Photo Credit: Palladium India
“We didn’t know the real value of our produce. The farmers from our village are surprised and have now started approaching us to understand how we did this,” says Rajendra Himgire, a grape farmer in Maharashtra State, India. Until recently, like many farmers in the region, Rajendra was not getting paid a fair market price for his produce. After connecting directly with an exporter, this has finally changed.
For years, Rajendra has followed best agricultural practices and has grown grapes that meet high quality standards. Despite this, Rajendra’s profits have been miniscule compared to their potential, in part due to the long value chain from farm to work and the sheer number of intermediaries.
This isn’t the story of just one farmer. The majority of the farmers across India fail to get remunerative prices for their produce, largely for these reasons.
Recognising the problems a long value chain can pose for farmers and their profits, the Palladium India team found a way to shorten the value chain by eliminating the need for traders and buyers between farmers and exporters.
“We felt that the program would provide skills and knowledge sharing to the famers in these district” said Ron Erasmus, Palladium India CEO. “However what the skilling intervention didn’t involve was practical experience and real-life commercial exposure.”
The Palladium India team studied the practices followed by Rajendra and many other farmers like him to ensure that their produce was suitable for export and arranged visits to the farms for exporters. These visits gave exporters an opportunity to physically inspect the produce and take samples to the laboratory to measure residue levels and other criteria necessary for meeting international standards. Rather than going through an intermediary, each of the exporters communicated their respective rates for the produce directly to the farmers.
Rajendra’s grapes were inspected by two potential exporters and Rajendra came to an agreement with one of them. The exporter offered Rajendra a rate of USD 1.4 per kilogram of grapes, which was much higher than the USD 0.91 offered by the traders and buyers. The exporter purchased eight tons of grapes from Rajendra, raising his income by 54%.
With support from the Palladium India team, Rajendra has also set up a ‘farmer producer company’ (FPC) – an organisation of farmers pooling resources and negotiating power. The team has been assisting farmers in setting up FPCs, developing demand driven business plans, and getting access to finance.
“We added this extra step of handholding through the business advisory because we felt it was necessary to take the farmer’s knowledge and turn it into real learning experiences executing on these commercial transactions.” Erasmus added, “It wasn’t part of the original program design, but the team felt that in order to create an impact, it needed the extra element of farmer support.”
The Palladium India team organised an exposure visit for Rajendra and his board of directors to an exporter’s packhouse, where grapes were being cleaned, graded and sorted for export. Rajendra interacted with packhouse staff to better understand the quality parameters and the export market.
Thanks to the increased exposure to the export processes and a better understanding of what happens to his grapes after they’re purchased, Rajendra and his FPC directors are now well informed of the opportunity the export market presents for their produce. They plan to extend this awareness and market information to the members of their FPC as well as other farmers in and around their village.
Since the project, the farmers’ confidence levels have only increased, and with the direct access they now have to the exporters, they are already in talks and negotiations with them for the next harvest season.
“We will take more farmers with us on this road to success,” Rajendra said. “This is true happiness for me.…”
The Palladium India team works closely with the Maharashtra Agri-Skilling Program, which is implemented under Pradhan Mantri Kaushal Vikas Yojana, the flagship scheme of the Government of India’s Ministry of Skill Development and Entrepreneurship (MSDE), and is funded by the National Skill Development Corporation (NSDC). At the state level, the Maharashtra State Skill Development Society (MSSDS) is the Project Implementation Agency (PIA) for a mass-skilling intervention, and the training program is being implemented under the Chhatrapati Rajaram Maharaj Entrepreneurship and Skill Development Mission.