How private sector is helping cultivators with technology, buyback and improving their social standards

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By Madhvi Sally

NEW DELHI: At first glance, farming seems a state-dependent enterprise across India’s hinterland. The state sets floor prices for farm output, and its agencies control the procurement centres and subsidies. But the role of top private labels becomes apparent just beneath the surface, with the Adani Group, ITCBSE 3.44 %, Hindustan UnileverBSE 2.67 %, or the Godrej Group helping cultivators through the crop cycle – from improving soil health and providing the best seeds to buying the output.

“About 80% of the agriculture sector is driven by private companies. But given the involvement of 138 million farmer families, more needs to be done to provide them technology on the field and ensure remunerative prices. Enacting a liberal APMC law, scaling up digital technologies, encouraging private players to set up mandis and lifting export bans or stock limits should be priorities,” said Ashok Gulati, agricultural economist and former chairman of the Commission for Agricultural Costs and Prices.

Private investment in agriculture is not the exclusive preserve of home-grown companies. Cargill, Hindustan Unilever, PepsiCo, or McCain are equally involved, as are the Tata Group, the Mahindras, Ruchi Soya, or DCM Shriram. Over the past few years, these groups have been working with farmers, in collaboration with agrochemical and farm-machinery companies to bring best practices and raise yields or lower costs.

“For the first time in 25 years, I witnessed a drop in water usage for growing mint. Instead of 11 irrigations, I used 8 this year. I have also used a modified distillation unit that helped earn 30% more,” said Ram and Ruprani, mint growers from Zaidpur village in Barabanki, Uttar Pradesh.

They are beneficiaries of the Shubh Mint project, run by Mars Wrigley Confectionery, which makes Orbit, M&M, and Skittles. It seeks to improve mint plant science and ensure the long-term viability of mint, an essential ingredient in gums and mint confections.

“Through our project…, yields increased 68% and water requirement fell 23%, saving an average of Rs 6,222 over the course of the crop season,” said Kim Frankovich, VP, global sustainability, at Mars Wrigley Confectionary. The project covered about 2,600 farmers. For Mars Wrigley, 65% of its gum and mint brands use natural mint or menthol flavouring, and 90% of these products contain oil derived from the menthe arvensis plant grown in India.

Similarly, US- based Amy’s Kitchen, which specialises in organic, non-genetically modified food, is seeking to work with horticulture farmers in India. Several start-ups in retailing horticulture produce have started working with farmers directly, weeding out the middlemen.

The association between farmers and the formal corporate sector goes back a long way. In 1987, PepsiCo started working with tomato farmers in Punjab, providing technology and firm prices, said Gokul Patnaik, chairman, Global AgriSystem, a food processing consultancy firm.

“This was followed by Bharti’s Field Fresh, and projects by seed companies like Mahyco and Syngenta. New crops like gherkins were sown by farmers, with Balarpur industries working with them. Also, the market for marigold extraction opened, with players like AVT Natural and Katra group exporting,” said Patnaik.

PepsiCo India currently works with more than 24,000 potato and rice farmers across nine states, providing new varieties, technologies and sustainable farming practices.

Chairman D Shivakumar said, “PepsiCo has been at the forefront of empowering Indian farmers with cutting-edge technologies, derived from our global technological expertise pool. A reflection of this is the collaborative farming of process grade potatoes which we introduced in India, has not only raised the incomes of small and marginal farmers but also their social standing in the community. Additionally, we introduced the pioneering initiative of direct seeding technology, resulting in reducing water consumption in paddy by over 30%.”

Godrej Agrovet works with 2 million farmers at 54 production units, in 20 states, in the areas of animal feed, dairy, poultry and oil palm plantation. “It is the private sector which is bringing new technology to the rural landscape – from seed to farm equipment,”said Balram Singh Yadav, MD of Godrej Agrovet.

The company is a pioneer in the plantation of oil palm, which is not a native crop of India. Yadav said that the private sector imported seedlings from Malaysia and Thailand, and even got farmers and agronomists to train Indian farmers on managing trees. Investments have also enhanced livestock and poultry yield. “Ten years ago, farmers had to feed 2 kg of seed to get 1 kg live weight of a bird in 25 days. Now, they use 1.5 kg of feed.”

All initiatives are not necessarily large, and some involve technology like the laser leveller for farms, which helps in water conservation, said Ajit S Shriram, Joint MD, DCM Shriram. The company’s sugar business DSCL Sugar has been working with 50,000 farmers in Hardoi and Lakhimpur districts of Uttar Pradesh. “Farmers have a lot of traditional knowledge, but we add in technology to further increase his yields and bring down input costs,” he said.

To improve sugarcane yield and make the crop sustainable, DCM Shriram is working with the International Finance Corp, Solidaridad and Coca-Cola.

Mondelez India’s cocoa sustainability program has been working with farmers in India for over 50 years and work with over a 100,000 farmers under Cocoa Life programme. “We support farmers by providing them seedlings, technical know-how and during post-harvest processing in the farms. We have also partnered with the Kerala and Tamil Nadu Agriculture Universities to develop superior varieties of cocoa seeds. Our research focuses on areas like plant breeding, agronomic practices and environmental impact,”” said a Mondelez India spokesperson.

Similarly, Mahindra’s grape farmers have seen yields increase from 3-4 tonnes per acre to 9-10 tonnes per acres in seven years, said Ashok Sharma, president – agriculture sector & MD and CEO – Mahindra Agri Solutions Ltd,(MASL), the agri-business initiative of the $ 19-billion Mahindra Group.

“The adoption of micro-irrigation by our farmers has lead to 30% to 35% increase in chilly and banana yields. Providing digital agri services is our next focus. Further, MeraKisan, a start-up for online purchase of fresh fruits and vegetables, is ensuring that farmers get 10% to 15% more returns as we remove 6-8 middlemen,” said Sharma.

The private sector can play a critical role in doubling farmer incomes, said S Sivakumar, Head-Agri & Tech of ITC. “ITC has been working with farmers…making interventions at all the nodes of the agricultural value chain and aligning the same with consumer demand. This is helping the farmer to garner a greater share of the consumer price,” he said.

Hindustan Unilever has come a long way in India since beginning with tomato puree imports from China. It now works with more than 15,000 smallholder farmers in Maharashtra and aims to expand the network. “Apart from providing farmers with a buyback guarantee for their produce, we also offer global and local knowledge and expertise like latest agricultural techniques, irrigation practices and recommendation of right seed varieties,” said the HUL spokesperson.

The Adani Group is working with 15,000 farmers in Himachal Pradesh, where it buys 30,000 tonnes of apples. “The quality and prices have improved. In 2006, farmers would get Rs 25 a kg whereas now they get as high as Rs 65 a kg,” said Shrinivas Ramanujam, business head, Adani Agrifresh Ltd. Adani pays online in 20 days, said Ramanujam.

Organised vegetable retailing has ensured that more players work with farmers closely, which former bureaucrats such as Pravesh Sharma (founder of Sabziwala) and IIT alumni Shashank and Manish Kumar (founders of DeHaat) consider necessary. Sharma’s Sabziwala now handles 50 tonne of produce daily in the Delhi region, directly buying from farmers or their producers’ organisations. “Besides compressing the value chain and saving costs, we ensure higher returns to our partner farmers,” he said.

Shashank and Manish Kumar are currently helping more than 25,000 farmers in Uttar Pradesh, Bihar and Odisha grow corn, wheat, paddy, litchi and vegetables, and marketing the output to ITC, Godrej, Reliance and Metro. “From providing seed to reaching the market, we are there for farmers. We are doing customisation at the farm gate, from packaging and grading,” says Shashank, who is planning to go in for series A funding.

Source: Economic Times

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