Producer Companies
99
Some of the private sector companies
are also trying to address the issues faced
by farmers and build better relations with
them. Vippy Industries, a private sector
company in MP, initiated a market link-
age facility for farmers and established
three soya procurement centres,
7
out of
which two were managed by FPCs. These
procurement centres were established
with the objective to ensure transparent
practices and fair prices to farmers and on
the other hand, for the company, provide
quality soya and build better relations with
farmers. While promoting market linkage
initiative, the company has experienced
challenges like poor quality soya from
farmers, transportation issues with small
farmers, limited working capital availability
with FPCs and legal formalities like getting
APMC licences etc (Box 5.1).
Experience of institutions like Covenant
Center for Development (CCD), Madurai also
corroborates that it requires special skills for
doing business with corporate partners. CCD
formed Aharam, a PC in 2005, with member-
ship of six farmer federations and three SHG
federations functioning in six districts of Tamil
Nadu.
These federations largely consist of
small farmers in rain-fed areas. CCD, through
the company, provided the farmers advise on
crop production and tookmeasures to decrease
costs of production. With ICRISAT’s technical
support, the company worked with farmers in
own seed production and propagation among
farmers. Organic inputs and integrated pest
management practices encouraged farmers to
take up multiple cropping. While some prod-
ucts like cotton, chilli, coriander are under-
taken in organic conditions and duly certified,
others are near organic.
CCDhas been facilitating corporate linkages
from 2006. Based on suggestions from the
corporates, the company has been initially
hiring processing units and then investing in
value adding facilities. The organic cotton value
chain initially started with ginned cotton to
be supplied to an institution in Pondicherry.
The company set up a ginning mill and then
moved to fabric making on the basis of direct
orders from international organisations. A
special purpose vehicle (SPV) was created
for investment in the cotton value chain with
co-investments from private sector/social
investors and PC.
Similarly, for mango grown under rainfed
conditions, initially they were aggregated and
supplied to corporates who in turn arranged for
pulping through local facilities. The company
worked with the farmers in tree management
through bio-pesticide management, organic
inputs which decreased costs of production.
Parle Agro, one of the major procurers,
asked PC to invest in processing to supply
high-quality pulp. With investments from a
Canadian organisation, a SPV, Kalasam Sacred
Foods, now manages the mango pulping and
marketing. About 2,000 tonnes of mango are
pulped and marketed each year.
CCDmentions that PCneeds deeper pockets
for initial investment in social mobilisation,
engaging professional staff and also for initial
investments in land etc., AVT McCormick,
a company exporting spices and condiments
has forged partnership with PC for supply
of condiments, such as chilli, coriander etc.,
For the primary level cleaning, drying and
grading, the export company is ready to invest
in machinery worth
`
20 million to handle
large volumes which will be in the company’s
books; however, PC will have to invest in land,
drying yard and godowns for the machinery to
be installed, which will cost
`
5 million. CCD
finds that the primary cleaning and selling can
increase the price by 20 per cent and is trying
to find ways of investing in the infrastructure.
CCD has been having corporate linkages
for 17 years and shares detailed information
about the purchase orders, zero rejections and
financial transactions to build new linkages for
co-investments.
Source:
Discussions with CCD.
Box 5.1:
The CCD experience: Dealing with corporate partners is not easy, but doable
7
Mr. Praneet Mutha, Director, Vippy Industries Ltd. Dewas, Madhya Pradesh. India, as mentioned in Sustainable
Soy newsletter, February 2015.
Volume: 2 Issue: 1, February 2015, a quarterly newsletter of National Platform of Sustainable Soy.
