SHGW and Shri Jagdamba Samiti have come together since 2006 to work on business driven social development in India, focusing on cotton, coffee and apples in the states of Andhra Pradesh / Maharashtra, Kerala Himachal Pradesh and Uttrakhand, respectively. SHGW, FFT and AOFG collaborated with Shri Jagdamba Samiti (SJS), an NGO functioning in Uttrakhand on the Apple project in 2007. FFT was entrusted as the consortium leader of organisations working with the SHGW’s initiative in India. By December 2008, SJS was entrusted as the supporting agency to coordinate the apple project. AOFG had subsequently associated for coffee project. SJS (In apple project) by now has set up six collection centers functioning under Joint Venture Companies (of fresh food technology India and participating farmer trusts) these farmer trusts are the representing legal entities of the collectives of small and marginal farmers in the areas of Dhari, Purola, Pissaun, Tyuni , Harshil and jhala (Uttarankhand) India. Approximately 500-700 farmers are associated with one trust and thus far 3800 farmers have been registered as primary suppliers and beneficiaries of the project.
Each collection centre has a facility to sort and pre-cool apples to a capacity of 500 Metric Tons (MT) in one harvesting season (Aug. to Oct.). A Controlled Atmosphere (CA) Storage facility has been constructed in Naogoan with a capacity of 1000 MT to store apples for fetching more prices by selling off-season (This Company also set up as a joint venture of an apex trust of all six trusts and fresh food technology). The six farmer trusts in Dhari, Pissaun, Tyuni, Harshil, Jhala and Purola, so far, have brought together about 3,800 small and marginal apple growers. The goal is to raise the membership of farmers to 10,000 by the end of the project period. An opportunity for women farmers also created by organising 1200 women in women trust for processing of left out fruits for fresh juice and other processed item in the form of juice processing facility adjoining to the long term apple storage.
Stichting Het Groene Woutd (SHGW) a family fou8ndation of Netherlands and Shri Jagdamba Samiti (SJS) initiated an inclusive business model by engaging the small and marginal farmers in apple value addition business chain. This would result in creating more employment, income, technical skill and local capacity for the apple growing farmers of Tyuni, Purola, Nogaon, Harshil and Taknor of Uttrakhand, India. The basic idea here is to use the know-how and capital base accumulated at the tip of the economic pyramid to develop its base.
Collaborations between the private and non-profit sectors opening up opportunities to finance the cold chain Business Models. The actors involved are mutually supportive and complementary in terms of expertise, experience, networks and access to external resources. These actors, collectively referred to in this paper as the “Social Business Management Consortium”, should obviously have a shared vision on social/economic development as prime drive to participate in this approach. They can be categorized in four groups:
? Producer: Particularly the farmer groups’ organiosed in farmer trusts at six different locations i.e. Tyuni, Purol, Dhari, Pissaon, Dharali and Jhala of Uttrakhand.
? Inclusive Development actors: Particularly knowledge/training institutions, government and (international) development agencies and NGO.
? Business partners: Experienced & social conscious entrepreneurs
? Financial supporters: Social investors / banks and Govt. agencies
Based on the above Social Business Management Consortium, it is clearly specified that once the company makes profit, this profit can be allocated for three purposes:
? Repayment of the investment to the social investor
? Capitalization of the company for further growth
? Premiums to supplying farmers addition to purchase prices
APPLE PROJECT as cold chain in Uttrakhand
The inclusive business model through cold chain of apple is developed by a tripartite partnership of SJS, farmer trusts and SHGW in Uttrakhand. SJS with the financial assistance of SHGW launched the apple project with the realization that small farmers in a market-oriented agribusiness get further marginalized mainly due to the dominance of ADHATIS, a chain of well-organized intermediaries who control the entire process from credit supply for farm inputs, transportation and marketing of produce. In this business model the farmer organizations become equal business partners with private sector parties and a social investor. This social investor is willing to invest in setting-up of agro-businesses, which can create sufficient value addition to the farmer’s products in order to become healthy, self-sustaining joint companies of participating farmers. The farmer organization themselves become shareholder in this new company, alongside the social investor. The ultimate aim of this approach is that the economic benefits of the company are plough back to the participating farmers, mostly in the form of premiums over their supply (based on quantity and quality), while the investments made by the social investor are fully repaid on commercial terms.
In 2007 this inclusive business aims to empower apple growing small farmers in India and to increase their income level substantially. For this a Controlled Atmosphere (CA) Storage facility has been constructed in Naogoan with a capacity of 1000 MT to store apples for off-season sales, so that farmers will get a good value for their apples. The CA store has been build up by the Joint Venture Company named KINCAID Agri projects (Himalayan farmer trust and FFT India are the shareholders) and run by FFT Himalayan fresh produce Pvt. Ltd. (A company of FFT India and Himalayan Farmer Trust.
In this model Farmer Trusts has been formed for the purpose of handling of produce and value addition by a farmer organization. Farmer Organizations function at the area level to bring together farmers from different villages. The Farmer Organizations strive to organize farmers to get eventual ownership owning a Joint Venture value-addition enterprise through the legally registered Farmer Trust created by this Association and the facilitating development organization (SJS). This trust shall distribute the benefits and shareholding of the enterprise on the basis of patronage.
The farmers sell their yield to the collection point against a transparent price, for which a commonly agreed formula has been determined. The apples are bought by the primary producing company (at present six) at collection point where apples are sorted in sizes and pre-cooled in a pre-cooling container. This Joint Venture Company which runs the Collection Centre is engaged in the collection, procurement, sorting, grading, packing, possibly pre-cooling and reselling of the apples. The Farmer Associations work in between the Collection Centers and individual farmers at village and orchard levels. The Farmer Trust functions as the would-be owner of the Joint Venture Company eventually. Currently it holds a stake of 10%. Therefore, as a partial owner and would-be owner, the Trust makes decisions that bind the work of the Joint Venture Company. SJS works with all the levels as a facilitator and service provider. Though SJS is not holding stakes in terms of capital, it is represented in governance at operational units of the Trusts. Thus far, the project has set-up 6 of such farmer trusts and 6 joint companies for this primary processing. Now the JV Companies sell their A Grade apples to FFT Himalayan Fresh Produce Private Ltd for long term storage and B & C Grade apples to market and to the Himalayan Juice Factory. After completion of procurement process training session begins for the farmers for different activities of their apple orchards by SJS.
The ultimate profit and assets of the legally registered farmer trust shall be owned by the farmers in proportion to their cumulative patronage. Premium shall be distributed on the basis of annual patronage at Annual General Meeting conducted in March/April. Share distribution shall be based on amount of produce they give to the organization. This shareholding is decided by cumulative patronage (supply of the produce). On repayment of the investment/ loan, the farmer trusts shall be eventual owners of the business. For the same they would be owners of the assets of the trust on the basis of their cumulative produce given in the trust.
The second value addition process of cold chain development i.e. purchase of refrigerated trucks and a state of art control atmosphere storage for apples started in September 2011 where four collection point joint venture companies supplied 430 Mt. Grade apples from August 2011 to Oct. 2011 for trail run through four refer vans and the joint venture company FFT Himalayan Fresh produce Pvt. Ltd. (A company operating the CA storage) sold these apples from Feb. 2012 to April 2012 on relatively good prices in the market. The storage company also have the same principle of profit utilisation as collection point companies to repay the investment, capitalise the company and pay additional premium to participating farmers through collection point trusts
Operations, operational units and information flows
As explained in the previous chapter, the key operational units of the Apple Service Programme are the following:
- Farmer Association at area level (six Associations in six project areas – Dari, Purola, Pissaun, Chausal, Harshil, jhala Mundhol and Sari)
- Farmer Trust at area level (four Trusts, also called A,B,C,D Trusts)
- Joint Venture Company, at area level six JVCs)
- Himalayan Farmer Trust (E Trust), covering all areas, based in Nagoan
- Himalayan Fresh Produce (Pvt) Ltd., based in Nagoan
The other key stakeholders of the Apple Service Program are Shri Jagdamba Samiti (SJS), Fresh Food Technology (FFT) – both at The Netherlands and India levels and Stichting Het Groene Woudt (SHGW)