicity.

• We’ll be collaborating with the Indian Postal Services to increase our reach, we will train the officials to manage the transactions and help maintaining the authenticity. This is like replicating the business correspondent model.

• People from village will be trained to provide financial literacy to the people.

• Further, we will tie up with NGO’s to keep an eye on malpractices and reporting us in such a case.

We can generate employment and skilled labor using this model.

Selling/Marketing

The problem is that we take the crops from farmers at 10 Rs. per Kg and spend 22 Rs. in the storage and give it back to the farmer at 2 Rs, so instead why don’t we give it to him then and then?

• Now the farmers will be having enough harvest to sell it to the whole sale market.

• So instead of selling to the wholesale market instead of increasing the chances of hoarding, we will be collaborating with the Agricultural retail stores like Reliance Fresh.

• Such retail stores will in turn take care of the cold storage and selling it to the consumer.

• NGO’s will monitor the amount of harvest that is sold by the farmers and that is reaching to the consumers, they will monitor the time lapse between the two, and report us directly in case of mal-practice.

• Instead of cutting the middle men and generating unemployment, why don’t we just employ the middle men to work for us? We will be monitoring their actions instead.

Building our Network (Summary)

Well educated workforce willq be collaborating with Financial Institutions and Agro. Industries to pair up with our conglomerate as a part of their CSR initiative.

We can tie up with media to advertise our model, we can put posters in public places, local newspapers to encouragefarmers to adopt our model.

India Post has to play a significant role in increasing our reach. We will train people basic skills and employ them in their respective villages. Financial literacy will be given to people.

Well established NGO’s will monitor the implementation of the scheme. We can also generate employment for the same.

Roping in Agricultural Retail Industries is an important part, educated people will be doing the same.

A special dedicated team will maintain a check on hoardingand black marketing. Special teams will be carrying out random raids.

Challenges and Risks

Challenges:

• Government and corporate partnership will be difficult and consensus among the parties participating will be challenging.

• Convincing farmers will be a tough task, so building a reach and creating awareness should be prioritized.

• Creating an educated workforce and managing them will take a lot of efforts.

Risks:

• Competition from existing microfinance ventures, and local landlords.

• NGO’s might manipulate the figures while reporting to us.

• Retail Industries might themselves try hoarding.