The Apple Project
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.
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July 27th, 2009 at 9:49 pm
The best part about this initiative is that it is a hybrid between a cooperative and a firm and is an improvement over the producer company phenomena.
Also the produce has a benefit of transactional advantage because of being produced in a unique agroclimatic zone but its benefit is seldom reaching the initial producer unless he is very well established. This initiative helps such small farmers as well in Uttaranchal.
July 30th, 2009 at 6:55 pm
I have visited the area of this project in Yamuna and Tons river velley of Uttrakhand and get inspired to know that the farmers companies are coming up for value additions and storage.
Thanks to Mr. L.P. Semwal for taking initiatives for empowerment of small and marginal farmers.
August 7th, 2009 at 10:18 am
Dear sir,
we want to Membership with your Organisation.
Your sincerly
Mr.P.K.Gorada(Director)
ICCC,Orissa,India
August 8th, 2009 at 8:29 pm
Inspired by the initiatives of SJS for starting of this type of much needed value addition and supply chain management project. It would be better if Mr. L.P. Semwal will able to share the model and his teams experience so far.
August 25th, 2009 at 6:11 pm
you fand reuvrant
August 26th, 2009 at 7:48 pm
It is most rquired model for delivery of inclusive growth in rural (agriculture) areas.
Can you please explain more on the legal model of institutions setting?
Mr. Semwal I request you to organise on intrection session to learn more.
August 27th, 2009 at 3:37 pm
Hi,
We are working on the issue of SROI (Social return on Investment).
The model of SJS also on working with tools of SROI.
It is really nice innovation.
All the best for success.
August 30th, 2009 at 6:29 pm
Hi Dhimant & Arun,
Congratulation for good work you have been doing.
I am interesting to know about the Netherland counterpart of Apple project in India.
Can I request you to send me the details
September 4th, 2009 at 5:42 pm
application
September 16th, 2009 at 12:08 pm
Please refer to my interview with a journalist in Holland here:
http://www.centreforcivicdrivenchange.org/stories-of-change/sjs-apple-project-india/
September 24th, 2009 at 12:56 pm
I would like to request the better India forum to share the full “Model” of this project as it seems worthworthy for learning of the development practitioners in Rural areas of BHARAT to deliver the fruite of shining India to unprevilaged.
October 7th, 2009 at 7:24 pm
It is very nice to hear from this initiatives about Shri jagdamba samiti after such a long time! Hope everything is well with organisation. And, to be honest, I often think of my visit to Uttarakhand.
I have with interest taken knowledge of your successes with regard to the apple project, I think you have a good initiative there. Already at the time that I visited your organisation and the farmers cooperatives I was already impressed by the ideas.
It would be very kind of you if you could visit me the next time you are in Holland. You are very welcome at Both ENDS! I understood that you have found some Dutch funders for your project, which is fine.
If you need any further information from us, don’t hesitate to contact me.
I am looking forward to a visit.
Keep up the good work there.
October 17th, 2009 at 3:25 pm
Pleased to see comments. Friends who want to interact with project or eager to know more advised to Cpntact:
Mr. Laxmi prakash semwal
Shri jagdamba samiti
1, vinod market, Dehradun Road
Rishikesh
e-mail:lpsemwal@rediffmail.com
October 24th, 2009 at 2:23 pm
Hi,
I have covered the work of apple project during my visit to farmers organisations in Uttrakhand as:
Description of Social Enterprise-
Strategic Business Unit Level One: – Aggregation – Through Farmer Associations (10-50 groups) / Groups of (10-20 people each) Farmers who are willing to join, pay membership fees and with the approval of the quorum (2/3) have right of voting during election. These groups engage in Primary collection/aggregation through farm collectives in the form of SHGs or Farmer Associations who do collection of the produce and sell it either to the SBU level two or in the market. Ownership is divided amongst the farmers (30%) as well as the second level SBU (60%) based on supply of working capital for purchase and sale of the produce. The facilitating organization also has a (10%) stake till the farmer need backstopping support. First Payment is made at the time of purchase from the collectors. Premium is paid after trading and deduction of capitalization and service fees.
Strategic Business Unit Level Two: – Primary Value addition (Like grading/pre-cooling or quality improvement or packaging) Through Farmer’s LTD company that is made up of (Federation/ Clusters of groups) as a community based organization. The SBU level two has a company structure with management and business decision making in the hands of professionals. Initially divided amongst the investment firm (90%) and the facilitating organisation also have a (10%) stake. The ownership is transferable to the farmers either on the basis of the patronage. i.e. they can buy shares of this limited firm and become shareholders. Investments are made in Transportation, Storage, Grading Equipment, Packaging and Labor through this company. Premium is paid after primary processing.
Strategic Business Unit Level Three: – Secondary Value addition by Limited companies-They can do additional value addition of the produce from the producer companies (like long term storage of apples for off-season sales). Ownership is initially divided amongst the investment firm i.e. FFT Limited (90%) and the facilitating organisation also have a (10%) stake. This ownership is transferable on repayment of investments (from government subsidies and profits) to the supplying farmer
October 27th, 2009 at 6:23 pm
Happy to see the article on web.
Thanks to Better India team.
It would be better to feature the approach with all pertners experiementing this model for betterment of small & marginal farmers of India.
October 28th, 2009 at 3:24 pm
Apple is a highly remunerative temperate fruit crop, help in improving economy and living standards of those engage in any way with this business and generting empoyment for the rural population. Commercial cultivation of apple needed the use of modern technologies with scientific base.Follow proper harvesting, handling, storage, packaging amd trasportation to fetch good price in the market.
November 2nd, 2009 at 7:18 pm
Inspiring work by SJS.
Keep it up.
Hopefully, we’ll have a learning sharing visit soon
Judith from Konstaz, Germany
November 17th, 2009 at 6:52 pm
This project has a real positive approach for empowering farmers socially as well as economically.
The Ultra Low oxizen technology based storage is coming up in nogaon, uttarkashi, Uttrakhand will help the famers to save time, money and provide them to fetch more realistic prices for their produces.
All the best.
November 23rd, 2009 at 6:17 pm
Great initiative by Mr. Semwal.
We request SJS to explore the possibilities for working together in BHILANGANA area of Tehri Garhwal, Uttrakhand with our organisation.
November 30th, 2009 at 7:56 am
application
December 9th, 2009 at 7:41 pm
We heared about this project when the representatives of FFT and SJS visited us.
Sound very innovative and realistic for small growers in developing world.
All the best for success.
December 26th, 2009 at 12:08 pm
Congratulations for initiations to bring the much required development intervention in rural India.