MP farmers take corporate route to prosperity

REBUILDING RURAL INDIA

Amidst reports of farmers' suicides and farmland acquisitions, here is some good news from the rural heartlands of Uttar Pradesh and Madhya Pradesh where land reclamation projects have helped farmers improve their earnings. Here is the last of a three-part story...

Dinesh Nagar hardly has the look of a company executive. He is dressed in a modest shirt and trousers and tills his fields for a living.

Yet, he is a key shareholder and the chairman of a company called Khujner Agriculture Producer Company (Private) Limited (KAPCL), registered under the Companies Act.

"Our company procures and grades the yield and markets it. It also trains farmers," says Nagar, with quiet pride.

For long, Indian farmers have faced the problem of marketing their produce. As a result, a significant part of their output rots in the field and in transit. Also, since each farmer carries his produce alone, he is not able to get a good price in the market. Farmers like Nagar have been able to address these problems to a large extent by forming KAPCL.

The company, named after Khujner town, where it is based, has been functional since May 2006 and does business in no less than 100 villages in five blocks of Rajgarh district of Madhya Pradesh. Other shareholders and directors of the company too are farmers like Nagar. All told, 1,200 farmers own the company's stock.

KAPCL has its roots in the state government's District Poverty Initiatives Programme, under which farmer groups, called common interest groups, have been formed in 14 districts.

These groups pursue a common livelihood and are kept together with a grant, besides assistance in irrigation. These groups are now forming larger clusters or producer companies - all registered under the Companies Act.

"These companies are essentially a federation of common interest groups," says Ravindra Pastor, project coordinator, DPIP. So far, 17 such companies have been formed in the districts and are doing business in farm produce and dairy products.

In the initial stages, these companies get support from the state government. While the government provides a consultant who assists the farmers in setting up the company in accordance with their business plans, a special state fund provides Rs 7 lakh.

The companies can also get up to Rs 25 lakh from the banks to expand. The promoters (farmers) contribute Rs 10,000 each.

As Madhya Pradesh is the country's largest producer of soybean, the producer company is concentrating on the crop. At the moment, KAPCL is small - it had a turnover of Rs 7.5 lakh last year. But for this year's kharif crop, it has set a target of marketing soybean worth Rs 5.5 crore.

The company has already tied up with big names like the MP State Agro Industries Development Corporation, state MARKFED, NSC, State Seed Corporation and some private companies like Bhumi Putra Agritec and Monica Seeds, says Nagar.

KAPCL has even got licences for retailing seeds and fertilisers as well as a trading licence from the Agriculture Produce Marketing Committee.

Still, KAPCL has a long way to go. The company is yet to reach out to all areas in the district, which needs more such companies. For example, Nalajhiri, a village 75 km from Nagar's, is not covered by the company.

"Though the DPIP has benefited our common interest group by providing money, we still have a problem with marketing, for which we have to through the commission agents in the nearby market," said Bapulal of Bholenath Samuh (a CIG of five members) in Nalajhiri. The remote village, which is showcased by the DPIP as a success story, has had no electricity for almost two months now.

"Had it not been for timely rains, the mirch (chilly) crop and other vegetables would have dried up," a group member said, pointing to the motor pump set sitting idle on the edge of a well with abundant water.

The correspondent's visit was sponsored by the World Bank.