Grow, process, pack and market the produce - Farmerpreneur

There germinates a small seed at the rustic countryside of eastern ghat.
OrgTree, farmerpreneur movement. 25,000-mile journey. One step at a time.

Our experiment is with local economy, sustainability, millet.

Local Economy

For Every 1$ spent on food, farmers receive less than 12 cents. The Indian farmers grow banana spending an average 12 months of effort and sells it for Rs. 30 per kg. The local buyer who buys from the farmers makes it ripe (1 day of effort) , sends to city mandi (main market). From Mandi it goes to distributors, retails and finally it reaches the customers. The time taken from local buyers (who buy from farmers) to reach the customer, it takes 3 or 4 days. The end user buys at the rate of Rs. 70 or 80 per kg. The middle men make Rs. 40 to Rs.50 per kg and the effort is 3 days and the farmer who earns Rs. 30 per kg, the effort is 365 days.

In case of processed food, 12% of the MRP goes to farmers and remaining 88% goes to the middle men: manufactures, distributor and retails (US study).

In case of farmers, the effort versus income never matches, he/she only earns 12% (US) from the whole value chain, but the effort is 80% to 90%.

Farmers: Income 12%, effort is 80%

Middle man: Income 88%, effort is 20%.

Farmer can never demand his due base on effort. In the name of value-add, 80% of the income is being reserved for each entity in the value-chain. This is probably justifiable, if one has to argue on that. But, what if farmers were to take up significant percent of that effort, thereby increasing their income too?

Other related problems are:
  • Migration - Rural to Urban: As the earnings deplete and unable to make economic sense, famers migrate to cities .
  • Unemployment: Farmers are not skilled to do the so-called high-value work and mostly work in a low-paid service sector.
  • Cost of Living: Living in city becomes unviable with less income, hence slums are created and live in pathetic and un-hygienic conditions
  • Women Employment: Women although are equal partners in agriculture, their role is under appreciated. And with the migration, they again take up low-paid service jobs.
Question #1 is, can we achieve growth around local economy?

Sustainability

Environmental Sustainability

All the food manufacturing or production facilities are centered around cities. Urban population is increasing and the need for transporting all goods to city for consumption. All the raw materials are brought-in from distant places unprocessed, causing pollution challenges, and CO2 emission (global warming). Globalization is adding to the misery, having to import goods from around increasing pollution and CO2 emission.

Global warming is becoming a major concern. Since the beginning of industrial revolution, thoughtless assumptions about abundant availability of energy and natural resources, has caused building industries with those assumptions. Availability of water, light, green were assumed to be limitless.

Economic Sustainability

We have addressed this to some extent in the previous (Localized Economy) topic. Urban-centric approach to economic development has only added to the bloating city population and all the challenges that come with it. These economy development opportunities need to be distributed across.

Instead of accommodating un-skilled farmers in low-paying service sectors, can we once again make them producers, with one difference, that is to make finished goods.

Question #2 is, can we incorporate sustainability or conservative approach to building an industry? Right from the way food grains and raw-material are grown, to manufacturing and to packing and shipment. And can we do it locally?

Millet

Millets were a staple food in most parts of India with a history of 3000 years. Despite their high nutritional value, they were dominated by rice and wheat. Millets are much easier to grow and are a sustainable crop. One of Orgtree’s core vision is to create products with millets and bring back its nutrition to everyone through unique products.

Millets grow in less than 1/5th of the water required to grow rice or wheat. They grow in less fertile soil and without the need for fertilizers or pesticides. Generally grown by multitude of small-hold farmers, millets are not usually traded in the international market or even in domestic ones. We would like to see that change.

Millets have been in-use in India since the early days of the Indus valley civilizations. They are gluten free and packed with Vitamins, Minerals and Proteins. They are a goldmine of nutrition and energy. We rediscovered this treasure trove of nourishment, neglected for decades, and now we grow it in our farmlands.

Question #3 is, can we bring back millet to the consumption level of other grains?

Our Model

What if farmer grows, processes, packs at the place where ingredients and raw-material are grown?

The effect is:

  • Farmers grow needed raw material in their land. Mostly men are reserved for farming, although we have seen number of women contribution. They get higher return if the produced grains are sold locally to the industry that is utilizing and providing them high-returns.
  • Women work in the same factory and earn.
  • Finished goods are directly transported to end consumers which avoids middle men ill effects.
100% effort : 80% income VS 80% effort : 12 % income