Gram Mitra Kendra-A Rural Initiative

By

Dr. Anurika Vaish

Asst Professor & Head MBA & MSCLIS, IIIT, Allahabad

Ms. Pratika Mishra

Research Scholar, IIIT, Allahabad

Mr. Kartikey Kumar Singh

Research Scholar, IIIT, Allahabad

 

Overview of the Project: Gram Mitra Kendra (GMK) will offer Trading and lending platform to farmers and artisans in a transparent manner so as to minimize the role of middle man in selling their produce so that they can earn better returns. The Gram Mitra Kendra’s will tie-up with large bulk purchasers so that it act win- win situation for both formers and purchasers. Thus our clients would be all large and medium farmers besides marginal farmers who will work through self help groups to ensure quality of produce and economies of scale, the SHGs will also act as guarantor of the loan taken from Gram Mitra Kendra’s.

The Problem Beneath:

Agriculture in India is one of the most prominent sectors in its economy. in 2005 Agriculture and allied sectors like forestry, logging and fishing accounted for 18.6% of the GDP in and employed 60% of the country's population. It accounts for 8.56% of India’s exports. Agricultural activity is done about 43% of countries Geographical area. Though there has been a steady decline in agriculture share in the GDP, it is still the largest economic sector and plays a significant role in the overall socio-economic development of India. In order to reduce reducing poverty and hunger in the country the planning commission has always placed a great deal of importance to the agricultural sector, not to forget the fact that 70 percent of country’s population live in rural areas and agriculture is the major and primary source of living for them.

However the performance of agri-sector has been disappointing since mid 1990s. While in the ninth plan Agricultural growth was restricted to 2 percent a year, and overall economic growth was only 5.5 percent, well short of the 8 percent target. The share of agriculture sector in Indian economy has been 25 percent of GDP, the shortfall of more than 2 percentage points in agricultural GDP growth compared with the target accounts directly for a shortfall of about half a percentage point in GDP growth. If the indirect effects of more rapid agricultural growth on other sectors are taken into account, the total impact on GDP growth may have been as much as one percentage point.

We have arrived at an age where time and information is capital. If India has to join the fast track of development then present culture of development has to be reviewed. This requires a fresh approach in handling the long socio economic problem faced by the rural community. As India is predominantly rural, this brings us to the key issue of rural management- the farmer

Till recently India has seen little development and use of IT services in Agriculture has been very little. What use that is going on today is limited in some pockets to providing web-based information; email supported consulting services and one successful case – e-Choupal (www.echoupal.com)– an industry initiative while the above mentioned efforts have had some significant impact on the farmers in the selected pockets. The scope of using IT in Agriculture is much larger than the current attempts. While some effort in this direction has being done by Kerala Government (www.e-krishi.org) and NDDB (safal exchange) a viable cost effective and user friendly solution is the need of the hour.

From past 60 years we are talking about agricultural growth. Government has made many efforts for progression of agricultural land and growth, irrigation facilities and green revolution which was brought about for the improvement of agriculture as a whole. The manufacturing and the service sector both has seen an up gradation and sharp growth. In recent times we have witnessed stock exchange towering, foreign investments, industrial growth, IT boom but the agriculture sector has been always untouched and suffering. So, here’s the paradox: the hard-working Indian farmer — one of the world’s low-cost producers is unable to compete globally.

A recent World Bank study reveals that the biggest problems for India’s agriculture lie outside the sector rather than within it. It states that removing bottlenecks from farm to market should a higher priority than simply working for raising farm productivity. Statistics show that while atwenty percent higher yield lower the final price by three percent only where as a twent percent reduction in transportation coost will result in lowering the final price by ten percent. In other way it can be said unless we improve the logistical and trading infrastructure merely increasing the product has advrse situation for the farmer as it causes glut in the market

The main problem with India is its woeful infrastructure. By infrastructure, the meaning is “hard” as well as “soft” infrastructure. If we had sufficient “soft” infrastructure, that is a single VAT based tax system, where the paper payments are really limited, all transactions by “smart cards” or through banks, there won’t be many bottlenecks in moving goods from place to place. This adds another 20 % to the efficiency easily (just look at the number of trucks parked at various check-nakas all over the country). Not to the reduction of corruption because of this system.This infrastructure, is what makes China a powerhouse for manufacturing, we can be the same, if we improved the infrastructure. And the same good infrastructure can be used very efficiently by farmers to move produce faster to market. If payments were bank based by electronic means, less opportunities for middlemen to skim off the farmer’s incomes…. and so on…

Other major problem is the massive fragmentation of Indian farms resulting in very low economies of scale. With the passage of time ancestral land has divided over generations and the typical Indian farm is extremely small now. The overheads have to be spread over a smaller lot resulting in unsustainable economies of farming. So while the average farmer is quite poor, entrepreneurs and companies farming over large lots seem to be doing quite well. Also there is no appropriate market system for these marginal farmers. They do not have proper storage system and large part of their produce goes waste due to this. To add to the gloom there is shortage of funds and they do not have access to the available means.

Currently the Indian farming sector employs 40 to 50% of total work force which is a huge strain on the economy. More than 90% of the farming land is still dependent on the unpredictable monsoon rain which in turn increases the risk of productivity/returns causing huge turmoil in the lives of the farmers. It is time to move the work force to other sectors like manufacturing or smaller cottage industries to bring more stability to the economic well being of the working population.

Hence there is a need of a Nodal System to facilitate the marginal and small scale farmers and equip them with direct trading facilities.

Mission: To improve and enhance the quality of rural India by providing solution in the area of agri business and agricultural prentices by keeping the interest of rural India as the foremost focus of company and nurturing intimacy, team spirit, and self esteem of rural India.

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The GMKs are going to act as a facilitator of trade for the rural community. All the major component of village economy will be essential component of kendras. As it would be extremely difficult to deal individually with small and marginal farmers will be the part of the system through SHGs. The SHGs will play a very importation multifunctional role to play in the system. The SHGs would act as a guarantor of money borrowed. SHGs would also act to ensure the quality of produce as the group as a whole would be responsible for the quality of the product. Once a mutual trust is developed between farmers, SHGs and kendras other agri-inputs like and agri-implants can be provided n rental basis. The GMKs would be in coordination with Bulk buyers and large retailers and would update its member farmers about the current and future requirements.

Self Help Group: would consist of ten to twenty farmers from same area. Not more than one person is allowed per family. Self help group would be from same area it may encourage community farming. Social security created by the group would act as to ensure the quality of the produce and security of financial dealings.

Small and Marginal Farmers: small and marginal constitute about 78 percent of the total farming community. Individuals with land holding of 5 acres and less and landless laborers, tenant farmers and share croppers.

Medium Farmers: individuals with land holding of in the range of 5- 12 acre are known as medium Farmers.

Larger Farmers: they are individuals with more than 12.5 acres of agriculture lands.

Financial Institutions: would be those bank who are interested in getting in to lucrative landing market but are reluctant due to lack of proper infrastructure to ensure the return of loans. As the produce will be directly sold to customer, elimination of mediatory will ensure greater profit to both the parties involved in the trade. In order to ensure better margins for members better agricultural practices and advice will be imparted to farmers

Bulk Buyers :would be companies that engaged in trade of agri products like ITC, Hindustan livers and Kargil foods.

Large Retailers: would companies involved in retailing of agri produce like Big Bazaar, Subhiksa, Spencer, Reliance fresh and big hotels that are always in look for professional organizations to deal with.

As evident from the flow chart the marginal and small farmers would operate through SHGs. the SHGS would act as facilitator both for trade and financial transactions.

Products/Services

Product/service description: The biggest challenge faced by the farming today is getting reasonable return on their investments. Due to lack of information most of the farmers are forced to sell their produce through middlemen who takes away the large chunk of the profit earned. The middlemen also act to manipulate the price on the side of chain making it costlier for the customer who buys these products.

  • The proposed Gram Mitra Kendra will be the nodal point which will join customers with farmers so that the trade could be performed in a transparent way.
  • The added benefit of joining farmers with customers is that a certainty in trend of future requirement makes the former a confident investor in his business that is farming.
  • A major problem faced by the Indian farmer is unavailability of cash to meet their requirements. The current available means of loan are bank which need guarantor or mortgage or private lender who offer money at a very high rate of interest. The GMKs will also act to serve as Microfinance institution.
  • The problem of quality control of the produce will also be handled through kendras as farmers would be working with it on long term basis.
  • Small and marginal farmers of one region will be motivated to work jointly through self help group for optimum utilization of resources.

So the services offered by the Kendras can be broadly classified as

  • Trade
  • Micro finance
  • Agricultural advices

Sales and Marketing Model: The company initially would setup four Kendra’s which would act as nodal centers. These Kendra will be connected with internets to facilitate the flow of transactions. Each Kendra will be given two filled assistant called Gram Mitra who job would be link to help form SHGs and link the farmers with Kendra’s. The field assistant would agriculture graduate so that they can also be useful to provide training to member farmers. The purpose of the having Gram Mitras is to build trust between farmers and Kendra’s

Positioning of products/services: Positioning of the services offered by the Kendra would be most crucial aspect and hold the key to its success. Company would put all its 8 Gram mitras would work extensively in the villages to communicate with the target population so that suitable atmosphere is created and farmers could develop a relation ship which is mutually beneficial to each other is created.

 Future products/services: Once a mutual trust is developed between farmers, SHGs and kendras other agri-inputs like and agri-implants can be provided n rental basis

 Current Players: There are few companies in private sectors that have got in to Agri Business, but none of them have a pan India presence,

  • TATA Kisan Sansar Tata Chemicals Ltd.
  • E-chaupal Indian Tobacco Co.
  • Sathi Samadhan Kendra Cargill
  • Haryali Kisan bazaar Shriram Fertilizers Ltd.
  • Mahindra Shubh Labh Mahindra
  • Fresh Field Bharati Tel
  • Reliance Fresh Reliance
  • Adhar Godrej
  • Khet se Tata Chemicals Ltd.

Social benefit:  

  • The farmers and artisans who form the major component of any village would get the best return on their investment.
  • Rural economy will be strengthened resulting in since of pride in rural folks.
  • The self help group would act as vehicle for financial services and quality measures and hence for alleviation of poverty.
  • Involvement SHGs would also encourage a sense of financial discipline. Employment opportunity would be generated in the rural areas.
  • Better agricultural practices can be induced and implemented with the help of Gram Mitras.