There are several issues that small holder farmers face in day-to-day agriculture. Besides facing natural vagaries, they deal with credit and market related issues.
Negotiating the local market
Small holder farmers from remote rural areas, with an average produce of 10-15 bags per farmer cannot bear the transportation cost to State-run market yards. Many of the APMC market yards in Anantapur district (Dharmavaram, Penukonda, Hindupur, and Anantapur) are very far away from the villages. Very often these APMC yards are also not active. Therefore farmers end up selling their produce to local traders.
Local traders form a syndicate and fix the price. Usually these prices are a little higher than the price displayed in www.agmarket.in. Though traders pay slightly higher prices they more than recover this through weighing. Local traders do not actually weigh every bag of the produce; they buy it on lots. Sometimes, traders weigh one or two bags of the farmers and equate it with their big bags. In effect it ends up in a big loss to the farmer as 10 of their bags go for 7 of the traders bags and thus get paid only for 7 bags. In this process they lose around 20% through weighing alone.
While loading the bags, whatever is left over belongs to the labours who are loading it. Traders incentivize the labourers thus but the cost is borne by farmers. Farmers can’t complain as they are really not in a position to bargain.
Traders don’t always buy whatever is grown. During bumper crop times, the prices offered by them are lower than MSP. However, these do not get reflected in the value-added products like oils, cakes etc. Hence, it is the farmers who end up bearing the brunt of the fluctuations and volatility of markets.
A cooperative hence becomes an effective means to pool resources, distribute costs, and negotiate the volatility of the market.
All the produce purchased from farmers are processed by Dharani. Millets, paddy, groundnut pods and pulses are processed into millet rice, paddy rice, groundnut oil, and peanut etc. All value-added products are sold under the brand name Timbaktu Organic. The profits from such value-addition gets passed on to the farmers through an annual patronage bonus after deducting the administrative costs. Patronage bonus is based on the quantity of produce supplied by the farmer.
The Cooperative also mobilises credit on behalf of member farmers from multiple sources at lowest interest rates possible.
In addition to procurement, sales and credit, the cooperative also takes care of the interests of the farmer’s vis-à-vis government and private companies. With the cooperative representing each members in all matters, the bargaining power of farmers is much higher than otherwise.
Thus, a cooperative form of business helps all the member farmers in the long term.
Why a village level sangham?
The 1800 farmers in Dharani cooperative are spread over 45 villages. The mandal level cooperative is 20-30 kms. away for some of the villages and for some as far as 40 kms. away. In such cases transaction costs of providing seed, communications, agricultural extension services and procurement become expensive. A local level sangham of 15 farmers makes such services accessible and cost-effective.