India Post, MCX project to empower farmers

Empowering rural farmers by providing them spot and futures prices of farm commodities and access to agriculture experts is the main objective of Gramin Suvidha Kendra, a joint initiative of MCX and India Post, said Lamon Rutten, joint managing director, MCX.

Currently, Gramin Suvidha Kendra is providing services from four centres""at Jalgaon and Dhamgaon in Maharashtra, Unjha in Gujarat, and Itarsi in Madhya Pradesh.

MCX, India's leading commodity exchange, has partnered with India Post since June 2006 to create an electronic price link between small village post offices and the rest of India.

This link helps farmers make informed decisions on which crops to plant and when to sell their produce for best returns, Rutten said.

"India Post has a great reach across the country, and through this project we are harnessing this reach and their logistics to disseminate prices through strategically placed blackboards and commodity price printouts circulated with their mail," Rutten said.

Farmers pay a one-time registration fee of Rs 11, and they pay Rs 10 for each query on issues such as weather patterns, pest management, and use of fertilisers. The blackboards and printouts contain information about local spot prices, all-India spot prices, and futures prices on existing contracts.

This helps farmers ascertain the likely movement in price and decide whether to produce a certain crop or to hold or sell their produce. Farmers are able to hold their stocks in warehouses, and they are able to get loans at lower rates on the basis of their warehouse receipts.

"This gives farmers the ability to not just hold back stocks but also take longer term price decisions, and also prevents them from indulging in panic selling," Rutten said.

The success of the pilot projects in select areas of Maharashtra, Madhya Pradesh, and Gujarat has led to two management schools to approach MCX to do a case study of this initiative. The government of Maharashtra has approved extension of this project to 40 more post offices covering about 200 villages in 2008.

"World Bank has agreed to fund some part of the project, but the state government believes that the model is a viable one and is ready to kick-start the project even before the international funds come in," Rutten said.

Apart from India Post, MCX has roped in National Bulk Handling Corporation and major seed, fertiliser, and pesticide companies, and is also planning tie-ups with insurance companies for this initiative.

NBHC, which is an arm of MCX's parent company Financial Technologies, has been providing warehousing and fumigation facilities, and assuring the quality of the produce stored in their warehouses, Rutten said.

Shriram Fertilisers and Chemicals, a DCM Shriram Consolidated Ltd Company, has been the initial partner whose fertilisers and other products have been sold to farmers through India Post at steady rates and with assured quality.

Shriram Fertilisers has provided nearly 70 per cent of the total cost for setting up the first stage of this initiative. The initial expenditure for setting up one project is Rs 275,000, and the recurring cost is Rs 30,000 a month. "Every project needs to grow and we are now looking at getting in more partners to benefit farmers in all possible ways," Rutten said.

Mahyco Seeds and Syngenta India are the other players who will sell their products through branch postmasters. Branch postmasters have been getting 1 per cent commission for selling these products, but this incentive will be raised to 3 per cent in the coming days, Rutten said.

"Once the National Spot Exchange Limited, MCX's spot venture, receives (the) requisite approvals, farmers can directly sell on the online platform and earn lucrative prices," he said.

Rutten clarified that Gramin Suvidha Kendra was part of MCX's corporate social responsibility initiatives and was not intended to be a profit-making venture. "It is primarily intended to integrate farmers with the rest of the agriculture ecosystem and provide employment opportunities," he said.

"We are just demonstrating a viable model and want other people to not just contribute to this initiative, but be enthused to choose different models." Rutten said India was too diverse a country for a single approach to succeed everywhere.

"Each state and each village has its own peculiar set of problems. We are also looking at other partners, as there may be places where branch postmasters may not be very dynamic and so the initiative may suffer," he said.