Marketing Cooperatives: An Integrated Solution to Small Farmer Issues

I. The Global Development Network Conference

During the first few weeks I created a slide presentation that CORD used at the Global Development Network Annual Conference in Morocco in early June. CORD was in the running for a $30,000 prize for its government-sponsored rural development project, MKSP (“Mahila Kisan Sashktikaran Pariyojana”, translated to “Women Farmer Empowerment Project”). The goal of the three-year project is to introduce a number of sustainable changes to women farmers’ agricultural practices that will improve their livelihood in the long-term, and to reduce their dependence on government aids such as subsidized tools and inputs as well as welfare, considering that most of them fall below the poverty line.

I am pleased to report that CORD placed first at the competition, which not only won the grant but also makes it eligible for a $200,000 grant from the Japanese government through the Japan Social Development Fund. While the assignment of making the slide presentation was an suspension from my actual project, I was very glad to have been selected for it because it was an important learning experience in terms of helping me understand the broad overview of all of CORD’s farming-related activities, and also see where my project fits in.

model

This is one of the livelihood models I developed for the presentation.

WFG and PLWFG stand for “Women Farmer Group” and “Panchayat Level Women Farmer Group.” The PLWFG consists of representatives from each WFG. My project this summer fits into the “Development of Market Linkage” component, where as I mentioned in my last blog post I develop an organized system for the farmers to sell their surplus produce and also acquire inputs such as seeds, fodder, and fertilizer for less.

The government chose to focus on female farmers because in rural Indian agriculture, women are responsible for most of the labor yet do not have the decision-making power in the household that comes with the money they earn as a result. Gender inequality is perceived as a significant issue and one of the ways proposed to resolve it is through livelihood improvements in agriculture. As my supervisor Narender views the issues, empowering women will help “unveil the veil” that while before was considered an aspect of femininity, might now be a symbol of oppression.

II. Overview of Collective Marketing

*note: Since I’ve never taken business classes, I’m not familiar with the jargon that would simplify my explanations, so I’m using the vocabulary I have.

The purpose of the sales outlet is to collectivize the farmers’ outputs and demands so that they can have a higher negotiating power. Most farmers CORD works with have small-scale production levels so in order to sell they need to bring their produce to big markets. Additionally, they require inputs such as seeds, fodder, and tools and machinery. Rather than attempt both processes individually, the collective effort of farmers in groups can allow them to set up a business of their own, hence the need for a marketing outlet operated by the farmers.

The idea of the marketing outlet is especially important and common in India, where a majority of the farmers are small. However, there is significant regional diversity in how the outlets are structured since each region has different needs influenced by local infrastructure and agricultural patterns, and hence an outlet in, say, Odissa would be very different than outlets in Himachal Pradesh. Even within Himachal Pradesh there are differences in agriculture.

III. My Project

I am tasked with improving the marketing outlet business model. CORD has established three collective marketing outlets in the area that have been running for about a month and a half, and I spend a week visiting the three, observing the kinds of daily issues they face, and reviewing their accounting and records.

saleswoman

A failed attempt at a candid photo of the saleswoman. She’s pretending to record a sale.

field

A photo of the field. Currently barren because it’s in between seasons.

ravi

A (staged) photo of me working on my presentation.

produce

The produce at the store.
L to R: tomatoes, bananas, mangoes, cantaloupe.

I found that the main issues are culturally or geographically based:

Most of the saleswomen are farmers themselves, and have limited schooling. While it is completely possible and normal to operate a business without formal education, an understanding of certain business principles like accounting, management, marketing, and communication, is essential.

An example of the importance of accounting knowledge is evident in the practice of selling on credit. Often times customers will come without exact change, and if the shopkeeper is unable to make change, she will allow the customer to return at a later time when he or she is prepared. This practice is common throughout India; however, without accurate records, it makes it difficult for outside observers such as myself, or even a CORD volunteer, to make projections for future revenue if we don’t know how much the shop takes in as receivables. This in turn was the basis for my first suggestion for improvement – a system of record-keeping for loans.

Additionally, a significant issue the shopkeepers face is produce wastage, since in the hot and humid summers watery vegetables like tomatoes and cucumber don’t last long. Add in the lack of reliable electricity for dairy refrigeration, and there is potential for serious losses. A recommendation I made to resolve this issue is to establish linkages with markets in nearby cities, where the demand for produce is much higher since usually people don’t farm their own vegetables. In general, the purpose of having a marketing outlet in a rural area would be to provide goods that farmers can’t produce on their own, since they will only sell their goods to the outlet anyway if they have a surplus. For example, if they only cultivate pulses (beans, lentils) in their backyard, then they would have plenty for themselves but would need to purchase fruit, vegetables and dairy. Many farmers cultivate a decent enough variety of crops but depending on the season and other factors, they may end up with the same vegetables every day, and so to have a variety they then turn to buying.

Another cultural issue I’ve encountered is that many farmers don’t feel comfortable selling their produce, and would much rather give their surplus to a friend in need or use it for some other purpose. It is difficult to entice them to change their giving, selfless nature into a “business” mindset, but that’s where revenue projections come in – to explain exactly how much money they forego, and outline all the possible ways they could the extra cash: education for their children, more comprehensive health care, among other lifestyle factors that people prioritize.

Currently I’m putting together a sort of training manual for the saleswomen, so they have a checklist of their responsibilities and can learn best practices for communicating with the farmers to compile their various demands and supply of goods. While the structure for how the information, cash, and goods will flow has been established, one of the crucial missing elements is understanding and implementation. The outlet is powered by farmers’ active participation, and the more the better, so their skepticism truly inhibits their earning the benefits it provides them.

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About Ravi Jain

Penn'17, Economics, sponsored by the Center for the Advanced Study of India to intern at Chinmaya Organization for Rural Development