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Group enterprises – A way to enhance small farmer livelihoods

Mallesh.H.R and Parthasarathy.T

Maize is a popular crop among farmers, especially small holders in Karnataka. By coming together as a group, the maize growers in Chikkayemmiganuru village established a collective enterprise and gained better control over the price. By recycling empty cobs as fuel, the group has shown its sensitivity towards environment, while earning income out of crop waste.


Briquettes, a greater alternative for fossil fuels is prepared from agri-waste

In Chikkayemmiganuru village of Holalkere taluk in Chitradurga district, nearly 80% of 840 families cultivate maize under rainfed conditions. Small farmers in this village prefer maize over other crops mainly because it can be easily cultivated as a rain fed crop and pest-disease incidence is less, so the cost of cultivation is minimal. Normally, farmers can expect grain yield of 60 to 75 quintals per ha which can result in a moderate profit of around Rs.15,000, with lesser risk compared to other crops. Different food items in the local diet like Upma, Dosa, Roti, Vermicelli etc., are made from maize. It is also used in making poultry feed and cattle feed. The crop residue from maize is high and is used to increase the organic matter content of the soil. The crop residue is also used as fodder for cattle. The empty cobs (after removal of grains) have good heat potential and can be used for fuel purposes. However, farmers consider the cobs as waste and give it away at throw away prices to local traders or burn them in the fields itself.

In May 2017, Myrada Green College (MGC) conducted a training programme for 30 farmers from this village on improved cultivation practices in Maize. MGC is a skill building institution aimed at developing agriculture-based enterprises. It was established in 2016 by Myrada in partnership with Welthungerhilfe and supported by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and German Federal Ministry of Economic Cooperation and Development (BMZ) under the Green Innovation Centre programme.. Agri-business promotion Centre (ABPC) is a unit within the MGC which supports enterprises formed by Green College Trainees.

Farmers group manages the operation and maintenance of maize thresher

The trained farmers were organized into a maize growers group called “Samrudhi Mekke Jola Belegarara Sangha”. The group meets on fifth of every month to discuss their experiences of putting into practice the techniques learnt during training and other issues related to farming. The members save Rs.50 to 100 every month and till date have savings of Rs.19,520/- deposited in their bank account.

The enterprise

One of the problems that emerged during farmers’ discussions was with regard to maize threshing. Generally, after harvest, maize is dried and stored in famers’ houses till market prices are good enough. Before selling though, maize must be threshed, i.e. grains separated from cobs. However, farmers face difficulty in getting labour for manual threshing which is also very time consuming. Machine threshing is another option, which is also easier than manual threshing. For this, small farmers depend on traders or bigger farmers who own a thresher. But often, farmers find it difficult to get a thresher on time, when the market prices are high.

For a small farmer, not getting a thresher in time would mean losing out on good price in the market. This could be understood by looking at the market price of maize in one season. In the previous season (November’17 to April’18), the market price of maize fluctuated between Rs.1060 – 1280 per quintal. The price depends on various factors like maize arrivals from Bihar, international market conditions, release of old stocks of maize etc. In such a dynamic situation, farmers keep a close watch on the local market, and try to sell when the market price meets their expectations (Rs.1250–1300 per quintal). But, whenever the market prices are high, there is a rush among farmers across the region to thresh their maize and transport it to the market. So, there is a lot of demand for threshers and farmers who do not own a thresher face a frustrating situation of having maize produce without being able to sell it even though the market prices are good. In one of the meetings, Karibasappa, member of group said regretfully,” If only I could have threshed my maize when the market price was Rs. 1200/ quintal, I could have sold my 96 quintals of maize at that time and earned extra Rs.10000”. The group discussed the problem with Myrada Green College and jointly explored ways to support the farmers to thresh the maize in time so that they would be ready to sell when market prices were high.

MGC’s ABPC provided the details of maize thresher to the Group. The group immediately showed interest in managing their own maize thresher. Myrada staff along with group representatives discussed about the cost of the thresher and ways to procure it. The cost of the thresher was Rs.188,000/-. The farmers found it unaffordable with their meagre savings. The Department of Agriculture had a scheme to provide the thresher at a subsidized cost of Rs.88,000/- to individual farmers. Even this amount was beyond the reach of farmers.

Therefore, ABPC extended support of Rs.88,000 to the group for the purchase of subsidized maize thresher. The group identified a member, Gu. Nagappa, who was eligible to obtain the subsidy. A tripartite agreement between the MGC, the group and the farmer (Gu.Nagappa) was signed to allow the ABPC to have the managing rights over the machine on behalf of the community. The thresher was procured in December 2017. It was handed over to Samruddhi group on 2nd of January 2018, to be operated for one season.

ABPC facilitated the group to work out the details of operation. The rate for threshing for non-members was fixed at Rs.50/quintal and the group members were offered a discounted rate of Rs.45/quintal. One member, Kalleshappa was selected as the operator. It was decided that the running costs, maintenance, insurance will be met through the income from threshing. From the remaining, the group will retain Rs. 36,000 and the rest will go to Kalleshappa.

Marketing grain

The entire process of threshing lasted for 51 days and catered to the needs of 78 farmers. As per the agreement, the operator returned the thresher to ABPC after completing the threshing process, in May 2018. The enterprise resulted in profit of Rs. 36,280/- (after payment of Rs.36,000 to group),  which was retained by the Operator as agreed. The details are given below.

Thresher cost Rs. 88,000.00 (Purchased under subsidy) Total cost of the thresher is Rs. 188,000.00
  Expenditure Income
Sl. No. Particulars Unit Unit rate Total amount Particulars Unit Unit rate Total amount
1 Diesel cost (Litres) 150 66.00 9,900.00 Maize threshed (Quintal) 2881 50.00 144,050.00
2 Oil cost (Litres) 15 110.00 1650.00
3 Service cost 2 1,300.00 2,600.00
4 Labour 45% of total earning 57,000.00
5 Amount paid to group (FIG) 36,000.00
Total 107,770.00 Total 144,050.00
Profit to the operator 36,280.00

 

Rajkumar from nearby Kodagavallihatti village says “Kalleshappa provided excellent service to us and the quality of thresher is good. I threshed 120 quintals of maize when the price was good in market and paid Rs.6000/- to Kalleshappa after I got the payment from trader. Earlier, I was trying to get thresher from my village and asked for it several times when the price was going high but failed to get it. I got the information from Ashok Kodagavalli (a group member) about the maize thresher at Chikkayemmiganuru and the rent is lesser. Then myself, with some other farmers called Kalleshappa. Next day he started threshing at our village. In total, all the farmers who obtained the services from the thresher are happy because of timely threshing which in turn helped them to get good price.” The threshing enterprise has also helped Kalleshappa, the operator, to earn a reasonably good income for the season. 45% of the earning was given to 4-6 wage labourers, who were employed on daily basis depending on the workload.

Additional benefits

Besides this, ABPC also assisted the farmers to sell maize cobs directly. After separating grains from cob, empty cobs are heaped and used as fuel or for compost making. Sometimes farmers sell it to middlemen for throw-away prices or burn it in their fields.  The middlemen quote a low lumpsum price to farmers for the cobs.

Agri-waste (maize cobs/groundnut shells) is transformed into briquettes, a greener alternative to fossil fuels and has a good demand.

To get good prices for cobs, arrangements were made to collect cobs from the farmers’ fields and transport it to the Gayathri Agro Fuels (GAF) in Challakere which is 80 to 90 Km away. GAF is a successful company working with the idea of “Wealth from agri-waste” – agri waste can be maize cobs / groundnut shells / coffee shells – GAF crushes the agri-waste into powder and compacts the powder to produce briquettes used in boilers, power plants. There is a good demand for briquettes which is a greener alternative to fossil fuels – oil/coal. In fact the demand is so high that GAF is willing to procure as much agri waste as it can be provided. ABPC is facilitating the farmers group to supply cobs directly to GAF for 2-3 times the price farmers used to get earlier. As simple as the linkage may sound, there are still lot of operational nitty-gritties to be learned. The main skill in the enterprise is loading the trucks with maximum cobs. Initially, the entrepreneur could load only about 5.5 – 6.5 MT, but with experience, about 9-10 MT is being loaded in a truck.

Details of the enterprise are given below:

Sl. # Empty maize cobs procured Price in Rs./tonne Total amount (Rs.) Remarks
1 5.5 tonnes 2400.00 13,200.00 1 Truck
2 6.2 tonnes 2400.00 14,880.00 1 Truck
3 6.5 tonnes 2500.00 16,250.00 1 Truck
4 6.00 tonnes 2500.00 15,000.00 1 Truck
Total 59,330.00

 Expenditure details – 1st truck

Sl.# Particulars Quantity Exp. Details (Rs.) Remarks
1. Cost of empty cobs 24.2 tonnes 17,450.00 Lump sum price purchased from farmers
2. Transportation 4 trip 26000.00
3. Labour cost 19 11500.00 Loading/unloading
Total 54,950.00

Cobs sold to GAF         – Rs.59,330

Expenditure details        –  Rs.54,950

Net profit                      – Rs.4380/- for 24.2 tonnes

While selling cobs through middlemen, farmers used to get around Rs.250 to 300/- per tonne, while with direct purchase of empty cobs without middlemen, farmers can get 650 to 750/- tonne. Halamma, a farmer from Holalkere village, says “I had grown maize in 3 acres of land. I used thresher and sold 48 quintals of maize @ Rs. 1280/ quintal. I also sold 0.6 tonnes of empty cobs and could earn extra amount of Rs.550.” Despite these benefits, it is a challenge to convince the farmers group to get involved the business of selling of cobs as it is usually seen as low value waste, so the group has identified entrepreneurs for this.

Seenappa, the village level entrepreneur who coordinated the business between Gayathri Agro Fuel Challakere and farmers says “I learned how to buy cobs from farmers and load it in trucks. In future, I can earn Rs. 700/ truck/day. It is necessary to motivate the farmers to sell empty cobs directly to GAF through farmers group”.

Challenges and way forward

The group has realized that threshing can be a profitable enterprise. Encouraged by the results, the group is planning to procure one more maize thresher. Before that, there are several challenges and learnings from the experience, which need to be addressed. There is wastage of grains along with the cobs, which needs to be reduced by making certain improvements in the threshing process. As the thresher remains idle after maize threshing, there is a need to explore the possibility of using the same thresher for different crops like sunflower, finger millet, jowar etc. Also, presently ABPC is taking care of  maintenance issues and this needs to be taken over by the community. Also, the insurance does not cover accidents/ damages during the transit of the thresher from one place to another, which needs to be looked into.

Having tasted success in working together for the threshing enterprise and selling empty cobs, this season, the group worked together to procure inputs in bulk, for the upcoming season. Thus, the farmers got the inputs at a discounted rate, in time, without having to take loans from money lenders.

Another related enterprise that farmers are experimenting with, is the chaff cutter- for cutting maize crop residue into small pieces, before feeding it to cattle. By doing so, wastage of maize crop residue can be reduced significantly. The group is also trying to sell maize in bulk to poultry and cattle feed companies. B.M.Vidya, MGC coordinator for the maize training says “At the training, the participants learned not only farming practices but tried to look at agriculture as a business. While discussing their issues, they realised that their strength lies in working unitedly as a farmers’ group, as it enables them to convert their problems into innovative business opportunities. A journey of a thousand miles begins with a single step – these farmers have made a small beginning with the self-belief that their future and the future of farming rests on their strong shoulders.”

Acknowledgements

The authors would like to acknowledge the support of many colleagues and friends for their contribution, which makes such initiatives possible.

Parthasarathy.T

Project Coordination (Green Colleges – Karnataka and Maharashtra)

Welthungerhilfe

Project Office, Myrada

#2, Service Road, Domlur,

Bengaluru, Karnataka 560071

Email: partha.sarathy@welthungerhilfe.de