Bulk Procurement Project

Soyabean and Mustard Aggregation and Marketing Value Chain in Kota

Introduction

CLFs of Kanwas, Bappawar, Kundanpur and Deoli collaborated with NeML (NCDEX e-Marketing Limited) to understand what is needed to truly scale innovations to reach thousands of smallholder farmers, so that incomes increase and entire communities can escape the poverty trap. The process included interviewing 3000 smallholder farmers belonging to SHGs. As a pilot, Collective Procurement of Soybean and Mustard was initiated by CLFs with 63 farmers from 14 villages in Kharif Season and 76 farmers in 16 villages in Rabi Season respectively. The impact of this project was benefit of more than Rs. 200 per quintal to small farmers. The adoption and excitement of this collective procurement initiative among small farmers has led to the formation of a repeatable model.

Need for The Intervention

  • Lack of awareness among farmers for new product and services

  • Due to absence of proper storage facilities farmers tend to sell their produce at a very early stage post harvesting. In the absence of proper storage facilities with the farmers they tend to dispose their produce at the very early stages after harvesting where there may be a glut in the market (out of distress) therefore, they may not get the actual price for their produce.

  • Weighing Malpractices at local aggregator level

  • In addition to commission charged, the mandi trader used to pay for 1 Kg/ quintal less while procuring the whole lot citing quality concerns based on subjective criteria.

Major Challenges

  • Capacity Building of the women leaders: Awareness among the leaders of CLFs about the financing of the project, major cash flows, utilization of project funds and risk of commodity for months before it is sold at a better price.

  • Timely availability of Warehouse: Warehousing of the produce should be planned on the basis of the quantum of the procurement. An alternate storage site should be planned for any last-minute hassles.

  • Resistance among farmers to sell their produce through CLFs: Huge amount of loans from middlemen during off season for seeds, fertilizers and other input supplies, thus they are bound to sell the produce to the middlemen. Paving a way for a new business where crop input supplies of SHG farmers can be met.

Implementation

The process of bulk procurement started from collection of Soyabean at a very small scale including just 63 farmers. The project was initiated on 5th November 2016 with a successful collection of 77.1 quintal Soyabean from 14 villages of 4 CLFs. The result of this procurement was high enthusiasm in the community people for selling the next crop of mustard in March 2017.The second process of procurement resulted in the collection of 974 quintals of Mustard from 16 villages of 4 CLFs. The bulk procurement project incurred a total cost of Rs. 3.3 crores on purchasing the produce from the farmers and an additional cost of Rs. 3 lacs on other expenses like packaging, transportation, warehousing and labour. The major amount of investment was done by the 4 CLFs through project fund. A total profit of Rs. 1.5 lac is expected out of the total produce.

Impact on The Beneficiaries

  • Maximize advantage of the small farmers: more than 7% increase in the income of small farmers, CLFs provided a better price of the crop to the farmer than Mandi price thus increasing in substantial income of the farmer by more than Rs.200/quintal. A total of 974.28 quintal of mustard was procured from the village organizations. The farmers were offered an assured price of as low as Rs. 3300/quintal and as high as Rs. 3480/quintal depending on the daily Mandi price.

  • A penny saved is a penny earned: 3-4% decrease in farmer’s expense on packaging, transportation, informal and formal taxes. Mustard was checked on the spot for the oil content in the seeds. Each procurement centre was well equipped with Moisture Meter and weighing balance to provide small farmers the benefit of each gram of their produce. CLFs provided farmers with gunny bags to pack their produce. Farm produce was collected from the farmer from their doorstep.

  • CLFs plan to provide Assured Market to the farmer: even in case of low quality of crop CLFs are planning to facilitate farmers in selling their produce in local mandi or any other potential buyer. Thus, building a trust in farmers towards CLFs

  • Reliance on formal means: timely payment to each SHG women farmer was done through cheques. Also, farmers were able to understand the importance of transparent weighing of the produce.

Learnings

  • On the spot Quality Checking of the produce, Mustard was checked for the moisture content at the time of procurement which helped farmer to get the maximum price for its produce.

  • Awareness to grow better crops, the price of mustard is dependent upon the oil content, the better the oil in the produce, the better price the farmer gets. The process brought awareness in people to grow better crops.

Conclusion

Bulk Procurement project is a great initiative for small farmers who do not get a good price for their produce in mandi or local aggregator. It might not be beneficial for the CLF in the initial phase as it is difficult for people to build trust on community-based organizations and adopt the new interventions. Advantage of this project can be availed at all the levels (CLF, VO and Beneficiary).