TRANSFORMATION OF FARMERS’ CLUBS TO … OF FARMERS’ CLUBS TO ... The Chief General Manager, NABARD Chhattisgarh ... Use of good quality seed alone enhances productivity by …

Maheswar Sahoo, DGM/FM & K I Shariff, DGM/FM

BANKERS INSTITUTE OF RURAL DEVELOPMENT Sector‐H, LDA Colony, Kanpur Road

Lucknow 226 012 (UP)

2014

TRANSFORMATION OF FARMERS’ CLUBS TO

PRODUCER ORGANISATION

A STUDY IN BILASPUR DISTRICT OF CHHATTISGARH

DisclaimerThis document has been prepared by Bankers Institute of Rural Development, Lucknow (BIRD) based on the field study by a team comprising Shri Maheswar Sahoo and Shri K I Shariff, Faculty Members. The views expressed in the report are that of the study team. It does not necessarily represent or reflect the policy or view of BIRD or NABARD (National Bank for Agriculture & Rural Development). BIRD/ NABARD accept no financial liability or any other liability whatsoever to anyone who uses this report as also for the accuracy of facts and figures quoted in the report.

Acknowledgements

The Study Team of Bankers Institute of Rural Development (BIRD) gratefully acknowledges the cooperation received from the following officials/agencies in the conduct of the study on “Transformation of Farmers’ Club to Producer Organization”: Farmers’ of Bilaspur and Mungeli districts The Board of Directors of Baigababa Krishak Mahasangh and Maa Narmada Krishak

Mahasangh in Bilaspur district The Board of Directors of Jai Mitan Krishak Mahasangh in Mungeli district The Office Bearers of Kisaan Beej Cooperative Society (a Producer Organization) Kiosk Operators (BCs of SBI) at Kenda, Kota, Pendra and Lormi The Chief Executive Officer, Zilla Panchayat, Bilaspur The DGM and the AGM of SBI at Bilaspur

2. We record our sincere thanks to the Director and the Joint Director, BIRD for encouraging and providing guidance from time to time. 3. Cooperation of locals in giving information, perspectives and suggestions is also gratefully acknowledged. 4. Last but not the least, we gratefully acknowledge the special assistance and cooperation extended by Shri Kamal Pattnaik, DDM, NABARD, Bilaspur for the successful conduct of the study in Bilaspur and Mungeli districts. The Chief General Manager, NABARD Chhattisgarh Regional Office and many other officers of the RO also extended necessary support in collating perspectives, experiences and other useful information for the study which we thankfully acknowledge. Shri Maheswar Sahoo and Shri K I Shariff Faculty Members of BIRD Lucknow (The Study Team)

Index

Sl.No Particulars

Page No

1

Executive Summary

i to iii

2

Chapter 1‐ Introduction

1 to 6

3

Chapter 2 ‐ Study Objectives & Methodology

7 to 11

4

Chapter 3 ‐ Transformation Process

12 to 29

5

Chapter 4 ‐ Policy Issues

30 to 37

6

Chapter 5 ‐ Summary & Conclusions

38 to 43

7

List of Annexure I– Districts with SBI as Lead Bank

44 to 46

9

References

47

Executive Summary

III

Executive Summary Executive Summary 1. NABARD launched the Farmers’ Club Programme in November 1982 (till 2005, it was called “Vikas Volunteer Vahini”) for propagating the principle of “development through credit, technology transfer, awareness and capacity building”. More than 1.43 lakh farmers’ clubs have so far been launched. Some of them have become dormant and some are defunct. Federating the farmers’ provides an opportunity to reinvigorate the programme. There are 106 federations of farmers’ clubs in the country. Federating about 50 farmers’ clubs in contiguous blocks will generate membership of near 1000 farmer which will make the federations sustainable. These federations can undertake economic activities to derive benefits of economies of scale.

2. In Bilaspur district of Chhattisgarh, one federation of farmers’ clubs has set up a producer organisation (Kisan Beej) for procuring, processing and retailing seed. One more federation in the same district and another in the neighbouring Mungeli district are in the process of establishing producer organisation. A study was undertaken to understand the model and to examine the scope of replicating the model in other parts of the country.

3. There are 300 farmers’ clubs in Bilaspur and Mungeli districts, of which 201 have been affiliated to these three federations. Rest of the clubs have become defunct. The federations have established 16 Business Correspondent (BC) kiosks of State Bank of India. These kiosks are being utilised by Kisan Beej to sell seeds and pesticides to farm-ers’. There is a revenue sharing agreement between the kiosk operators and the feder-ations. Similarly, Kisan Beej pays commission to the kiosks on sales. Fees received from the bank towards BC services and commission from sales of agricultural inputs have made the kiosks sustainable. With a regular stream of income from kiosks, the federa-tions also have become very effective in ensuring involvement of farmers in all its ac-tivities.

4. The federations have collaborated with Agriculture Department for demonstra-tion plots of crops, seed distribution and agricultural extension work. They have facili-tated seed production license for the members. Licenses for vending seeds and pesti-cide, by the kiosks also have been obtained by the federations. Establishment of feder-ations has helped in broad-based interaction with government agencies, banks, pesti-cides wholesalers and host of other institutions. This has created the eco-system for promotion of the producer organisation (kisan beej) dealing primarily with seed. Col-laboration of federations with various government departments will also ensure better access to multitude of government services, thus benefitting the farmer-members. DDM, NABARD can facilitate such collaborations.

Executive Summary

III

5. The federations have been provided financial assistance by NABARD to conduct financial literacy campaigns in the schools and villages with active involvement of farm-ers’ clubs. Such assignments helped in building the capacity and confidence of the in-stitutions. Many of the development programmes of NABARD can be channelized through the federations. They may be actively engaged by NABARD in stabilising the farmers’ club programme. Reviving dormant clubs, opening new clubs only in un-cov-ered villages, conducting meet-with-expert programme for farmers’ etc., may be done through financial assistance to the federations (and not to the clubs). The preferential partner status should shift from the NGOs to the farmers’ federations at least in these districts.

6 Experience in the study area indicates that a federation requires support for about three years to work as a sustainable producer organisation. The first activity they undertook is to work as BC to State Bank of India in the kiosk model. Next, they started using the kiosk outlets for vending seeds sourced from their own producer organisa-tion, and pesticides sourced in bulk from the wholesalers. Of the three federations, only one has started procurement, processing and selling of seeds (Kisan Beej is the pro-ducer organisation). The other two presently source the seeds from Kisan Beej. They are in the process of establishing their own producer organisation for seed processing. It is possible to replicate this model in other areas. DDM, NABARD in the district must take active part to transform the farmers’ federations to producers’ organisations. This will require sincere efforts for institutional coordination, motivation and hand-holding of the federation leaders, and may be for accessing finance either from NABARD or from banks.

7. Establishment of BC kiosks has been an important and visible milestone to rally the farmers’ around the federal institution. In close to 70 districts in the country, the State Bank of India has lead bank responsibility. Many more districts will have a Re-gional Office of the bank. Efforts may be focussed to establish BC kiosks by the farmer federations in these districts. On achieving a critical mass, it will be easier to convince other banks to do so. Kiosks are essential for channelizing seeds and pesticides by the producer organisation. These are also focal points for interaction among members and federation leaders. As and when, additional activities are taken up by the federations and/or producer organisation, the kiosks can expand by taking additional space on rent.

8. The producers’ organisations promoted by farmers’ federations will not have any collateral security to offer for accessing bank finance. They can only mobilise mar-gin contribution through membership fees, income from kiosks, and miscellaneous in-come. Lenders on the other hand will be hesitant to provide loans to such start-ups without some form of comfort. Credit guarantee cover for farmer producers’ organisa-tion is presently available from SFAC only when these are registered as Producer Com-pany. Since the formalities of registering a producer company was found to be very cumbersome, the federations have opted to register the producers’ organisation under

Executive Summary

III

Autonomous Cooperative Society Act. Once they gain experience in governance and reach a noticeable scale of operations, they will find it useful to come under the Com-panies Act.

9. Use of good quality seed alone enhances productivity by 10 to 20%. Therefore, availability of good quality seed is essential to make small farms viable. Production and processing of seeds locally will improve seed replacement rate, besides boosting crop productivity. Many state governments procure seeds from outside the state to cater to the needs of its farmers’. With appropriate policy support, local seed production for such crops can be enlarged very fast through the farmer federations, who can set up seed processing facility in quick time with financial assistance from banks and/or NAB-ARD.

10. There may be some states where the State Seed Corporation is the only channel for seed processing and distribution. Everywhere, state governments provide some subsidy to the seed growers and to the seed vendors, so that seed is available to the farmers’ at reasonable rate. For major cereals and pulses, price of seed is often regu-lated. In Chhatisgarh, the state government changed the policy and now institutions other than the Seed Corporation are eligible to receive seed processing and distribution subsidy. Seed production subsidy is paid to the seed-growers through the seed pro-cessing agency. In states, where such enabling provision is not there, dialogue with state government may help in modifying the policy.

*****************

Chapter 1 Introduction

1


1.1 The share of agriculture in gross domestic product (GDP) is declining over the years (13.9% in 2013-14) as a concomitant of growth process. However, it still continues to account for a huge share of total employment (54.6% as per 2011 Census) despite substantial decline in the number of cultivators (from 12.73 crore in 2001 to 11.87 crore in 2011). Besides, a structural change within agriculture is observed with diversification into horticulture, livestock, and fisheries.

1.2 Given the limitations in expanding area under cultivation, increased productivity holds the key to future growth in agriculture. Moreover, the productivity increase will have to come largely from small and marginal farmers’ holding less than 2 ha area. The average size of farm holding has declined from 1.33 ha in 2000-01 to 1.16 ha in 2010-11. Sixty-seven percent holdings are less than 1 ha in size. Eighty-five percent of holdings are less than 2 ha in size accounting for 44.31% of area. Besides, the number of tenants, oral lessees and share-croppers has been increasing at fast pace over the years. Pressure on land will further increase in future leading to still smaller holdings. Generating remunerative income from small farms is the key challenge. Table 1.1: Agricultural holdings in India (2010-11)

Class of farmer Size class (ha)

No. of holding (lakh)

Area op-erated

(lakh ha)

Av size of hold-ing (ha)

No. of hold-ing as % to

total

Area op-erated as % to

total

Marginal <0.5 643.42 150.61 0.23 46.71 9.46

0.5 to 1 280.14 203.48 0.73 20.33 12.78

Total 923.56 354.10 0.38 67.04 22.24

Small 1 to 2 247.05 351.36 1.42 17.93 22.07

Semi Medium 2 to 4 138.40 375.47 2.71 10.05 23.59

Medium 4 to 10 58.56 337.09 5.76 4.25 21.18

Large > 10 10.00 173.79 17.37 0.73 10.92

All classes 1377.57 1591.80 1.16

Source: Ministry of Agriculture (as in indiastat.com)


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1.3 Maintaining sustainable growth in agriculture requires research in innovative technologies for conservation and management of limited natural resources. The emerging needs in the agriculture sector require adoption of location specific models of farmers’ groups to promote greater value addition of the produce, forge new partnerships with technology providers to realize financial sustainability and compete in the national and international market. ICAR has developed new crop varieties that improve yield and nutritional quality along with resistance to various biotic and abiotic stresses. Adoption of such improved crop varieties and better crop management techniques has resulted in record production of cereals, pulses, and other crops in recent years. Last mile connectivity of agricultural extension services have not been adequately addressed to meet the emerging technological and knowledge needs of farmers’. Research has shown that peer to peer transmission of knowledge is a better method for propagation of agricultural innovations compared to state sponsored model. 1.4 Capital formation in agriculture has been declining over the years. Gross capital formation in Agriculture and Allied Sector was a mere 7.1% of total capital formation in the economy during 2012-13, despite the sector contributing 13.9% to the GDP. Also, GCF in agriculture was 21.2% of agricultural GDP during the same year, while it was about 40% of GDP for the overall economy. Table 1.2: Gross Capital Formation in Agriculture (as % to GDP)

Year Share of agriculture in total GCF (%)

GCF in agriculture as % to agricultural GDP

Public sector Pvt sector Total

2004-05 7.5 2.9 10.6 13.5

2005-06 7.3 3.4 11.2 14.6

2006-07 6.7 3.7 11.2 14.9

2007-08 6.6 3.5 12.6 16.1

2008-09 8.1 3.1 16.3 19.4

2009-10 7.3 3.4 16.7 20.1

2010-11 6.3 2.8 15.7 18.5

2011-12 7.0 2.8 18.0 20.8

2012-13 7.1 3.1 18.1 21.2 Source: Economic Survey 2013-14 and NABARD Annual Report 2013-14

Role of public sector in capital formation in agriculture has been continuously declining reaching 3.1% during 2012-13 in comparison to the contribution of 18% by private sector in agriculture during the same period. While the level of capital formation in


3

agriculture needs to be enhanced substantially to ensure food security, growth and sustainable income levels for the small holders, bulk of the requirement would have to come from the private sector, essentially from the financial institutions. 1.5 For adopting new technology, better inputs and farm mechanisation etc., capital investment has to be made by the farmers’ which would mainly come from institutional sources. Credit flow for agriculture has increased substantially over the years, mainly for working capital needs, which does not add to capital formation. Agricultural term loan which forms the main component in capital formation by private sector has lagged behind. While banks are weary of dealing with multitude of small borrowers, vagaries of nature bestow huge uncertainties for agricultural activities and thus on the resultant income stream. Availability of timely and adequate credit both for production and investment for technology is essential for sustaining agricultural growth. Simultaneously, instilling financial discipline among the farmers will encourage banks to lend more for agriculture. Organising farmers’ is essential to address these key challenges. Table 1.3: Ground Level Credit for Agriculture Sector (Rs crore)

Year Production

credit Investment

credit Total

Growth rate of total GLC

(%)

Growth rate of Term loan (%)

2004-05 191050 71748 262798 11.43 36.86

2005-06 239439 98084 337523 28.43 36.71

2006-07 138455 90945 229400 -32.03 -7.28

2007-08 181394 73264 254658 11.01 -19.44

2008-09 210461 91447 301908 18.55 24.82

2009-10 276656 107858 384514 27.36 17.95

2010-11 335550 132741 468291 21.79 23.07

2011-12 396158 114871 511029 9.13 -13.46

2012-13 597139 155349 752488 47.25 35.24

Average Growth Rate 15.88 14.94

Source: NABARD Annual Reports 1.6 Farmer’s Club Programme of NABARD

1.6 Realising the complex issues and challenges that beset the rural sector, NABARD, soon after its formation, launched the “Vikas Volunteer Vahini (VVV)” programme in November 1982 to propagate the philosophy of ‘Development through Credit’ enunciating five principles (Pancha Sutras) among farmers’:


4

1.6.1 The five principles are: Credit must be used in accordance with the most suitable methods of science

and technology.

The terms and conditions of credit must be fully respected.

Work must be done with skill so as to increase production and productivity.

A part of the additional income created by credit must be saved.

Loan instalments must be repaid in time and regularly so as to recycle credit. 1.6.2 The “VVV Programme” was rechristened as “Farmers’’ Club (FC) Programme” in 2005 by revisiting its earlier mission. Even after 32 years, the objective of the programme i.e. “Development through credit, technology transfer, awareness and capacity building” appears to be more relevant than ever. Throughout the long journey, farmers’ clubs have been contributing their bit both, to the farmer community and also to the Bank Branches. A few important benefits achieved by the farmers’ clubs formed by NABARD are enumerated below:-

The Clubs lead to better Banker-Borrower relationship in the area and helped in mobilisation of deposits.

Played a catalytic role in increasing credit flow and diversification of lending and generation of new business avenues.

Facilitated recoveries and contributed to decline in the non-performing assets.

Created awareness about government programmes, new technologies and marketing avenues for the farmers’.

Were instrumental in socio economic development of the village through certain social welfare measures like free Eye Check-up Camp, Animal Health Care Camp, Mass Vaccination camp, community works like road, check-dams, afforestation, etc.

Enhanced bargaining power through bulk purchase of inputs and marketing of their produce in the open market.

1.6.3 Since 1982, large number of farmers’ clubs were supported by NABARD through various banks and voluntary organizations. As on 31 March, 2014 there were about 1.43.lakh farmers’ clubs in the country. Farmers’ exposure visits, meet with expert programmes, meetings, discussions, collaborations etc., have helped in adoption of technology, availing of credit from banks, convergence with government departments etc,. NABARD also has been felicitating the best performing farmer’s clubs with a view


5

to encouraging them in supporting the farming community. Table 1.4: State-wise and Year-wise Status of Formation of Farmers’ Clubs (FC)

Sl No.

State/UT FC formed during the year Total no. of FC as

on 31.3.14 2009-10

2010-11

2011-12

2012-13

2013-14

1 Andaman & Nicobar 17 4 45 28

16 163

2 Andhra Pradesh 1106 1203 2004 2106 2063 11523

3 Arunachal Pradesh 113 137 44 50 10 395

4 Assam 138 352 321 188 252 1862

5 Bihar 460 1060 1300 1400 1502 7570

6 Chhattisgarh 607 602 457 777 370 3677

7 Delhi 6 5 5 1 0 25

8 Goa 9 24 6 11 10 94

9 Gujarat 613 901 1755 1100 561 7590

10 Haryana 140 284 303 350 400 2168

11 Himachal Pradesh 431 612 555 475 222 2819

12 J & K 110 69 77 151 95 622

13 Jharkhand 653 928 1015 1105 1102 5902

14 Karnataka 782 1011 1300 1417 838 9760

15 Kerala 213 225 236 258 248 2103

16 Madhya Pradesh 1969 2401 1256 1508 750 9965

17 Maharashtra 1116 2022 2409 2524 1057 11834

18 Manipur 54 39 32 47 17 224

19 Meghalaya 54 55 63 57 102 386

20 Mizoram 12 21 22 30 11 167

21 Nagaland 34 78 81 5 12 224

22 Orissa 1836 2233 2311 2177 1552 11648

23 Punjab 208 325 482 561 302 2486

24 Rajasthan 1005 1515 1717 915 817 8046

25 Sikkim 72 143 100 60 21 546

26 Tamil Nadu 712 926 1126 1407 701 7095

27 Tripura 49 12 30 4 16 265

28 Uttar Pradesh 3045 3542 4003 4682 2000 24117

29 Uttarakhand 301 404 551 508 514 2926

30 West Bengal 725 770 1637 900 718 6830

Total : 16590 21903 25243 24802 16279 143032 Source: NABARD, FSDD, Head Office Mumbai


6

1.6.4. During 2013-14, 16,279 new Farmers’ Clubs (FCs), were formed taking the total number of Farmers’ Clubs across the country to 1.43 lakh, with membership in the range of 15 to 20 per club. Apart from facilitating farmers’ in accessing credit, extension services, technology and markets, some Farmers’' Clubs function as Self Help Promot-ing Institutions (SHPIs) and Business Facilitators/ Business Correspondents. There have been attempts to upgrade the Farmers’ Clubs into Farmers’ Federations and further upgrade them into Producers’ Organization.

1.6.5. Despite the tremendous positive impact, the stand-alone farmers’ groups face many constraints and challenges limiting their service capacity, bargaining power and even hindering and/or endangering their sustainability. In some parts of the country Farmers’ Clubs, with the support of NGOs, began organizing themselves into multilevel institutions like Farmers’ Club Federations (FCF) at block, district and state level. As on 31 March, 2014, there were 106 Federations of Farmers’ Clubs formed in 14 States. 1.6.6. Most of the federations of Farmers’ Clubs are in the nascent stage of develop-ment. Many of them are still in a process of identifying their role. However, some fed-erations have already developed to successful institutions as producer’s organization. Developing producer’s organizations in good numbers is also a thrust area for NABARD. Research has shown that productivity of small farms can be substantially increased through use of technology, mechanization and better support systems. Focus should be on cropping systems and on aggregation of small and marginal farmers’ through development of farmer producer organizations, creating value chain and providing market linkages. Existing institutions of farmers’ like the farmers’ clubs and federations of farmers’ club can be leveraged to establish producer organizations in noticeable scale. 1.6.7. It has been established that due to continuous fragmentation, the farm holdings are not economically viable. They are also unable to realize good value from their marketable surplus by individually selling their produce. In many areas of the country it is observed that at the peak cultivation season there is a shortage of inputs and similarly at the harvesting time there is fall in prices, affecting the profitability. Through better collectives, farmers can utilize economy of scale to procure inputs at a lower price, and gain more selling power for their produce/product. Forming a producer organization can also provide access to timely and adequate finance, build capacity and provide linkages to markets. Keeping this in view to support the producers’ NABARD set up a separate fund titled "Producer Organization Development Fund" (PODF) to tackle the issues of non-availability of timely credit, capacity building of producers’ & strengthening of the Producer Organizations and market tie-ups.

Chapter 2 Study Objectives and Methodology

7


2.1 Introduction Despite existence of farmers’ clubs since last four decades, (many clubs have done good work on agricultural technology dissemination), no significant economic activities have been undertaken by these clubs. Of late, some of these farmers’ club federations have ventured into economic activities to derive benefit of economy of scale through aggre-gation. Few federations have promoted producer organizations. Therefore, it was felt that it is the most opportune time to study the models and processes as to how the federations can possibly transform into producer organizations. The Govt of India has proposed in the budget for the year 2014-15 to promote 2000 Producer organization over a period of next two years. Since few years, SFAC is promoting Farmers’ Producer Organizations (FPO) mainly through NGOs to ensure profitability to producer collec-tives. Transformation of farmers’ club federations into producer organizations will build on the social mobilization of farmers’ that has already taken place. The federations will thus require less hand-holding support for promoting POs compared to any other in-terventions. One such successful intervention was supported by NABARD in Bilaspur district of Chhattisgarh. It was felt that there is an opportunity to document the pro-cesses, best practices and experiences of such successful institutions. All stakeholders can then learn from these successful models and scale up transformation of Farmers’ Club federations to Producer Organizations. With this in view, it was decided to take up a study to understand the working of a Farmers’ Club Federations as Producer Or-ganization in Bilaspur district of Chhattisgarh State. The farmers’ federations and farm-ers’ producer organization was supported by NABARD under its PODF Scheme during 2012-13 to 2013-14. 2.2 Objectives of the study: The broad objectives of the study were to

1. Understand the process of evolution of Farmers’ Clubs into Farmers’ Federations

and the Farmers’ Federation into Producer Organizations; 2. Understanding of Farmers’ club Federations, their role and functions, their

performance and sustainability; 3. Documenting the processes for transforming Farmers’ Clubs to Producer

Organisations; 4. Understanding the key stakeholders' roles and responsibilities, legal,

institutional and regulatory framework and support systems necessary for such transformation;

5. Examining appropriate models and developing a case study;


8

2.3 Study Team: The study was undertaken by S/Shri Maheswar Sahoo and K I Shariff DGMs/Faculty Members of Banker’s Institute of Rural Development, Lucknow along with substantial inputs from Shri Kamal Kant Pattnaik, District Development Manager, NABARD, Bilaspur district, Chhattisgarh. The field visits were undertaken from 04 to 06 September, 2014 in Bilaspur and Mungeli districts. 2.4 Study Area: In 2001 when Chhattisgarh State was carved out of Madhya Pradesh, Mungeli was a part of Bilaspur district. Subsequently, Bilaspur district was bifurcated in to two districts i.e. Bilaspur and Mungeli. Many of the farmers’ clubs were formed by banks through the support of NABARD prior to the bifurcation of the district. In the combined Bilaspur district there were 207 farmers’ clubs. Most of the farmers’ clubs were formed during 2002 to 2009.However, these clubs were not organized. Chhattisgarh RO, and the DDM Bilaspur of NABARD held a series of discussions with the farmers’ clubs with a view to organize them. After detailed discussions the clubs were federated into four federations and the federations were further elevated and a Producer Organization was formed. Three Federations were identified for study, two federations from Bilaspur district and one from Mungeli district. Since the study objective was to establish the efficacy of Farmers’ Federations, the discussions were held mainly with the Federations and Producer Organization. A few focused group discussions were also held with members of the farmers’ clubs. 2.5 Methodology: 2.5.1 Review of literature: Many researchers have studied the impact of farmers’ club on its members, agricultural productivity and access to finance etc. It has been found that more than half of the members of farmers’ clubs hold small and marginal farms (Memon et al, 2012). Three-fourth members felt that the forum provided useful training, while the same number communicated with others in the forum on matters relating to agriculture and allied activities (peer to peer knowledge transfer) at least once a week. Thus, farmers’ clubs have become efficient institutions for agricultural innovation dissemination. A study by IDS observed that “the positive impact of farmers’ clubs has been to include tenant farmers’ and sharecroppers wherever possible”, emphasizing the inclusive role of farmers’ club (IDS, 2010). Farmers’ clubs have also generated considerable collateral benefits to farmers’ like formation of SHGs leading to reducing moneylenders’ impact and increasing health awareness (Goswami, 2010). While studying the farmers’ clubs as model of empowerment, Rosenberg found that most of the clubs drifted into inactivity once the three-year handholding support extended by NABARD came to an end (Rosenberg, 2013). She quotes one NGO that, “the clubs may be good vehicles for increasing farmers’ access to information and credit, but do not actively help farmers’ aggregate produce and consolidate market


9

power”. There seems an urgent need to innovate on the structure of farmers’ club so that this need of farmers’ is adequately addressed. There is however no published literature on farmers’ club graduating to Producer organizations which can effectively handle the issue of aggregation and marketing for the farmers’. 2.5.2 Secondary Data: Substantial data is available on farmers’ club in NABARD Annual Reports. NABARD also publishes report on status of farmers’ club programme in India. The evaluation undertaken by IIM Lucknow in 2008 had come out with suggestions to initiate dialogue with agribusiness companies so that they can use the forum for marketing inputs and outputs. The study also recommended to create massive awareness and capacity building of the clubs, NGOs, banks and Government department so that the philosophy of development through credit catches popular imagination like the SHG movement. This has been reiterated by another study in 2010 by IDS, Jaipur. Unpublished data collected from the Regional Office of NABARD at Raipur and from the DDM NABARD Bilaspur on farmers’ club status in the area have been used in finalizing the report. 2.5.3 Data Collection and Analysis: During field visit, primary data was collected from the farmers’ club federations, the kiosk operators and the Kisaan Beej Producer organization. There are two farmer club federations in Bilaspur district and one in the neighbouring Mungeli district. The study team visited all the three Federations. Out of 16 kiosks being operated, the study team visited four of them. For obtaining other information, semi-structured interviews with key persons of Farmers’ Club, Federations and Producer Organizations were conducted. Five Focus Group Discussions were undertaken with members of farmers’ clubs, kiosk users, federations and producer organizations which yielded useful information on organization and management, processes, members’ involvement and sharing of benefits. Besides, discussions with the CEO, Zilla Panchayat, the officers of Agriculture Department, Bankers and the Lead District Manager provided useful insight into the institutional mechanism. The outputs from the field visit mainly consisted of information in the nature of impressions and attitudes which cannot be quantified. Therefore, the feedbacks have been used to document the experience and best practices. Quantified data obtained relate to the operations of the kiosks and the producer organization. These have been used in the narrative while documenting the processes. 2.6. About the Districts: 2.6.1 Mungeli was a part of Bilaspur district and as such most of the features are similar, a common description is given in the report to make it concise. There were 10 blocks in the erstwhile Bilaspur district. After bifurcation, 7 blocks are in Bilaspur and 3 blocks are in Mungeli district. Bilaspur including Mungeli district is situated between 21º47' and 23º8' north latitudes and 81º14' and 83º15' east latitudes. The district is


10

bounded by Koria district on the north, Anuppur District and Dindori District of Madhya Pradesh State on the West, Kawardha district of Chhattisgarh on the southwest, Durg and Raipur of Chhattisgarh on the south and Korba and Janjgir-Champa on the east.

2.6.2 Climate: The study area receives rainfall mainly from the southwest monsoon. It sets in the 3 rd or 4th week of June and continues till mid-August/ September with the heaviest showers being in the months of July and August. The average annual rainfall for the district is around 1100 mm. The months of July and August are the heaviest rainfall months and nearly 95% of the annual rainfall is received during June to September months. The district experiences a hot and semi-humid climate. The annual temperature varies from 9.2° C to 42.1° C. The hottest months are May and June and the minimum temperature is observed in the months of December and January. 2.6.3 Topography: Topographically the study area can be divided into two parts. The first part consists of the high plateau area covering north and central part of the district (Lormi, Kota, Gaurella, Pendra and Marwahi blocks). Around 38.78% of the total area is covered by forest. The southern part of the district is a plain with gentle slopes covering an area of 48% of the total geographical area of the district. The land is very fertile and is mostly used for the agriculture purposes with few surface irrigation facilities. Most of the farmers clubs are located in these fertile areas. 2.6.4 Soils: In general it can be said that the district is covered by red gravely soils, red sandy soils, lateritic soils, red and yellow soils and black soils. Alfisol soils are fertile

Map of Chhattisgarh with Bilaspur Dist Map of India with Chhattisgarh State

http://en.wikipedia.org/wiki/Anuppur_District

http://en.wikipedia.org/wiki/Dindori_District

http://en.wikipedia.org/wiki/Madhya_Pradesh

http://en.wikipedia.org/wiki/Madhya_Pradesh

http://en.wikipedia.org/wiki/Kawardha_District

http://en.wikipedia.org/wiki/Durg_District

http://en.wikipedia.org/wiki/Raipur_District

http://en.wikipedia.org/wiki/Korba_District

http://en.wikipedia.org/wiki/Janjgir-Champa

http://en.wikipedia.org/wiki/Janjgir-Champa


11

leached soils found with a thick humus layer. These soils cover maximum area in the northern and central parts of the district and highly suitable for agriculture. 2.6.5 The district profile of Bilaspur and Mungeli are given in the Table below:-

S No Particulars Bilaspur Mungeli

1 Geographical Area in ha. 581849 275036

2 Net Cultivated Area in ha. 234616 (40.32% of Geo. area)

127906 (46.5% of Geo. Area)

3 Gross Cultivated Area in ha. 2977351 224186

4 Net Irrigated area in ha. 151620 (64.62% of net

cultivated area)

73822 (57.71% of net

cultivated area)

5 Gross Irrigated Area in ha. 201408 92656

6 Area under canals in ha. 48% (of net irrigated area)

55.51% (of net irrigated

area)

7 Area under Tube wells 34.0% (of net irrigated area)

37.0 % (of net irrigated

area)

8 Main Crops Paddy, Wheat, Soya bean, Maize, Pulses

Paddy, Wheat, Soya bean, Pulses,

9 Marginal Farmers’ 80% NA

Small Farmers’ 13% NA

10 No of banks 35 16

11 No of Branches 176 37

12 No of Kiosks 106 Both in Bilaspur and Mungeli (Source: Dist Report of CGWB, GOI and PLP of Bilaspur & Mungeli districts prepared by NABARD)

2.7.4 Irrigation Facilities: There are 3 medium and 117 small irrigation projects in Bilaspur and Mungeli districts. The 3 medium irrigation projects are Khunj, Ghongha and Maniyari. Lormi, Mungeli, Masturi and Bilaspur blocks are the major beneficiaries of these projects. The small projects consist of small reservoirs constructed across the nalas, diversion canals, ponds and lift irrigation systems. Kota block has more small irrigation projects. Nearly 38.65% of the net sown area is irrigated by all sources. Irrigation by surface water covers almost 85.7% of the net irrigated area and parts of Bilaspur, Masturi, Mungeli and Lormi blocks are covered by canal irrigation system. These irrigation facilities supported by bore wells in tail end areas contribute to the development of agriculture and play a major role in the sustainability of the interventions of farmers clubs, their federations and the Producer Organization.

Chapter 3 The Process: Transformation of Farmers

12

Chapter 3 The Process: Transformation of Farmers’

Genesis: 3.1 Chhattisgarh is among the few states in India that have recorded impressive growth in agriculture in recent years. Development of farmers’’ own institutions catering to various needs of the farmers’ has also kept pace with the agricultural growth. As on 30 September 2014, the state had 3,679 farmers’ clubs. In fourteen districts, the number of such clubs exceeds 100. Besides, there are eight federations of farmers’ clubs in the state; five in Mahasamund, 2 in Bilaspur and one in Mungeli district.

Table 3.1: District-wise Farmers’ Clubs in Chhattisgarh as on 30/09/14

Sl No. District No. of FCs as on 30/09/14

1 Raipur 242

2 Balodabazar 29

3 Gariyaband 3

4 Mahasamund 230

5 Dhamtari 199

6 Durg 262

7 Balod 19

8 Bemetara 1

9 Rajnandgaon 485

10 Kawardha 101

11 Bastar 208

12 Dantewada 34

13 Bijapur 1

15 Kondagaon 6

16 Narayanpur 70

17 Kanker 188

18 Bilaspur 276

19 Mungeli 24

20 Jhanjgir- Champa 218

21 Korba 202

22 Raigarh 247

23 Jashpur 153

24 Surguja 396

25 Surajpur 1

26 Koriya 84

Total 3679 (Source: NABARD Chhattisgarh RO)


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In Bilaspur and Mungeli districts (the study area), there are 300 FCs, of which 201 are active. Majority of the farmer’ clubs (129 clubs) were formed by the Regional Rural Bank (Gramina Bank). Other promoting institutions include Chhattisgarh Agricon Samiti (30), CARMDAKSH (12), SBI (12), ARDB (8) and IFFDC (5). While all were active in the initial three years, they slipped into dormancy through inaction and non-availability of hand-holding support. The clubs did not have any vision or any roadmap for the future. 3.2 The Chhattisgarh R O and DDM Bilaspur were keen to make the farmer’ clubs a sustainable entity and felt the need to federate the clubs to a higher tier so as to make the entire farmer’ clubs programme sustainable and the organization a viable model. With this in view, the farmer’ clubs were federated and four farmer’ federations were formed in the year 2012. All the four farmer’ federations were registered under ‘Chhattisgarh Society Registrikaran Adhiniyam, 1973’ in different months during the year 2012. Subsequently the Arpanchal Krishak Mahasangh was merged with Baigababa Krishak Mahasangh as the Mahasangh was not very active and having only a few farmer’ clubs. There were thus three federations working at the time of field visit. The details of the Mahasangh, area of their operation, number of famers clubs affiliated to each Mahasangh etc., are given in the table below:-

Table 3.2: Farmers’ Club Federations in Bilaspur and Mungeli

S No

Name of Farmers’ Club

Federation.

Area of Operation No of Farmers’

Clubs

Regis- tration

No.

Date of registrati

on

1 Baigababa Krishak

Mahasngh

Kota & Takhatpur

Blocks of Bilaspur

District

71

16044 28 Feb 12

2 Arpanchal Krishak

Mahasangh

Bilha & Masturi

Blocks of Bilaspur

District

16224 02 Apr 12

3

Maa Narmada

Krishak

Mahasngh

Pendra, Gourela &

Marwahi blocks of

Bilaspur Dist

73 16045 28 Feb 12

4 Jai Mitan Krishak

Mahasangh

Mungeli, Patharia &

Lormi blocks of

Mungeli District

57 16174 23 Mar 12

The team visited all the three Mahasanghs and also one or two Kiosks operated by the


14

Mahasangh during the visit. The team had detailed discussions with the Farmers’ clubs, farmer’ federations and also with the operators of the kiosks and a few beneficiaries who visited the Kiosks. 3.3 Time Line in transformation of Farmers’ Clubs to Producer Organization: The various events that occurred in the transformation of farmer’ clubs could be depicted in a graphic as under:

3.4 Financial Literacy Activity: To promote financial literacy among the farmers’ and the school children, NABARD Chhattisgarh RO engaged the Farmers’ Club Federations and provided financial assistance. Initially 10 awareness and 20 quiz programmes were sanctioned for Bilaspur and Mungeli districts organized by the Farmers’’ Club Federations (FCF). As the federations and farmers’ clubs are village level bodies and have local presence and acceptance, they could mobilize children and their parents in good numbers. The programmes on important issue of financial inclusion was organized successfully by the Federations. Looking at the encouraging results, the RO sanctioned more awareness


15

and quiz programmes at different times thereafter. The federations were paid Rs.2500/ for organizing a quiz programme in school and Rs.5000/- for conducting an awareness programme in the village. In many of these programmes, Bankers and LDM, DDM NABARD were also in attendance. This provided much needed scope for interaction between the DDM, Farmers’ Federation, bank official and the government officials which paved the way for furtherance of the task of making the federation’s financially sustainable entities. Altogether, 130 programmes were organized by the FCFs with financial support from NABARD. The resource fees so collected from these programmes was retained by the FCFs, and the resource persons handled awareness sessions free of cost. Besides, the FCF collected contribution (membership fee) from the members of farmers’ clubs which provided the initial corpus to the federations.

Scanned Copy of the Certificate issued by the Registrar of Societies to the

Federation

Financial Literacy Programmes conducted by the Farmers federations


16

3.5 Agricultural extension: With active support of the Agriculture Department in the district, the federations were involved in establishing field demonstration plots for cultivation of paddy (300 ha), chana (500 ha) and green gram (500 ha). The farmers’ raising crops in demonstration plots received financial assistance from the Department. Similarly, the Agriculture Department also encouraged the federations to establish input retail outlets for selling inputs like seeds, pesticides and fertilizers by providing them with retail licenses.

3.6 Business Correspondent of SBI (Kiosk) Due to greater acceptability of the federations in the villages, SBI approved opening of BCs/ Kiosks through federations to achieve financial inclusion. This was facilitated by e NABARD RO, DDM, LDM and the Regional Office of SBI at Bilaspur. Based on the recommendation of the federation, the BC/Kiosk was allotted by SBI in the name of a leader of the federation. As per rules, the BC/Kiosk has to be allotted only to individuals and not to institutions. The federations entered into an agreement with the BC/Kiosk owner/operator for sharing a part of the fee that SBI will pay for services rendered by the BC/Kiosk. The Kiosks were working efficiently as Business Correspondents (BC) of SBI and providing various financial services to the villagers. As on September 2014, there were 16 kiosks working through three farmer’ federations and another 4 Kiosks were already sanctioned and yet to be opened. SBI is planning to establish, 10 more such Kiosks at other village centres during the next one year. The location of the existing Kiosks are given below:-

Agriculture Dept. distributing cheques District Collector Addressing the Farmers


17

Table 3.3: Financial Inclusion Kiosks operated by Federations in Bilaspur and Mungeli

S No

Name of Farmers’ Club Federation.

No of Kiosks

1 Baigababa Krishak

Mahasangh 8 Kiosks (Established at Risda, Bhilai Kota, Kenda,

Ratnapur, Belthora, Sakri and Takhatpur) 2

Arpanchal Krishak

Mahasangh

3 Maa Narmada Krishak

Mahasangh

6 Kiosks (established at Gorella, Kodhri, Pendra,

Kotmi, Semra and Marwahi)

4 Jai Mitan Krishak

Mahasangh 2 ( Established at Lormi and Mungeli

3.7 The federations have 16 Kiosks all opened by SBI and considering a sample size of 25%, the team visited 4 Kiosks. 2 kiosks, pertaining to Baigababa Krishak Mahasangh and 1 each from Maa Narmada and Jai Mittan Krishak Sangh were visited by the study team. The Kiosks were attached to the nearest branch and worked under the guidance of the concerned Br Manager. The Br Manager supervises and monitors the work of the Kiosk (BC). The Kiosks are in the name of the President or Secretary of the federation. In some cases, where the number of kiosks are more than one, the Kiosks were out sourced to other members of the federation but the control is with the federation. As the norms of the bank, BC is to be in the name of an individual and not in the name of the federations and therefore, licences for the BCs were given in the names of individuals.

3.8 At present, the Kiosks are mainly involved in providing banking services like, opening of savings bank accounts, recurring deposit accounts, acceptance of deposits and payment towards withdrawal. Besides the above, Kiosks are also dispensing old age pensions, student scholarships, MNREGS transactions and other social sector funds on behalf of the government. The present monthly income (Rs 8000 to Rs 14,000) of the Kiosk is mainly from banking services. The expenditure involved was salary to the operator, rent of the premises, interest on the initial investment etc., which is about Rs.8000 to 10,000 (Salary of the operator- Rs.4000 to Rs 5000, Premises rent-about Rs.2000 to Rs 3000). It was also observed that there were delays up to 3 months in payment of commission to the Kiosks/ federation. The payment system needs improvement and payment should be made on monthly basis within the first fortnight. Otherwise, the Kiosk operators, federations will lose interest and the entire system may collapse.


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3.9 The BCs/ Kiosks are working directly with SBI and under the Corporate BC. The commission details of the BCs are given in the table below:-

Table 3.4: Banking Transaction Limits in Kiosks

Particulars -----> Deposits Withdrawal Opening of SB a/c

Opening of RD a/c

Commissions ---> 0.85 paise per transaction

Rs 1.0 per transaction

Rs 20.00 Rs 20.00

Limit for account holders

Rs 10,000 in one day

Rs 10,000 in one day

Limit of BC/Kiosk Rs 1,00,000 per day

Deposit paid by the federation

Rs. 1,00,000

Investment in infrastructure- Laptop, Printer, tables & chairs etc.,

Rs 50,000

Monthly Income Rs 8,000 to Rs 14,000 depending upon number of accounts and no of transactions.

3.10 Kiosk as Multi Service Centre (MSC) Present level of income from banking services is not sufficient to sustain the Kiosk in the long run. Besides, the farmers’ need inputs and services preferably from the same outlet. Therefore, the Kiosks are better placed to take up multiple services like input retailing (seed, fertilizer and pesticides), custom hiring, insurance, soil and water testing, and host of e-governance services including online ticketing etc. All the services which are essential to the farming/ village community should be addressed by the Kiosks of the federations and thereby keeping the kiosks viable and the federations active and relevant to members. In short, the Kiosks should become a ‘single window’ for all the agricultural and banking related services of the members of the FCFs. One federation has already started work in this direction with the establishment of out-lets selling seeds and contemplating to take up selling of fertilizers and pesticides. All the federations will have to obtain retail license for all their kiosks to sell seed, fertilizer and pesticide.


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Table 3.5: Scale of Operations of BC Kiosks

S No

Particulars Baigababa & Arpanchal

Krishak Mahasangh

Maa Narmada

Krishak

Mahasangh

Jai Mitan

Krishak

Mahasangh

1 Kiosks Visited

during the study.

Kenda Kota Pendra Lormi

2

No of Accounts SB a/c- 3500

RD- 25

SBa/c- 5300

RD- 98

SB a/cs- 2956

RD- a/cs- 105

SB a/cs- 4038

RD a/cs- 148

3 Deposits/day Rs 30 to 40,000 Rs 60 to

70000

Rs 75 to 80,000 Rs 45 to50,000

4 Withdrawals/ day Rs 50 to 60000 Rs 55 to

70000

Rs 70 to 85,000 Rs 40 to 50000

5

Charges- Withdrawal- Rs 0.85 for each withdrawal

Deposit- Rs 1.00- for each deposit

Opening R D account- Rs 20

Opening SB a/c Rs 20

6

Schemes where

money is routed

through Kiosk

1.Indira Gandhi Vishesh Vridha Pension

2. Vridha Pension.

3.Vidhwa Pension

4. Samajik Suraksha Pension.

5 Sukhad Sahara

6 MNREGS

7 Scholarships

7

Other Business

activities of the

Kiosk

1. Seeds not yet

started.

Planning to

start seed,

fertilizer and

pesticide sales

1. Seeds not

yet started.

Planning to

start seed,

fertilizer and

pesticide sales

1. Seeds-

Sold 5207 bags at

a cost of

Rs 23,98,330;

Planning to start

fertilizer and

pesticide sales.

1. Seeds- Sold

800 bags at a

cost of Rs

3,68,500.

Planning to start

fertilizer,

general shop &

pesticide sales.

8

Commission

Received from

seeds sale

Nil Nil Rs 96,000 Rs12000

9

Av. Monthly

income from

Banking Services

Rs 8000 Rs 10,000 Rs 14,000 Rs 12000


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3.11 Graduation of Farmers Federations (FCF) to Producers Organization (PO): The FCFs received resource fee for financial literacy programmes from NABARD. They also collected monthly contributions from members. This led to building up of a small corpus of between Rs 1 to 2 lakh with the federations. Continuous engagement with agriculture department (demo plots, seed retailing) encouraged these institutions to seek deeper involvement. Besides, interaction with NABARD, bankers, government officers, LDM and other representative of other important institutions during the literacy programs boosted the confidence of the FCFs to seek more avenues for collaboration. Many of the leaders of the FCFs are also registered individually with Agriculture Department as seed farmers’. Each year, they receive foundation seeds to produce certified seeds which is procured by the State Seed Corporation for processing. Agriculture Department then arranges for retailing of certified seeds thorough the FCFs. The FCFs realized that there may be some business sense in establishing their own seed processing facility. This would be a step forward along the seed value chain besides serving the needs of its famer members.

Organogram of the Farmers’ Producer Organization

3.12 With the experience of engaging with the banks, government depts., seed certifying agencies, besides active involvement with its own members who are seed


21

producers or the users of certified seed, it was natural that the federation should graduate to next level of organization which can work as a business entity on behalf of the farmers’. This breakthrough came in the form of ‘Kisaan Beej’ a ‘Producer Organization’ formed by a group of farmers’ from Arpanchal Farmers’ Club Federation. The PO was registered under ‘Chhattisgarh Autonomous Cooperative Act 1999’, which allows the farmers’ group to work as a business entity and earn profits. The PO is anchoring the programme of producing & marketing of certified seeds in paddy (five varieties), wheat, soya bean, mustard, gram, arhar, mung and tiwda. 3.13 The cropping pattern of the districts indicates that more than 80 percent of the net cultivated area is used for paddy both during Khariff and Rabi. The seed production level in the districts caters to only 35% of the local demand. Besides this, there is also demand from the adjoining districts. Both Bilaspur and Mungeli have assured sources of irrigation (both surface and ground water) besides adequate monsoon rainfall exceeding 1000 mm which takes care of the Khariff crop to a large extent. Considering the potential, the PO is concentrating on cultivation of certified seed of paddy by the members and procuring the seed and after cleaning, grading, packaging and obtaining certification the seed is sold to the farmers’ for planting. While some members of the FCFs are seed Producers, all of them are users of certified seed. Local production and distribution of certified seed reduced the transportation cost and resulted in reduced cost of cultivation besides saving time. 3.14 During 2013-14, 39 members of the PO were registered with the Seed Certifying Authority of the State Govt. to produce certified seed (25 farmers’ in 153 ha during Khariff and 14 farmers’ in 106 ha during Rabi). The total production of certified seed by these members during the year was 656 MT in the Khariff and 394 MT in Rabi. The Total seed produced by these farmers’ were procured by the PO at a cost of Rs. 73.32 lakh. The PO also channelized seed subsidy of the state government to the seed growing farmers. Retail price of certified seed is decided by the State Government each year, which is usually less than the MSP for paddy. Therefore, subsidy is provided to seed farmers’ to encourage them to sell the seed to seed procurement institutions (and not in the mandis). Similarly, to encourage farmers’ to use certified seeds for planting, the Government provides subsidy to seed processing institutions so that quality seed can be made available to farmers’ at reasonable rate. For the current year i.e. 2014-15, the PO has a programme to procure certified seed of about 2700 MT from its members. It has so far contracted seed-growing farmers’ for 380 ha paddy for Khariff and 195 ha paddy for Rabi. 3.15 The PO has established infrastructure facilities for cleaning, grading, packaging, certification and storage of certified seed. The seed is sold through the outlets of farmer’ federations, established adjoining the BC Kiosks. The Govt of Chhattisgarh has


22

a policy to provide incentive to the farmer’ producing seeds; so the farmers’ are mobilized by the farmer’ club, federation and the PO to opt for seed production. The seed is procured by the PO. There is no monopoly buyer for seed. The seed-grower may choose to sell the seed to the State Seed Corporation (which is a PSU), if he is not satisfied with the terms and conditions of the PO. In reality, most seed-growers would prefer not to sell their produce to the PSU if there are alternatives. Given the bureaucratic attitude, ham-handed behaviour, arbitrariness in weighment, and delay in payment to seed-growers by the PSU, this attitude is not surprising. The PO has found a niche market for its services among this discontented farmers’. Its capacity to handle volume restricts its market potential.

Sh.A K Sahoo, CGM, Chhattisgarh RO inaugurating the cleaning and grading unit supported under PODF

Processed and Packaged seed and Seed out lets with the Kiosk of federations to sell the seed

3.16 As the farmers’ need an assurance from the PO for procurement of seeds and similarly the PO also has to have assured supply of seeds, PO provides advance to the farmers’ for inputs and consumption. To support the PO for on lending to farmers,


23

NABARD provided financial assistance of Rs.1.943 crore (Rs 1.85 crore as loan & Rs.9.43 lakh as grant) on 23 Sep 2013. The loan was for procurement of seeds, creation of infrastructure for cleaning, grading, packaging and storage, holding costs till seeds are sold, and overheads. The grant support was extended for capacity building and training etc. As at the end of May 2014, loan amount of Rs. 1.74 crore had been disbursed. Discussions with the office bearers of PO revealed that they plan to seek higher sanctions from NABARD for the enhanced business programme during 2014-15. 3.17 Seed replacement Rate: The seed replacement of important crops in Chhattisgarh state lags far behind the national average for most of the crops. The table gives the details of SRR in Chhattisgarh State. The SRR data indicates that from the year 2009 on there has been considerable improvement in seed replacement. The rates of major crops like wheat, paddy, maize, mustard are comparable with the all India average figures, however, when compared with a few states like Maharashtra, Andhra Pradesh, Tamilanadu and Punjab, the SRR of Chhattisgarh is lagging behind in few specific crops.

Table 3.6: SRR (%) of important crops in Chhattisgarh from 2007 to 2013

Crop 2007 2008 2009 2010 2011 2012 2013

Wheat 9.5 26.42 26.59 36.42 33.71 34.21 35.18

Paddy 7.65 13.81 20.39 28.41 34.33 36.36 40.23

Maize (hybrid) 11.50 12.07 16.13 18.03 21.23 27.70 51.54

Gram (chana) 7.00 11.88 13.82 14.95 15.90 19.07 20.45

Black gram (urad) 1.36 3.27 3.37 6.91 8.05 9.18 14.29

Green gram (moong)

20.13 12.21 10.44 1.83 3.65 6.33 33.07

Arhar 1.85 6.87 8.45 17.72 20.78 12.36 23.87

Groundnut 1.70 3.07 3.90 2.42 3.37 3.59 4.25

Rapeseed/Mustard 24.00 25.85 30.43 46.90 24.76 25.20 29.93

Soyabean 37.62 46.90 62.13 57.92 64.44 66.23 68.33 Source: seednet.in website of Ministry of Agriculture, Govt of India

3.18 Seed Production Cycle: Classes of Seeds: Four main classes of seeds are defined by the A Association of Official Seed Certification Agency. They are

i. Nucleus Seeds ii. Breeder Seeds

iii. Foundation Seeds iv. Certified Seeds


24

i) Nucleus Seeds: Nucleus seeds are the basic seed class for seed production. These seeds are maintained by the breeder for further multiplication. It is produced under the direct supervision of the concerned plant breeder. It is produced based on the various crop multiplication techniques and methods. Nucleus seeds possess high percentage of genetic purity (100%). ii) Breeder Seeds: Breeder seeds are produced using nucleus seeds in the Research institutes or Universities under the supervision of a breeder. The entire production process will be monitored by the Scientists and Officers of the Seed Certification Department and by the representatives of the National Seed Corporation. The genetic purity of the breeder seeds is 100% and the tag provided for the breeder seed is golden yellow in colour. iii) Foundation Seeds: Foundation seeds are produced from the breeder seeds. It is produced at Government farms or by Private Seed Producer. Its production can also be taken up by the farmers’ by getting suitable breeder seeds. Genetic purity of the foundation seed is 99.5% and its certification tag is white in colour. iv) Certified Seeds: Seeds produced from foundation seeds are known as certified seeds. The production of certified seeds is taken up by the National and State Seed Corporation, private seed companies and also by farmers’. The certified seeds should possess uniformity and purity as defined by the Department of Seed Certification. The genetic purity of the certified seeds is 99% and the Certification tag provided is blue in colour. 3.19 Seed Certification Procedures: The Seed Certification Department is the authorized body to manage the production, multiplication and monitoring of the seed quality. As per the Seed Act 1966, seed certification is voluntary. Seeds which are certified by the Seed Certification Agency are called certified seeds, which passes through both the field and seed standards as specified by the certification body. Seed standards are specified and uniform throughout the country, whereas the seed certification procedures and fee vary from one State to another State. The details mentioned in the following pages pertain to the State of Chhattisgarh. It may slightly vary in other States. The aim of the Seed Certification Department is to produce quality seeds of the crop varieties that are notified by the Central and State Governments and make them available to the farmers. The entire process of seed cultivation by farmers’, seed procurement, processing, certification, selling etc., is enumerated step by step in the following. 3.20 Steps Involved in Seed Certification


25

i. Application and Registration ii. Quality parameters - Field inspection

iii. Seed processing iv. Seed sample and seed analysis v. Tagging and sealing

3.20.1 Application & Registration of farmers’: The Certification Agency, Dept. of Agriculture, GOCG registers the farmers’ cultivating seeds. The farmers’ have to submit application to the department with land documents and register themselves by paying fee of Rs 300 per ha. The farmers’ clubs, federation and PO help the farmers’ in registration. The department provides foundation seed to the farmers’ and also conducts field monitoring of the plots from time to time to ensure scrupulous adherence to package of practices advised them for producing seed. Representatives of the certifying agency visit the field at least three times in a crop cycle, once at the time of planting, second at flowering stage and third at the time of harvest. This ensures that good quality of seeds are produced. Separate sowing reports are required for different crop varieties, different classes, and different stages. Separate sowing reports are required to be registered for the same crop variety if the seed production fields are separated by more than 50 meters, sowing or planting dates differ by more than 7 days and if the seed farm area exceeds 25 acres. The sowing report should reach the concerned Assistant Director of Seed Certification within 35 days from the date of sowing or 15 days before flowering whichever is earlier. In the case of transplanted crop the sowing report should be sent 15 days before flowering. 3.20.2 Quality parameters for Certification: Field Inspection: The objective of the field inspection is to check for the factors that may affect the genetic purity and physical health of the seeds. Field inspections are conducted by the Seed Certification Officer (SCO) to whom the specific seed farm has been allocated. The specific date of inspection and details of the seed farm will be intimated by the Seed Certification Officer through a copy of the sowing report sent to the farmer or the PO. Generally field inspections are carried out during the following growth stages of the crop. • Pre flowering stage • Flowering stage • Post flowering and Pre harvest stage • Harvest time


26

It was reported that as per existing norms, for each crop at least two field inspections should be conducted. Apart from the assigned field inspections, the Seed Certification Officer can visit the seed farm at any time during the crop growth stage. The following things are normally checked during field inspection. a. Inspection during pre-flowering stage • Verification of the location and area of the seed farm in the farm map as shown in the sowing report. • Verification of the seed source. • Verification of the acreage of the seed farm. • Verification of the uniform planting ratio. • Also guide the grower in identifying and removal of off-types. b. Inspection during flowering stage • Confirming the removal of off-types and proper rouging c. Inspection during post flowering / pre harvest stage • Confirming that the findings made in the previous inspections are taken care of. • Explaining to the grower about when and how to harvest the seed crop. d. Inspection during harvest stage • Verification of the maturity of the crop. • Guiding the grower in processing and handling techniques. 3.20.3 Seed Processing: It was reported that on harvesting, the seed is collected by the PO through federations or on its own. At the PO level, drying, cleaning and grading is done. The bags are arranged in lots with unique numbers, each lot containing 200 quintals. Lots are also stacked farmer-wise. 3.20.4 Seed sample and seed analysis: For quality assessment, from each farmer’ lot, 200 gm of seed is taken as sample. Quality assessment includes percentage of germination, moisture levels in the seed, proportion of foreign grains and purity of the seed. The approved standards followed in Chhattisgarh required that, the germination should be above 80%; moisture level should not be more than 13%; foreign material (seeds of other grains) should not be more than 0.2% i.e. 2 seeds in 1000 seeds; purity should be above 98% (soil particles should not be more than 2% in terms of weight); and damaged seed (insect-infested) should not be more than 0.2%. If the seed sample qualified the above standard, the certifying agency issued quality certificate in three copies, one for the farmer, one for PO and the third one for the HO of the agency.


27

If the germination is above 70 % but less than 80%, and/or foreign grain proportion is within 0.7%, re-grading is allowed. After re-grading, the sample must pass the quality criteria for certification. Failing this, the seed is rejected. 3.20.5 Tagging and sealing: After certification, the PO packages the seed in 30kg bags and sealed and the seed is being marketed under the brand name “Kisaan Beej”. The PO has the option to sell the certified seed directly to the farmers’, agriculture department, PACS or Seed Corporation. At present the PO is selling directly to the farmers’ through Federations as there is huge demand from the farmers’. The main reasons for demand are:

a. Assurance of quality, as the seed is procured from farmers’ PO, b. It is available at the door step of the farmer c. Immediate receipt of payment, as the farmers’ have availed advance almost to

the extent of 80%, and only 20% is the balance payment. 3.20.6 In case the seed is not approved, it is sent to PACS for government procurement where the PO gets the amount as per the MSP. The MSP for Paddy in Chhattisgarh during 2013-14 was Rs 1310.00 per quintal. If the seed is approved farmers’ get Rs 1310.00 MSP plus Rs 450 production charges and Rs 330 as bonus for seed cultivation. Thus, effective sale price per quintal of paddy seed was Rs 2090. Seed production subsidy and bonus to the farmers’ is routed through the PO. Similarly, for handling seed, the PO gets government subsidy of Rs. 740 per quintal of paddy seed (Rs 50 for production, Rs 500 for processing and distribution, and Rs 190 for storage). The expenditure involved was Rs 100 for transportation, Rs 450 for cleaning, grading, packaging and storage and interest on loan Rs 90, thus the total expenditure was about Rs 650 per quintal. The net profit per quintal was Rs 90 for the PO which goes towards administration, overhead and interest payments. 3.21 The PO was using the Kiosks opened by the farmers’ federation as outlet points for selling seeds. A commission of 4% was being given to federation on the total seed sales. Transportation charges are presently borne by the PO. For farmer’ federation which are operating Kiosks, it was an additional source for income taking kiosks closer to financial viability. Besides, by providing certified seeds to the farmers’ at their door step, it is also extending the much needed service to the farming community, most of whom are members of the farmers’ clubs. 3.22 Future Plans of PO: Discussions with the officials of PO revealed that it is going to upscale it’s operations in a steady manner in next 4 to 5 years. As indicated earlier for 2014-15, the PO is planning to procure about 2700 MT certified seeds. When compared to 2013-14, the increase is about 150 percent. The PO has a sound supporting structure in the form of farmers’ clubs, farmers’ federation and Kiosks. Therefore,


28

planning for a turnover of Rs 20.00 crore per annum in the next five years is feasible. 3.23 Replication of the Model: The model of PO with federations and farmer clubs at the ground level with Kiosks/outlets for inputs and services can be considered as sustainable for the following reasons:

It’s a farmer’ organization providing essential services to the farming community. Hence the acceptance level in the farming community is high. There is huge brand loyalty for the producer organisation. Depending upon the location, the exact commodity/input/service and scope for value addition will vary.

With renewed focus on financial inclusion, farmers’ clubs can act as BCs of banks, facilitated through their federations. This will ensure that farmers’ get both banking services and agricultural inputs and information at one place. The BC outlet in turn can act as the nodal point for convergence of services including e-governance.

The Kiosk/ input outlet is the most commonly visited place by the farmers. A business model for other products and services like micro insurance can be developed based on the foot-fall.

Local production, processing and use of certified seeds keeps the whole value chain within the district, and benefits accrue to the farmer members, both seed-producer and seed-buyers. Farmers’ will be attracted to use certified seed which has been produced in their own locality. This will enhance the seed replacement ratio, which in turn will increase crop productivity. For paddy, which is a major crop in the region, there is demand for supply of quality seed. As the PO and farmers gather more experience in Seed production, procurement, processing and use, diversifying into other crops will be easy and may be more profitable. The PO can easily upscale its seed business operations, provided it ensures quality and timely supply.

Providing banking services through kiosks to small customers is much less expensive than the brick and mortar model of delivery. It was leant informally that for SBI, a banking transaction in a branch costs Rs.80, while the same in a kiosk costs Rs. 15. More BC outlets will de-congest the branches, thus enabling the branches to post their personnel to more profitable business. With increasing number, the kiosks will become sustainable. The State Government is already channelizing its payments under 7-8 schemes through bank accounts.

The operating margin at the PO level is quite satisfactory. In its first year, it has surpassed the break-even level, earning a little surplus. This is more due to the nature of the commodity i.e. seed, which is regulated by the State Government. The State Government provides subsidy to the seed producer as also to the seed processors and retailers. Everywhere, seed business is regulated, especially for


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major cereals which provide food security to the nation. Demand for quality seed will always be huge even if subsidy is withdrawn at some stage. Therefore, the business model with seed as the key product is viable.

For the State Government, there is a farmer’ organization which is able to take care of the input needs of the farmers’. State government can converge some of its agricultural schemes through the PO, farmers’ federation and reach the unreached. Agricultural extension services can be provided using this institutional arrangements at much less cost with much larger outreach.

Chapter 4 Policy Issues

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4.1 Role of NABARD: Since inception, NABARD has been promoting the concept of farmer’s organization in the form of Farmers’ Clubs. However, a long term policy on the sustenance of these farmers’ organization is needed. Now, with the strong presence of NABARD in the agriculture sector, both in the irrigated areas through RIDF interventions and in Rain fed areas through watershed programs, it could leverage on these and play a greater role in upgrading the Farmers’ clubs of these areas into higher tiers i.e. Farmers’ groups Federations producer organization. The steps to be followed could be: 4.2 Database of Farmers’ Clubs: Over a period of time NABARD has promoted a large number of farmers’ clubs throughout the country. During various field studies, it was observed that there are a few defunct and dormant farmers’ clubs in the initial years of formation. However, the number grows once the initial 2 to 3 years period is over and the study in Bilaspur indicated that more than fifty percent of the Farmers clubs were defunct and dormant. The situation may be more or less same in other areas also. Therefore, there is a need to strengthen the data base on the number of active farmers’ clubs.

4.3 Revival and Establishment of Farmers’ Clubs: To support the District Development Manager, a few active farmers’ clubs of the district may be identified and up graded and registered under Farmers’ Federation. The farmers’ federations thus formed could be involved in the revival and establishment of farmers’ clubs. Capacity building of federations is required so that the entire structure is nurtured. The federations are a vital link between farmers clubs and PO.

4.3.1 Federating Farmers’ Clubs: There are more than 1.40 lakh farmers’ club, yet there are only 107 federations of farmers’ clubs. A federation for about 50 farmers’ clubs with about 1000 members can provide the numbers for an effective organization that can benefit from the economies of scale. In Bilaspur and Mungeli districts, the federations have affiliation of between 57 to 73 farmers’ clubs. The FCs which have remained dormant, can be re-invigorated thorough affiliation to Federations. 4.3.2 Initially, the federation may be involved in revival of the defunct and dormant Farmers’ clubs. Potential areas like irrigated areas, watershed villages and agriculturally sound villages may be identified. In the first year the target for the federations could be putting the farmers’ clubs on a right track. A nominal amount could be paid to the federation for creating awareness and revival of the dormant/ defunct farmer clubs. Similarly new farmers’ clubs could be considered in the potential areas and this work also could be taken up by the federations. In the


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second stage, there should be a focused study by the RO/DDM and the federation to identify potential areas of business (farm based activities, Allied Agril activities, Non-farm sector activities etc.) volumes of business and accordingly prepare a plan for the Federations. In this process, the federation is involved in the process of formation of clubs from the beginning and therefore, get a clear picture of the capacities of the clubs, potential areas, potential activities and also the weaknesses.

4.3.3 In fact, this has happened in the study area. FCs have started working again, as the federations involved them in kiosks and seed distribution. Even when no other external support is available, the federation still can carry out activity of aggregation of inputs and produce for better bargaining power in the market place. As agriculture moves towards contract farming type of cultivation, forum of farmers’ to protect their interest and to enforce the terms and conditions will be all the more important. The fact that more number of federations are not coming up despite NABARD policy may point towards lack of a roadmap for sustainability of the federation as an institution. There is a need to revisit the policy. In fact, instead of promoting more farmers’ clubs, efforts should be focused on promoting their federations with business models. If farmer members see the future benefit of being affiliated to such an organization, the farmers’ clubs will suo moto start to be active. The model of promotion thus needs to be inverted in that first federate the existing FCs into a Federation in a geography and then task the latter to reactivate the dormant clubs and promote new clubs in unreached villages. Promotion of clubs through NGOs, KVKs and Banks needs to be re-examined.

4.3.4 The federations need to take a lot of care in selecting a person or a group of people from the farmers’ clubs who will take the lead in establishing commodity-based farmer organizations. This group needs to be acquainted with and convinced of how the FC can be used to increase the income of small producers.

4.4 Organizing Workshops: It is observed that there are 67 districts where the State Bank of India is the Lead Bank. (List of districts is given at Annexure I). As an initial step NABARD, HO or BIRD may consider to organize 3 to 4 workshops involving DDMs, LDMs and few senior officers from SBI, so that the model could be replicated. The two main strengths of the model are Seed Business and banking services. For viability and sustainability of PO, these two aspects are important. (List of Lead Bank Districts given in Annexure)

4.4 Understanding the Village Community: The federation should enter the community with an open mind and understand the community structure. They must understand the community power structure, problems, and opportunities for development. Walking around and talking to key people can help ease their entry into the community. The federations should also develop an understanding of the entire community, including the poor and marginal farmers and women.


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4.5 Understanding the ownership of community resources and people's attitude, knowledge, and skills in the development of agricultural production will help the federation learn about the community. The federations can also understand the situation in more depth by collecting both qualitative and quantitative information on the levels of income and productivity, costs of cultivation, post-harvest losses, output utilization, and the likelihood of making striking improvements to each of these factors.

4.6 Identifying Potential Leaders in the Community

The usual tendency for the federation is to talk to formal leaders of farmers’ clubs and influential sections of the community. However, it is also important to be sensitive to the leadership structures operating in that culture and to the knowledge and skills needed to be a successful leader of a farmer organization.

4.7 Experience of Kisaan Beej Organization leaders who have established farmer organization shows that these leaders initially made considerable sacrifices, experienced financial losses, and had to be supported by their families. These leaders also had to struggle and negotiate with bankers, bureaucrats, politicians, critics, and others including their own farmer members. The study also revealed that the two main leaders of the Producers’ Organization were educated, one with Engineering background and the other with Law background. Both were big farmers’ and had support from their family members. Their educational qualifications and experience played a vital role in dealing with banks, government agencies and also with their own farmer’s fraternity. The discussions with the PO revealed that they interacted at the level of Secretaries of Finance and Agriculture Dept., GOCG and also Minister of Finance and Agriculture for registration of PO, to get the license for seed procurement, processing and marketing These experiences support the assumptions that the leaders of the Producers’ Organizations should have sufficient background - social, educational, financial and political, to take up the challenges.

4.8 Talking to the Identified Leaders and Seeking Cooperation from Other Agencies

The federations need to have a detailed discussions with the farmer’s club members on general agricultural development and get ideas and information on FOs in the village. They might also seek cooperation from government agencies and especially from NGOs (if there are any in the area) to help them in achieving success.

4.9 The federations can canvass for ideas from the community and add their own ideas on the need for and the role of farmers’ clubs, farmers’ federation and Producer Organization in the entire process of broad-based agricultural


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development. It is important to provide facts and figures to convince potential leaders of the possibilities and approaches for increasing the income of a sizeable number of farmers and for contributing to the economic development of the region.

4.10 The federation can help enthusiastic local leaders to call for community meetings. Sometimes more than one meeting may be needed to discuss the need for and the role of farmers’ clubs in agricultural development. Federation leaders from neighboring villages can be invited to speak at these meetings. Farmer-to-farmer information exchange helps. Sometimes smaller meetings can be held for low-resource (small and marginal) farmers’ and minority groups. They may prefer having a separate farmers’ club to serve their specific needs. There is no harm in having more than one farmers’ club in a village.

4.11 It is important that producers from all sectors in the village participate in these meetings because the success of an enterprise-based federation depends on the volume of raw material procured from member producers. Every small or big producer contributes to this volume. The volume itself is more important than the socioeconomic status of the supplier. Prospective farmers/members need to be convinced that everyone benefits in proportion to his or her contributions, not just the big farmers, as is widely perceived.

4.12 Developing an Organizational Structure for the PO

The Federation can help the in developing an organizational structure for their farmer organization/ producers’ organization. The structure should serve the organization's functions and goals. Understanding various types of federations is useful. Should they be commodity-based federations, cooperatives, enterprise based groups? Should they be multipurpose? Should there be one farmers’ club for the entire village or several to cater to the needs of special-interest groups (low-resource farmers’, women, craftsmen, small businesses, and the like)? Should they have sub groups and an advisory committee? The Farmers’ federation should, as far as possible, play a passive role because the farmers’ club leaders are the ones who are building the farmers’ clubs.

4.13 Implementing Selected Projects: Based on the strengths of the farmers’ clubs, potential commodities, the federations in consultation with the PO prepare projects. The following process may be useful:

Design projects in conformity with the local needs and potential (availability of volumes and market). The ‘Kisan Beej’ model reveals that for any model to be successful, at least 40 to 50 percent produce/ commodity should be consumed in the villages where it is produced. In this case, the seed was produced and a major share was marketed in the same area.

Develop a calendar of activities to achieve the goal.


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Develop monitoring processes for reflecting on events and activities regularly, either formally or informally.

Establish systems and procedures to implement the projects

Specify the sharing pattern of profits between farmers’ club, Federations and the Producers’ organization.

4.14 Scope for Extension Support:

There is potential for extension support. In the Kisaan Beej model the PO is providing support for cleaning, grading, packing, storing of the seed. It also provides support in harvesting of the Paddy. Further, the Kiosks are working as a single window for the banking and agriculture needs of the farmers. In principle, farmer organizations with full empowerment reduce the pressure on "routine extension" activities. Ecologically, the commercial sector is dependent on resource-poor or other farmers’ groups for their survival. Just as in farmer-to-farmer extension methods, PO should help link the commercial sector with the low-resource farm sector so that win-win projects can be developed. With the labor shortage, there are options available to have multi service Kiosks at the federation level. These Kiosks should be financially viable entities. The Bilaspur model with banking and input services provides a good platform where other services could be built upon based on the needs of the farmers and benefit to the federations.

4.15 Development through Convergence: While preparing the plan, a separate plan on the possible convergence with NABARD programs like CAT, MEDPs, or any other program related to farm sector or non-farm sector grant based programs needs to converge with the programs of the federations so that the federation is fully engaged in the activities. Similarly, there are large number of programs implemented by State Govt Depts. i.e. agriculture, horticulture, animal husbandry, fisheries, DRDAs. The federations and farmers’ clubs should become the prime movers of all these programs. 4.16 Institutional forms for Producers’ Organization Kisaan Beej has been registered under Autonomous Cooperative Society Act. This ensures minimum intervention by the state government in the affairs of the organization. The ease of registration (done at the district level) is the greatest advantage for such legal entity. Registration under companies act involves intermediaries like a Chartered Accountant or Company Secretary, takes good amount of effort and time, and is expensive. Besides, compliance to the provisions of the act for submitting returns etc. are minimal. At the time of formation of the legal entity, the business model might be still under evolution, and may not be tested at all. So, it is better to register initially under Coop Society Act. At a later stage, once the business model stabilizes, and the PO gets experience in organization and management, migration to Producer Company may become


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useful. Registration as a Trust (under Indian Trust Act) or as an NGO (under Society Registration Act) may be still easier. But, it will impart the institution non-profit orientation which will compromise the for-profit focus of the PO. 4.17 The National Advisory Council, GOI proposed to designate an apex organization from within the existing government institutions which will address the need for promotional role including acting as a single window source for technical support, training needs, research and knowledge management to the State Governments, POs and entities engaged in promotion and development of POs. Also, it will create linkages for POs to investments, technology and markets. NABARD could take up the role and direct the policy on the Farmers’ producers’ organization.

4.18 Collateral: The other important recommendations of the National Advisory Council, GOI, were create conducive policy regime for the POs to access start up and investment capital. POs formed from the farmers’ clubs face major challenges in mobilizing working capital and investment credit. Since most of these are small producers’, from economically weaker sections, their own capital base is low and hence, cannot provide collateral security, a prerequisite by the financial institutions. Measures which are therefore proposed are: (a) matching grant to FPOs to double member equity, subject to a ceiling, (b) collateral free loan up to Rs.25 lakh, (c) initiate measures for creation of Credit Guarantee Fund for the financial institutions to lend to POs, (d) producer companies to be treated at par with the Cooperatives for tax relief, etc.

4.19 ISSUES- Bilaspur PO: The Kiosks are at a crucial juncture and at this stage all out efforts are required from Federations, SBI, Government and NABARD to support and provide direction to enable them to establish themselves. There should be a concrete growth plan with time lines placed with each federation and next the 2 to 3 years will be very crucial for their progress. The following measures are suggested for increasing the efficacy of the Producers’ Organization:-

i. The PO should prepare a long term plan of at least 5 to 10 years with short

term plans high lighting focus points.

ii. At present the roles and responsibilities of Farmers’ clubs, Farmers’

Federations and Producers’ Organization are not specified. The roles and

responsibilities of PO, Farmers’ Federations and farmer’s clubs and the

sharing of profits has to be specified. These entities should enter into an

agreement to minimize disputes and also to have legal solutions in case

of disputes. There is a need to develop trust among the entities, as

otherwise the structure may become weak and may not sustain in the

long run. Therefore it is imperative on the part of NABARD to bring all the


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units to a common platform and a broad frame work with roles and

responsibilities may be put in place.

iii. It is also feared that advantages of PO may create problems ranging from local elite capture, exclusion of the poorest farmers’ clubs from decision-making. This would defeat the very purpose of the organization for which it was formed.

iv. Although the PO has an experienced set of farmers’, to make the entity

professional, it may have a core team with at least one Agriculture

Scientist or Agri Engineer and Finance specialist, when the balance sheet

size increases to a level of Rs 5.00 to 10.00 crore.

v. The PO may establish cleaning and grading centres at the level of

federations as it is felt that the distances from PO’s office to federations

is too long and transportation costs involved in procuring non processed

seed and marketing processed seed could be saved.

vi. There is a need to include the members from all the three farmers

federation on the board of the PO.

vii. The PO may think of registering itself under Companies Act so that it can

receive the benefit of equity fund and credit guarantee fund from Small

Farmers’ Agriculture Consortium (SFAC) and also spread its business

activities in a professional manner.

viii. Delays were observed in the payment of amounts to the BC/ Kiosk. State

Bank of India may simplify the payment system of commission to the

Federations and see that the payments of previous month are paid before

15 th of the next month.

ix. The bank may think of including products like insurance i.e. life insurance,

cattle, crop etc.

x. A clear supervision and monitoring system need to be placed. The branch

managers should pay a visit at least once in a quarter.

xi. A long term policy is needed for BC/Kiosk appointed by the bank.

4.20 Farmers’ Federation: Similarly at the Federation level also there is need for capacity building. The farmers’ federation is the link between the farmers’ clubs. From the study it is understood that the federation also holds a key position in terms of reach, number of members, volume of business etc., therefore, the capacity building and constant review of federations is important and the vibrant federations will be the key for success of the PO. The following interventions are required at the level of federations:-

i. The federations should have dialogue with the farmers’ clubs on

continuous basis and assess the area to be brought under seed

cultivation, demand for seed and also prepare other requirements

pertaining to agriculture like fertilizer, pesticides, harvester, tractor etc.,.


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ii. Federations need to have a clear long term policy on the business of the

Kiosks and bring in some more services for the rural community.

iii. Kiosk may plan to have some tie ups with SBI or Life Insurance Corporation

of India to provide Insurance services to the villagers.

iv. Explore the areas where government schemes could be converged and

similarly try to channelize payments of government programmes/

schemes through Kiosks of the farmer’s federations.

v. Kiosks should have updated knowledge about various government

schemes and help in guiding the farmers’. The Kiosk should become an

information centre for the rural community.

During the field visit the study team interacted with the office bearers of the three Farmers’ federations and four Kiosk operators. The Kiosks are involved with banking services and in the process have developed good rapport with the farmers and village community. At present the model is working with very little margin or even in some cases there is a loss. However, with the growing number of accounts and also diversification of business portfolios, the model can be developed into a sustainable entity. The next one or two years are going to be very crucial for the Kiosks and the federations. There is need to prepare a long term plan for the federations and implement it so as to have the interest of the federation in the business entity.

Chapter 5 Summary & Conclusions

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Farmers’ Club Programme

5.1 In Bilaspur and Mungeli districts, 300 farmers’ clubs have been launched since inception. Only 201 FCs have been affiliated to the three federations there. This indicates that 99 clubs have become dormant at some point of time. The all India situation may not be drastically different. The immediate objective therefore should be to identify the dormant clubs and to revive them. Creating a digital data base of all the clubs with address and contact details of the leaders (and may be the members) may be a good first step in this direction. Digital database may help in aggregation of farmers’ requirement in quick time, leading to identification of new business opportunities in future.

5.2 Sincere efforts need to be made to federate the existing FCs in contiguous geographies. Lack of hand-holding support from the promoting institution (NGO/KVK/SAU/Bank) beyond the project period has made many of these clubs dormant. Formation of federations will fill up the institutional gap that the FCs face when the promoting institution withdraws. After formation of the federations in Bilaspur and Mungeli, many FCs have become active once they got affiliated to the federations. They have been involved in promoting use of certified seeds, enhancing financial inclusion through BC kiosk and financial literacy in schools and villages. Federations have facilitated collaboration with Agriculture Department for field demonstration, seed production and agricultural extension. In the absence of federations, possibly some more FCs would have slipped into dormancy.

5.3 The federations may be provided financial and capacity building support to reactivate the dormant clubs within their operational area. New FCs may only be launched in uncovered villages, and this should be the task of the federation. The extant policy on Farmers’ Club Programme involving banks, NGOs and KVKs etc., needs to be revisited. The assumption that the bank branch would take care of the club after initial 3-5 years of hand-holding by the promoting institution with financial assistance from NABARD has not been substantially validated. Involvement of banks beyond the project period depends on the orientation of the personnel manning the branch. The key personnel change every one/two years leading to discontinuation of interaction. Only the federation will remain when NABARD withdraws its support. Therefore, federation should be the institution of first choice for up scaling and stabilising farmers’ club programme in the country.


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5.4 Important objectives of Farmers’ clubs are to enhance access to knowledge and information and credit, besides encouraging adoption of agricultural technology and innovations through interaction with experts and peer-to-peer transmission of skills and best practices. Federations can undertake these tasks more efficiently by mobilising experts from government departments, research institution, Agriculture Universities and progressive farmers’. Farmers’ clubs may mobilise the farmers’ of the village for such events/activities. Therefore, financial assistance for such events should go to the federations, and not to the clubs. In the study area, financial assistance was given by NABARD to the federations to promote financial literacy which they did successfully by involving the farmers’ clubs.

Collaboration with Local Institutions

5.5 The federations can interact more effectively with government departments to channelize benefits to members in a collaborative manner. In the study area, the federation has facilitated demonstration plots in members’ field, seed production by members and seed and pesticide retailing in BC kiosks. For the government departments, it has become easy to reach farmers’ in substantial numbers through federations. Collaboration of federations with various government departments will also ensure better access to multitude of government services, thus benefitting the farmer-members. DDM, NABARD can facilitate such collaborations.

5.6 The federations and the Regional Office of State Bank of India at Bilaspur have collaborated to establish 16 BC kiosks in the twin districts for wider financial inclusion. There is a revenue sharing agreement between the kiosk operator and the federation. The arrangement differs from one to the other kiosk, depending upon who had made the capital investment for equipment. Wherever the federation has invested in capital assets, the agreement provides for higher proportions of revenue to go to the federation. The kiosks have helped in financial inclusion of farmers’ of the federation. The kiosks open basic savings bank accounts and recurring deposit accounts, accept cash deposit, allow cash withdrawal within limits and provide remittance facility. The state government has channelized old age pension, NREGA payments and student scholarships through bank accounts. Cash-out facility is extended by the kiosks for bulk of these accounts. This can be easily be replicated in other districts, more quickly in those districts where SBI has the lead bank responsibility. NABARD needs to start a dialogue with SBI in this regard to expedite the process.

5.7 The PRIs are implementing various schemes in each district, many of which focus on livelihood issues of farmers’. One federation (Baigababa Krishak Mahasangh) had approached Bilaspur Zilla Panchayat for construction of a grain drying platform where the farmers’ can dry paddy to reduce moisture content to get MSP rates. Paddy seeds


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also need to be dried to reduce moisture content to less than 13% before certification. Zilla Panchayat has already approved the proposal, and they are going to construct the platform for the federation on land voluntarily leased by one member free of charge. This is only the beginning. There may be many more occasions in future where such collaborations will happen. The federations need to be in constant touch with the PRIs and seek support for creation of common infrastructure. At state level, NABARD Regional Offices may discuss with State Departments for Rural Development and Panchayati Raj to evolve an appropriate model for such collaborations.

Convergence of NABARD Programmes

5.7 NABARD has been implementing a host of grant-based development programmes in rural areas. Programmes like SHG Bank Linkage, JLG, financial literacy campaign, Village Development through VDP, Lead Crop Scheme etc., require considerable social mobilisation skills. Farmers’ club federations with substantial membership and local presence can be useful project holders. There are good number of examples of farmers’ clubs acting as self-help promoting institutions. During 2013-14, farmers’ clubs as self-help promoting institutions have formed and credit-linked 791 SHGs and 191 JLGs (NABARD Annual Report). In the study area, the federations have successfully conducted 200 financial literacy programmes with NABARD financial assistance. Such efforts need to be substantially escalated through the federations.

5.8 The three federations in the study area have affiliations of 57, 71 and 73 farmers’ clubs covering 3 to 4 blocks. Federation membership ranges from 800 to 1200 farmers’. The farmers’ clubs did not enlarge membership in the villages after launching of the club, assuming erroneously that this was not called for. Thus, taking in more members will be easy once the clubs set their mind to it. Assuming about 20 existing members per club, about 50 clubs will generate membership of close to 1000 farmers’ for forming a federation. Large base of membership is also essential for taking up any significant economic activity that requires scale. With membership of about 1000 farmers’, the federations will be better placed to upgrade their activity to that of a producer organisation. (Shri Amar KJR Nayak, in his manual says “Typically about 500-1000 farmers spread over about 2000 – 5000 hectares of natural resource base (land/forest/water) consisting of about 5 micro-watersheds can provide sufficient

marketable surplus for commercial viability of a Community Enterprise System”). Lot of investment has already gone into social mobilization of farmers’ while launching farmers’ clubs. A little more effort in a structured way can facilitate formation of producer organisations by federations. NABARD policy for promotion and financing of producers’ organisations is broad enough to cover any legal entity. May be, the focus needs to shift from NGOs to farmers’ federations. The Bilaspur model is not too difficult to replicate, since similar eco-system including institutional framework exists in most


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districts. At Bilaspur, the DDM NABARD was the key person who mobilised the federations and facilitated convergence of programmes of SBI, government departments and Zilla Panchayat, besides NABARD’s own programmes. Formation of a PO and financing thereof by NABARD also required lot of groundwork along with the federation leaders, which was also managed efficiently by the DDM.

Producers’ organisation

5.9 Experience in the study area indicates that a federation to transform into a producers’ organisation requires about 3 year time. The federations in the study area were registered in February/March 2012. Only one federation, viz. Baigababa Krishak Mahasangh has registered the Kisan Beej producer organisation in 2013. The other two federations are still in the process of registering producer organisation. Kisan Beej has started operations in 2013-14 with financial support from NABARD. During the crop year 2014-15, they plan to increase their business by about three times. It will use the BC kiosks affiliated to all the three federations to sell certified seed and pesticide. A time-frame of three years can be taken as reasonable for a PO to achieve a sustainable business level. Till such time, they may require hand-holding support which may have to be provided through DDMs of NABARD.

5.10 Procurement, processing and retailing of seed can be the first activity to start with for such federation promoted producers’ organisation. After all, the members of federations are farmers’ who are the producers’ of seed and also consumers, providing a loyal customer base. Retailing of pesticide is the other activity that Kisan Beej has successfully undertaken on an experimental scale, through few kiosks. The experience has been satisfactory, as the margins are good and farmers’ get at cheaper rates compared to commercial outlets. Secondly, the federations educated the farmers’ about better pesticides and proper method of application. Fertiliser though a critical agricultural input, requires huge storage structure. Besides, it is a differentiated product, farmers’ often demanding particular brands which may be difficult to source. Kisan Beej felt that there is presently no need to duplicate the delivery channel for fertiliser since the PACS are doing this activity and they have the requisite infrastructure. For seed, the State Seed Corporation is not able to meet the requirement.

5.11 NABARD has sanctioned financial assistance of Rs. 1.943 crore (loan component Rs. 1.85 crore) to Kisan Beej on 23 September 2013, and the PO has drawn Rs.1.74 crore loan till May 2014. Leaders of the PO have provided their own agricultural land as collateral security for the loan. Lack of other forms of collateral security to offer for availing loan will be the case for all the POs which will be promoted by farmer federations. An alternative can be some mechanism to provide credit guarantee cover.


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Presently, such cover is provided by SFAC to farmer producer organizations, only when these are registered as producer companies. Other legal forms of producer organisations do not enjoy this facility. Keeping in view, the huge scope of farmer federations upgrading into producer organisations, this issue of credit guarantee needs to be resolved. Even when such POs approach mainstream financial institutions for accessing credit, the issue of marketable collateral will invariably crop up.

Replication of Bilaspur model

5.12 The model of transforming farmer federation into producer organisation can be replicated in other districts. Developing the eco-system will require coordination of efforts of NABARD, banks and government departments. As a first step, the DDMs of NABARD may be tasked to federate the active farmers’ clubs in contiguous blocks. The idea is to have about 1000 members affiliated to one federation. If necessary, the farmers’ clubs may be encouraged take in new members to reach this figure. Once the federation is in place, capacity building measures may be undertaken through convergence of NABARD development programmes (Revival/formation/programmes of farmers’ club, SHG/JLG promotion, financial literacy campaign etc.). Simultaneously, the government departments and PRIs may be persuaded to involve the federation in their ongoing programmes. Like Bilaspur and Mungeli districts of Chhattisgarh, every district has some programme for seed production and distribution and therefore, this model can easily be rolled out through farmers’ federations.

5.13 Establishment of BC kiosks of SBI in collaboration with the federations may be replicated in other districts. Kiosks generate regular income which seems adequate to meet the operating expenses in the study area. When the federation sponsors a kiosk, it implies that most of the affiliated members will use the facility for banking services, generating the numbers required for sustainability. More importantly, the kiosk provides an address where the farmers’ can meet and interact with one another, as also with the federation leaders. These outlets can also be used for retailing seed, pesticide etc., which will generate additional income for the kiosk and the federation. Since SBI has successfully launched 16 kiosks in the study area, establishment of similar BC kiosks in other districts where SBI has regional office/lead bank office can be expeditiously replicated. NABARD/SBI can arrange exposure visits for identified regional heads and LDMs to Bilaspur district.

5.14 It is estimated that good quality seed alone enhances productivity by 10 to 20%. When good quality seeds of improved varieties are used, productivity goes up by 40%. As per norms set by the Government of India, seeds for self-pollinated crops need replacement once in three years. Wheat, paddy, pulses (gram, moong, urad, pea, and soyabean), sesame, linseed and peanuts are important self-pollinated crops, for which


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there is huge demand for quality seed. Localisation of both production and consumption (planting) will improve availability leading to higher seed replacement rate, and thus productivity of these crops. Many State Government procure seeds from outside the state to cater to the needs of its own farmers’. With an appropriate policy support, local seed production for such crops can be enhanced very fast through the farmer federations. Federations can set up seed processing facility in quick time with financial assistance from banks and/or NABARD.

5.15 In many states, seed production and distribution is not the monopoly of State Seed Corporations. The state governments provide same subsidy for seed production and distribution to other institutions as to the Seed Corporations, creating a level-playing field. The Chhatisgarh Government changed the policy in 2013 which enabled Kisan Beej to receive production, processing and distribution subsidy for seed. This enabling policy created an opportunity for the farmer federations to enter into the business of seed procurement, processing and distribution. The PO passed on the production subsidy to the farmers’ who produced seed. Processing and distribution subsidy was utilised towards meeting operating expenses in processing, storing and retailing seed. The retail rates for seed are regulated and subsidised by the government (for paddy, it is less than the MSP in Chhattisgarh). Wherever monopoly of State Seed Agencies still exists, dialogue with the state government will be necessary to modify the policy.

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Annexure I

LIST OF POTENTIAL LEAD BANK DISTS OF STATE BANK OF INDIA FOR WORKSHOPS

S No State/ District Lead District Bank

I ANDHRA PRADESH

1 Hyderabad State Bank of India

2 Mahbubnagar State Bank of India

3 Medak State Bank of India

4 Vishakhapatnam State Bank of India

5 Vizianagaram State Bank of India

6 Warangal State Bank of India

II BIHAR

7 Araria State Bank of India

8 Jamui State Bank of India

9 Kishanganj State Bank of India

10 Madhepura State Bank of India

11 Purnia State Bank of India

12 Saharsa State Bank of India

13 Supaul State Bank of India

III CHHATTISGARH

14 Bastar State Bank of India

15 Bijapur State Bank of India

16 Bilaspur State Bank of India

17 Dantewada State Bank of India

18 Janjgir-champa State Bank of India

19 Jashpur State Bank of India

20 Kanker State Bank of India

21 Kawardha State Bank of India

22 Korba State Bank of India

23 Narayanpur State Bank of India

24 Raigarh State Bank of India

IV JHARKHAND

25 Deoghar State Bank of India

26 Garhwa State Bank of India

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27 Jamtara State Bank of India

28 Latehar State Bank of India

29 Pakur State Bank of India

30 Palamau State Bank of India

31 Sahebganj State Bank of India

V MADHYA PRADESH

32 Chhatarpur State Bank of India

33 Damoh State Bank of India

34 Harda State Bank of India

35 Katni State Bank of India

36 Panna State Bank of India

37 Tikamgarh State Bank of India

38 Umaria State Bank of India

VI MAHARASHTRA

39 Bid State Bank of India

40 Hingoli State Bank of India

41 Latur State Bank of India

42 Mumbai State Bank of India

43 Mumbai Suburban State Bank of India

44 Nanded State Bank of India

45 Nandurbar State Bank of India

46 Osmanabad State Bank of India

47 Parbhani State Bank of India

48 Washim State Bank of India

VII ORISSA

49 Balangir State Bank of India

50 Bargarh State Bank of India

51 Boudh State Bank of India

52 Deogarh State Bank of India

53 Jajpur State Bank of India

54 Jharsuguda State Bank of India

55 Kalahandi State Bank of India

56 Kandhamal State Bank of India

46

57 Kendrapara State Bank of India

58 Khurda State Bank of India

59 Koraput State Bank of India

60 Malkangiri State Bank of India

61 Nawapara State Bank of India

62 Nawrangpur State Bank of India

63 Nayagarh State Bank of India

64 Rayagada State Bank of India

65 Sambalpur State Bank of India

66 Sonepur State Bank of India

67 Sundargarh State Bank of India

47

References:-

1. Farmers Club Progress – Status Report, NABARD, 2008. 2. Memon and Jowariya (2012) Effectiveness of Farmers Groups, International Journal

of recent Scientific Research, Vol: 3. 3. Goswami- Role of Farmers Clubs as a model MFI for Rural Areas’ Globalm Journal of

Management and Business Research 10(2)- 2010. 4. Amar KJR Nayak- Implementing Community Enterprise System for Sustainability of

Agricultural Communities - A Manual. 5. NABARD Annual Report- 2014. 6. NABARD PLP Bilaspur and Mungeli districts 2014. 7. District Report of Central Ground Water Board, GOI. 8. Seed Net, GOI. 9. Seed Development - Vision 2030, GOI.

TRANSFORMATION OF FARMERS’ CLUBS TO … OF FARMERS’ CLUBS TO ... The Chief General Manager, NABARD Chhattisgarh ... Use of good quality seed alone enhances productivity by …

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