Processing Payment – India

Parts of Orissa, in Eastern India, are blessed with fertile soil and reasonable climate. But the forested hills are home to some of the poorest communities in the world. Here many tribal people survive at a subsistence level, depending on their orchards and livestock. Although there is some agricultural surplus, their remoteness means these small-scale farmers have little power in the marketplace. A new scheme, promoted by International Development Enterprises (India), is adding value to farmers’ produce and giving them the power to earn cash in the market.

Farmers’ Problems
The key problem for farmers in the project area of Orissa is the geographical isolation due to mountainous terrain which limits transport and communication. Despite India’s extensive rail network and good trunk roads many tribal people live in areas where there is no vehicle access, or where transport is expensive and often overcrowded. Farmers find it difficult to travel to markets.

Getting produce to market is an ardous task. Credit: IDE (India)

Even if they get to market, farmers are reluctant to return home with unsold goods so they tend to sell them off cheaply. Their produce, such as pineapples, mango, guava, oranges, tamarind, jackfruits and lemons, is seasonal and perishes quickly. Traders exploit this situation, offering low prices. They often provide loans to farmers, which if unpaid result in the traders taking over the land, so that the farmers become labourers in their own fields.

Selling produce at the market. Credit: IDE (India)

IDEI wanted to prove that even in this kind of situation a post-harvest project could be worthwhile. Working with its partners IDEI found that the best way for farmers to make a profit was to process the produce – which not only added value, but also preserved it, enabling goods to be sold over a longer period of time and further afield. This meant that farmers could earn a better profit from their produce.

Business Approach
IDEI believes that if farmers are integrated into the market systems this will help them overcome these constraints and enable them to move up the income ladder. Much post-harvest work in the past has just looked at the development of suitable technologies, but to be effective it must also take into account the role of supply chains and markets. IDEI designed the project based on commercial marketing principles to identify market demand such as subsector analysis, business development services, and market analysis.

IDEI began by carrying out research to assess the situation in Orissa. They trained staff in interview techniques and information collection. The researchers visited the area before conducting interviews so they could get to know the area and develop relationships with local NGOs, youth leaders, teachers and postmasters who could help them with interviews and subsequent project implementation.

Although the focus was primarily on tribal farmers, IDEI looked at the whole business chain from farmers and processors to traders, gaining knowledge of their relationships and how to address their particular needs. The subsector analysis looked at how value could be added to the various crops. This analysis not only covered the raw material (the crops that were grown, their quality, taste, wastages etc), but also what happened in the market (its infrastructure, bottlenecks, processing). It looked at opportunities for adding value by processing and packaging, and assessed the potential for these products in the market. It also considered the opportunities for niche markets, such as organic produce.

Pineapple being prepared for slicing. Credit : IDE (India)

The research found that business development services generally did not exist. Farmers were unable to exploit their produce effectively, while traders expressed a need for services such as processing equipment, storage facilities and transportation. IDEI decided to develop a project that would link tribal communities to markets through adding value to their produce by processing.

Using the networks of partnerships that it had developed, IDEI managed to create a total system of technology development and supply. This links the poor farmers, through science and technology, to markets. Several institutions were involved – the Orissa University of Agriculture and Technology (OUAT) provided technical support adapting technology for specific needs, and the Centre for Community Development (CCD) was the NGO partner which had close relationships with the tribal community. IDEI acted as the managing partner, synchronising their inputs. Financial support was provided through a Crop Post Harvest grant from the UK Department for International Development.

Activities
Improved crops: The project focused on diversifying crops, promoting the cultivation of more valuable crops that can be grown in the area. IDEI made links with the public sector (government agronomic extension workers, university researchers) and with private sector enterprises who provide inputs to production such as seed, trees, fertiliser, technology, and micro credit.

Training: Farmers were keen to learn about the best agronomic practices for growing crops. Training courses were organised with input from SAMBHAV, an NGO that specialises in organic farming. Information was provided on fertilisers, pest and water management, and alternative crops. Through this training and fieldwork, farmers learnt how to reduce production costs and improve crop quality and soil fertility.

Technologies: A range of technologies was evaluated to see which would be the most suitable. These covered drying; juices; pickles, pastes and jams; and by-products. They were assessed by OUAT on their technical and economic feasibility to identify which were most likely to be sustainable. An appraisal was also carried out on food safety, packaging, labelling, storage, etc. to see if there were any constraints on these technologies. Based on this research the best innovations appeared to be in osmo-dehydrated pineapple slices, with by-products of pineapple squash and other drinks. Other fruits identified as suitable for processing were guava, lemon and cashew apples. Feedback from the market suggested that these products were acceptable, particularly for children.

Markets: During the analysis a value chain linkage was identified with some large private companies – M/s Arren Foods Pvt. Ltd and M/s OMFED – who were willing to purchase bulk quantities of horticultural produce from this area. The local NGO, CCD, is liaising with the farmers and these companies to ensure the required supply of crops is provided during harvest time to the businesses. As interest in this project has grown, other people have approached CCD to explore the possibilities of setting up micro-processing units in this area. The advantage of these units is that, being local, they have easy access to raw materials and would not have to incur transport costs.

Co-operatives: The farmers were organised into co-operatives, such as the Gajapati Women Self Help Co-operative, so they could pool their harvests, then work together making the finished products, and take a more significant part in the trading process. The profit was shared for the benefit of all the members.

Benefits
IDEI's approach has led to the creation of entirely new markets. Products that did not exist previously are manufactured and sold, generating new income for the supply chain members. Over three thousand growers are expected to benefit from this project. The result is true wealth creation (as opposed to wealth redistribution) with benefits accruing directly to the rural poor. Some of the farmers are now able to earn five times as much as previously, and their income is no longer seasonal. With this additional security they are able to afford schooling and cover medical expenses.

Acknowledgement
Hands On would like to thank Niraj Subrat from IDEI for his help in putting together this case study.

Participating Organisations
International Development Enterprises (India) (IDEI)
C 5/43, Safdurjang Development Area (1st & 2nd Floor)
New Delhi 110016
India
Tel: +91 (0)11-26969812, 26969813, 26964632
Fax: +91 (0)11-26965313
E-mail: mailbox@ide-india.org
Website: http://www.ide-india.org/

Other Organisations
Department for International Development (DFID)
1 Palace Street
London SW1E 5HE
UK
Tel: +44 (0)20 7023 0000
Fax: +44 (0)20 7023 0019
Website: http://www.dfid.gov.uk/

Crop Post Harvest Programme
Natural Resources International Ltd
Park House
Bradbourne Lane
Aylesford
Kent ME20 6SN
UK
Tel: +44 (0)1732 878675
Fax: +44 (0)1732 220497
E-mail: t.donaldson@nrint.co.uk
Website: http://www.cphp.uk.com/

Orissa University of Agriculture and Technology (OUAT)
Bhubaneswar- 751003
Orissa
India
Website: www.ouat.ac.in/

Orissa State Cooperative Milk Producer’s Federation Limited (OMFED)
Omfed Building
D-2, Sahid Nagar
Bhubaneswar - 751007
India
Fax: 91-674-2540974
E-mail: omfed@yahoo.com

TVE/ Practical Action gratefully acknowledge support for the HANDS ON programmes from the UK's Department for International Development (DFID), the European Commission (EC), the UN Foundation and UNDP/The Equator Initiative in collaboration with the Government of Canada, IDRC, IUCN, BrasilConnects and the Nature Conservancy.