Organic Effect in Veg Business

By AnilkumarT

Published:24th June 2015 06:04 AM

LastUpdated: 24th June 2015 06:04 AM

A housewife at her terrace garden in  Kaloor |  Express

KOCHI:Thanks to the popularity of organic farming, the influx of vegetables fromother states has taken a huge dip, according to the data available from theAgriculture Department.

Officialssaid that the quantity of vegetables arriving from  states like Tamil Naduand Karnataka has fallen by nearly 20,000 metric tonnes. This is owing to thepopularisation of small-scale vegetable promotion undertaken by variousgovernment and private organisations.

“ There is a20-per cent dip in the quantity of vegetables coming to the state. Earlier,between 70,000 and 80,000 metric tonnes of vegetables were brought to the statefrom Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra. These vegetablesarrived at 10 wholesale markets in the district,” said Jessy K X, deputydirector, Agriculture Department.

The changehas been made possible through the various organic farming promotion programmesundertaken by the department, including promotion of terrace farming, grow bagdistribution and small-scale vegetable farming.

“We coulddistribute as many as 7,200 units of grow bags (each unit has 25 grow bags)during the last fiscal year itself. This was just 4,500 units during the2013-2014 financial year,” said Jessy.  Meanwhile, Vegetable and FruitsPromotion Council of Kerala officials say that there is a steep increase in theproduction of vegetables by farmers in the district. “There has been a rise inthe number of people who express interest in our Haritha Nagari and MattupavuPachakari Krishi schemes,” said the official.

However,according to Jessy, a major reason for the fall in popularity of the vegetablesfrom other states is the awareness among people about the toxic content inthem. “Thanks to the campaign undertaken by the media and government agencies,people are now aware of the amount of pesticides in the vegetables. This toohas prompted them to cultivate vegetables in available spaces in their homes,”said Jessy.

Faizal, avegetable vendor, said that he is already feeling the pinch. “Many people arecoming to us expressing interest in supplying vegetables cultivated in theirhomes. And, such produce have demand too,” he added.

 Inspiredby the movement, GCDA, along with the district administration, has undertaken amass organic vegetable farming mission in the district. Self-help GroupKudumbashree too has undertaken a mission to enable 6,250 units of terracefarming initiatives in a bid to promote organic vegetable cultivation. Besides,it has also been helping individuals under the Green Tree and Rural AreaFarming Promotion projects.

“TMR (Total mixed ration) feed concept is an old one being practiced in large farms across U.S. and some other foreign countries. I came to know of this feed while I was working in Jaipur, Rajasthan.

“One of the specialists working there had given this idea/formula to a progressive farmer and shared this information with me and I took it further from there,” says Dr. R .Unnikrishnan, Veterinary Surgeon, Animal Husbandry Department, Govt of Kerala.

TMR helps in enhanced milk production, quality, good reproductive health and overall physical condition of an animal. Animals fed with this ration require only small quantities of green fodder or dry straw as supplements.

Right ingredients

Each mouthful of TMR feed that an animal consumes contains the right amount of ingredients for a balanced ration.

For animals fed with this special ration it has been observed that the milk production increases to five per cent more than those fed with commercial or conventional feeds.

Source: The Hindu

Majority of the population

of Manipur is engaged in agriculture and allied activities for their livelihood. But farming in the state is mainly of subsistence type with an average land holding size of only about 1.14 hectares. The mono-cropping nature of farming has worsened the condition of the farmers. Sectors, other than agriculture, like artisan and weaving, handicrafts, cottage industries etc is in no better state. Lack of proper marketing facilities for their produce hinders farmers and producers in getting remunerative prices for their produce. Farmers/producers organization and collective action can play a key role in enhancing access to markets, increasing their bargaining power igniting the entrepreneurial mindset and ultimately empowering the small and marginal farmers and producers.

Several institutional models have being tried in India to integrate farmers for collective action. The most common is the Producer Cooperatives which enable producers to organise themselves as collectives. But the cooperative experience in India has not been a very pleasant one, as cooperatives have largely been state promoted, with a focus on welfare rather than to do business on commercial lines. Studies on the performance of cooperative system in the country found that they have been infected by political interference, corruption, elite capture, less efficiency, loss-making ways and declining Government support (capital constraint). Recently, Producer Company has captured the attention of policy makers and the promoting agencies primarily due to several advantages it carries in comparison to the conventional model of Producer Cooperatives.

What is a Producer Company?
The concept of Producer Companies was introduced in 2002 by incorporating a new Part IX A into the Companies Act, 1956 based on the recommendations of an expert committee led by noted economist, Y. K. Alagh. The committee recognised the importance of efficient, professionally managed producer owned enterprises to serve rural enterprises, including small producers and the inadequacies Cooperative institutions suffer from. The objective for was to formulate a legislation that would enable incorporation of cooperatives as companies and conversion of existing cooperatives into companies, while ensuring that the unique elements of the cooperative business remain intact in the new legislation.

The Producer Companies Act protect the ethos and basic tenets of cooperatives and infuses a professional attitude into management i.e. ‘Producer Company’ is the hybrid between a private limited company and a cooperative society, which combines the goodness of cooperatives and efficiency of corporate company.

The basic purpose of the Producer Company is to collectivise small farmers or producers for backward linkage for inputs like seeds, fertilisers, credit, insurance, knowledge and extension services and forward linkages such as collective marketing, processing, market-led agriculture production etc. This effort is primarily directed towards gaining a collective bargaining power for small farmers/ producers. It also includes rendering technical or consultancy services; generation, transmission and distribution of power and revitalisation of land and water resources; promoting techniques of mutuality and mutual assistance; welfare measures and providing education on mutual assistance principles.

Key features of Producer Companies
Producer Company is a corporate body registered under the Indian Companies Act 2002. Ownership and membership of such companies is held only by ‘primary producers’ or ‘Producer Institution’. Primary produce has been defined as a produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products: produce of persons engaged in handloom, handicraft and other cottage industries: by – products of such products; and products arising out of ancillary industries.

Minimum number of producers required to form a Producer Company is ten, while there is no limit for maximum number of members and it can be increased as per feasibility and need. The members’ equity cannot be publicly traded but can only be transferred with the approval of the Board of Directors of the producers companies. The liability of the Producer Company is limited to the value of the share capital it has issued. Similarly the member’s liability is limited to the value of share capital held by them and the minimum authorized capital at the time of incorporation of Producer Company should be Rs.5 lakh. There cannot be any government or private equity stake in the producer companies, which implies that Producer Company cannot become a public or deemed public limited company. The area of operation for a Producer Company can be the entire country.

Benefits of Producer Companies
Studies on farmer producers companies found that pooling of produce by the members enable them to have a greater bargaining power in the market and also by-pass intermediaries and thus, save on costs and enhance their returns. The producer-members can aggregate their demand for inputs and services which will enable them to reduce the cost. The members also enjoy greater command over domain knowledge in the produce dealt with which enhance quality, productivity and returns.
 
Consistency in quality and regularity in supply will enable to link with corporate buyers and can enter for a long term contract. Producers also has the option to partner with corporate entities to float producer companies without losing control, as the rule of one-member, one vote applies. The problem of dormant membership which plagues the producer cooperatives is overcome in case of Producer Companies as producer companies entertain only those who are active in the commodity deals and transact with the company on an on-going basis.

Y.K. Alagh opined that the Producer Company format is a better way for organising poor producers compared to the co-operative format, which is known for its inadequacies. It offers an opportunity for them to compete and collaborate with other business organisations such as large companies.

Indian experiences
More than 150 Producer Companies covering a wide range of commodities has been established in the country since 2002. Following are some Indian Producer Companies and their activities and performance:
The Indian Organic Farmers Producer Company Ltd (IOFPCL), the first farmers’ Producer Company in India, is located in Aluva (Kerala) and produces organic products. Only producers with the organic certification are the members, where patronage per share is Rs. 40, 000 with one member-one vote policy. The company advices its members on mapping and assessing the resources, sustainable resource utilization and scientific production methodologies; markets organic produces of the members with own brand. “Healthy people, wealthy farmer, healthy and wealthy nation” has been the motto of the company.

Vanilla India Producer Company Ltd (VANILCO) has been promoted by Indian Farmers Movement (INFARM) of Kerala, a charitable society with over one lakh farmer members to cater to the long-term needs and interests of the vanilla farmers. The company procures, processes and markets the produce of the members in a most professional manner in order to ensure extremely handsome dividends and bonuses for its shareholders.

Banana India Producer Companies Ltd (BAPCL) has also been promoted by INFARM with rather broader objective of “building brand quality for 25 Indian banana varieties as exotic varieties at the International market”.

The Government of Madhya Pradesh (MP) under District Poverty Initiatives Programmes (DPIP) has promoted a large number of producer companies at various parts of the states with respect to the commodities viz, rice, tomato, chilies, peas, sugarcane, turmeric, ginger, poultry, potato, coriander, milk and bio-fertilizers.

Spices Board under the Ministry of Commerce, Government of India has promoted two producer companies, the Coinonya Farm Producers Company Ltd for turmeric and Karbi Farm Producers Company Ltd for Ginger and Chilly in Karbi Anlong district of Assam for promoting organic cultivation, processing and export. The Spices Board invested Rs.1 crore as equity in each of the companies, while the rest of the equity has been held by tribal farmers (600 in Coinonya and 400 in Karbi).

Rangsutra, a Producer Company that promotes the products of artisans, weavers and craftsmen, was registered in 2004 and has been extending services in Rajasthan, Assam and Uttarakhand to bridge the gap between the artisans and the customer and to provide such artisans sustainable rural livelihood options.

Scope for Producer Companies in Manipur
Many successful commodities based Producer Company models in India can be replicated in the state. Producer companies can be established for different agricultural commodities such as ginger, chilly, pineapple, passion fruit, citrus fruits etc. to exploit the national and even the international markets through collective action and marketing of the produce. The farmers can also be encouraged for organic farming of different crops following the steps of the Indian Organic Farmers Producer Company Ltd (IOFPCL).

The dairy farmers can form dairy producer companies like the Maahi Milk Producers Company in Gujarat. The dairy cooperatives can rethink of conversion from a producer cooperative to Producer Company as was done in case of Junargarh dairy Producer Company. Fisheries and poultry sectors in Manipur can also be benefitted.

Similarly for the Sericulture sector in Manipur, the model of Tasar based Masuta Producer Company in Jharkhand can be replicated as a stepping stone for reviving the sericulture sector in the state. This will enable to tap the full potential of this sector.

Besides agriculture, rural artisans, craftsman and the women weavers can also come together to form Producer Companies which will enable them to widen the market of their products.

Conclusion
The effective functioning of ‘Producer Company’ model and scaling-up of this concept can be a boon to the primary producers of the state, at a scenario wherein huge challenges pose before them. There is need for awareness creation, capacity building and promotional efforts by different agencies to realise the full advantages of this model. NGO, government agencies (eg. KVK, ATMA), Civil society organizations, etc. should work together to reap the benefits and strengthen the Producer Company legislation.

The writer is a Research Scholar, National Dairy Research Institute (NDRI), Karnal, Haryana