HomeAgriculture The Apple Project Dhimant Parekh July 24, 2009 Agriculture, community development, Development, Empowerment, Environment, Government, India, Livelihood, rural india Background The apple project consists of four decentralised apple collection centres. Farmers are encouraged to join a cooperative, through which they can process and sell their produce jointly at better prices. The goal of the project is to facilitate a process of empowerment among small-scale apple farmers in order to promote sustainable socio-economic development through promotion of a value-addition business chain, owned and led by farmers themselves. In this article, we talk about a successful cooperative initiative called The Apple Project launched by Shri Jagdamba Samiti (SJS), an NGO led by Mr. L.P. Semwal. SJS launched this project in Uttarakhand with the realisation that small farmers in a market-oriented agribusiness get further marginalised mainly due to the dominance of mandis, a chain of well-organised intermediaries who control the entire process from credit supply for farm inputs, transportation and marketing of produce. The apple project hence strives to create a model of business-driven, decentralised independent and small-scale production with coordinated arrangements for processing and marketing by providing technical, managerial and investment support to enable farmers collectively to move up the value chain. The ‘collective’ feature of the business model is promoted to save individual time, distribute risk, maintain price assurance, pursue damage control and save on handling costs such as storage and transportation. Empowerment beyond economic gains The Centre apparently did have an empowering effect among the community beyond mere economic gains. First, market dynamics and the apple business as such became more transparent and easier to understand for everyone. Thereby, people were enabled to participate actively and accumulate broader ownership instead of depending on traders and middlemen. Also, people were encouraged to view and understand power no longer purely along the lines of traditional class boundaries, but become aware of the power and possibilities for participation they have. Also, the Centre has an empowering effect on women. It was for instance repeatedly noted that women were for the first time participating in public meetings, and daring to speak up in public. Breaking the prevalent market cycle A main strategy of the Apple Project is to break the dependency of small and marginal farmers on middlemen through a process of a joint marketing via the Centre. This has both strong economic effects, as it raises the farmers’ direct gains significantly, and empowers them by reducing their risk of being exploited by middlemen. However, breaking entirely away from a highly organised network of middlemen is not an easy task. Middlemen still keep a tight control of crucial stages of growing as well as apples’ post-harvest processing. Sometimes, middlemen also operate transport services and buy apples from farmers at their orchards, but at a very low price. It is hence not easy for small farmers to delink themselves from the system controlled by middlemen. A sustainable, comprehensive alternative system should be in place. The role of SJS as an external agent The commitment, entrepreneurial competence and perseverance of the leadership of the farmers’ association and the Centre staff have been the main contributory factors for the success of business operations. SJS as an external agent has, however, played a distinctive role as a facilitator of the process. SJS’s main contribution has been to come up with an innovative business model for small and marginal apple growers and to build capacities of farmers to own and run such a business operation. SJS’s role in this regard has been building capacities of farmers in general and leadership of the farmers’ association in particular. The other important role that SJS has played as an external agent is to mediate power-play in relation to forming the farmers’ association. Matching economic goals with social goals The uniqueness of the Apple Project is its business model which is based on the functioning of the business operations whilst at the same ensuring social goals. If economic benefits are only used for consumption purposes there is no clear link to social change. Hence, it is important to monitor what the money is spent for (e.g. education, better health care etc.). Story Telling Workshop for the Apple Farmers (Courtesy: CDC) Economic empowerment alongside social interventions is required in order to stimulate long-term social change. SJS is also aware that joint ownership of the business operations alone will not automatically deliver social goals. The new form of collective ownership is an alternative to the form of organisations hitherto established in the village which were dominated by the Sayanas. SJS is cautious that opposing an existent power structure can lead to the unintended creation of another power structure. This is a major concern for the future. Promoting a value-driven business model Organising small and marginal apple growers is not simply an economic activity. The story of apple growers in Bawar area suggests that power structures and politics play a major role in village life and an economic activity cannot circumvent or keep aloof from such realities. The new farmers’ association and the Centre promoted a principle of political neutrality and a leadership model which is based on competence instead of party affiliations. Promoting a new form of economic activity with a social goal based on political neutrality and competence had been possible due to the values of inclusiveness and tolerance of diversity, which the Centre stands for. Drivers of change must hence incorporate the values they aim to promote, and these should be reflected in all areas of operation. Enabling farmers to jointly move up the economic chain With support from private investors, originating from successful business families, a new model for advancement of small and marginal farmers is now being tested in India and other countries. This model is an attempt to find a healthy entry point for rural development by concentrating on setting-up healthy agro-businesses in which farmers themselves gradually gain economic ownership. Similar to the self-help groups and cooperatives, the aim is to set-up healthy business in handling, processing and trading farmer’s commodities on a commercial basis. The main difference of the new approach is that the farmers are equal business partners of the investor: they will only gain full economic ownership if the investment is repaid fully. No paternalistic form of aid, but a sound economic partnership between an investor and a (farmer-owned) company. The investor assists the farmers in setting up commercially-run businesses (private Limiteds), based on a solid feasibility and business plan, and makes available a full (guaranteed) loan to the new company. The companies are to generate sufficient profit to pay back the loan, capitalize the company and invest in new profitable business ventures (allowing the farmer to move further up the value-addition chain). Part of the profit flows back to the farmers in the form of better prices for their commodities and possibly dividend payments.Some of the guiding principles behind the projects where the new model is being tested, are: Invest in profitable agro-business ventures – set up farmer-owned businesses, based on professional feasibility analysis and business plans. Farmers: equal business partners – farmers are not merely ‘beneficiaries’ or ‘the target group’, instead they are an equal business partner of the private business partner/investor Loan, no free money – the investment required is brought in by a private business partner, driven by its social corporate responsibility, rather than by its profit seeking objectives, but is to be repaid to sustain the model. Farmer ownership – as repayments are made on the investments, the economic ownership of the company is automatically transferred to the farmer groups. Continued strategic guidance by professional/business partners – whereas farmers are to gain 100% economic ownership over the business, and they are to be represented in the governing body (Board of Directors), the majority of the BoD will remain professional or business partners, to ensure that the long-term interest of the company and continued strategic guidance is secured. Invest, but also plough back profits – While investing in higher value-addition processing, the model is intended to plough back part of the profits to the farmers and into new economic activities in the region. Collective action to save time, energy & money Improve bargaining position Take out intermediaries – e.g. the middlemen or informal lenders. Overcome difficulties in handling & logistics – e.g. inaccessibility and transportation, especially in undulating terrains, leading to excessive wastage. Collectively, the farmers can more easily organize solutions or obtain external support (e.g. from (local) government or private sector). The above article is excerpted from the original article by CDC with due permission from SJS. All images courtesy CDC and SJS.