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Agri-Business Club, IIM Ahmedabad The Hyphen

September 2010

September 2010O N N E C T I N G B U S I N E S S T O A G R I C U L T U R E

Experts Opinion on

Retail Revolution in

India

Tapping The Rural

Markets

Biodynamic Agriculture

in IndiaRural Entrepreneurship-

Exploring opportunities

Indian Dairy Sector:

Opportunities and

Challenges


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September 2010

Dear Readers,

It gives me immense pleasure to put forward the first issue of

The Hyphen for the academic year 2010-11. I am pleased to inform

you that the Agri-Business Club of IIM Ahmedabad has decided to

make The Hyphen a quarterly magazine from this year onwards.

Consisting of articles contributed by students, academicians and

industry experts, this compilation aims to present different

perspectives on a variety of issues affecting the agri-business sector

today.

Let me take this opportunity to give you more details about the Agri-Business Club and its

activities. The Agri-Business Club of IIM Ahmedabad was founded in 2000 in the light of a

separate course PGPABM being offered at the institute. The mission of the club is to provide

students a forum, outside the classroom, which they can use to delve deeper into the arena of

agribusiness. It aims to provide a channel for interaction between the students, academia and

industry participants to develop this nascent area further and to allow them to achieveexcellence in this field. To facilitate this process, the club hosts a variety of formal and informal

activities throughout the year. It includes conducting workshops involving industry experts,

organizing various student events and competitions, maintaining an article repository and

holding a summer preparation program for PGPABM participants.

With this I leave you to explore the world of agribusiness. Hope you find this edition of

The Hyphen interesting, enriching and enthralling. Feel free to write us your feedback and

comments.

Happy reading!

Vaibhav Kumar

Coordinator, Agri-Business Club

From the Coordinator


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September 2010

The Hyphen team would like to acknowledge the constant guidance and support extended by

Professor Sukhpal Singh and the panel of evaluators for Hyphen. We are also grateful to

Professor P.K. Sinha for giving us his valuable article and being associated with The Hyphen.

We would also like to express our heartfelt gratitude to Mr. Shiva Mudgil, an IIMA alumnus and

presently, Dairy Analyst, FAR, Rabo India Finance Ltd for contributing his article to the magazine.

And of course, as for any student magazine, the mainstay for Hyphen also remains the same -

contributions from the student fraternity. We take this opportunity to thank one and all who

contributed articles, helped in editing and proof reading and all those also whose articles could

not be published, for their painstaking efforts in Connecting Business to Agriculture.

Team Hyphen

Acknowledgement

IIM AHMEDABAD


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September 2010

Agriculture not only gives riches to a nation, but the only riches that

she can call her own. -Samuel Johnson

The quote given above is applicable to the entire gamut of commercial

activities that form what we today know to be the Indian

Agri-Business Sector. The only sector capable of quite literally

producing wealth.

Welcome readers, to the first issue of The Hyphen, for the academic

year 2010-11. In its quest to bring out the burning issues at the frontiers of agribusiness, this

edition of Hyphen includes valuable insights from the leading academic researchers of IIM

Ahmedabad, cutting-edge analyses from industry experts, and of course excellent contributions

from the budding future business leaders of our country.

The next decade belongs to Retail. With foreign players intensely lobbying the Indian

government to open up this sector for FDI, the retail sector looks to be on the cusp of an

economic explosion. With rural markets projected to dominate the industry landscape in India(acquiring a total market share of over 50%), and food and grocery items expected to lead the

growth in the organized retail industry; this sector fully deserves to be the center of our

attention. In this context we have Professor PK Sinha and Professor Sukhpal Singh of IIM

Ahmedabad drawing our attention to certain easy-to-miss yet critical concepts that are required

for a successful foray in this sector. Under Industry Speak, we have an analysis of the Indian

Dairy Industry from industry expert Mr. Shiva Mudgil, of Rabo Bank, highlighting the

Opportunities and Challenges within the sector.

While at it, the importance of the Rural Sector can never be downplayed within agribusiness.

Tapping into the Bottom of the Pyramid has become more important now than ever, as

companies move away from cut-throat Red Ocean territories and explore for uncharted Blue

Oceans to unlock their profit potential. Hence we have several budding future business leaders

look at the various strategies that can be used to tap these lucrative rural markets, poised to be

the next big thing since the Klondike Gold Rush.

From the Editors desk

Editorial


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September 2010

Of course, in all this one cant forget Sustainability, the differentiator between a flash in the

pan and the legend. The world of today, with its exponentially growing population, needs

solutions that not only work today but will remain workable tomorrow. To this end, our

contributors examine two cutting-edge innovations Bio-Fuels and Bio-dynamic Agriculture.

Finally we also bring to you certain unique, interesting and fun facts related to the agri-business

world. We hope that you enjoy reading this edition of The Hyphen as much as we enjoyed

creating it.

Please share your feedback at [email protected]

Happy reading!!

Abhinav Jha

Editor, Hyphen

From the Editors Desk.. continued...Editorial


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Featured:

Tapping the Rural Market

Ms. Arpita Kar, Consultant, Deloitte

Opportunities and Challenges in the Indian Dairy

Sector

Mr. Shiva Mudgil, Dairy Analyst, Rabo India Finance

Ltd.

Campus Hues:

Biodynamic Agriculture in India

Jyotsna Kumari

Expert Opinion:

Dont Fight Nature: Yours And Others

Dr. Piyush Kumar Sinha, IIM Ahmedabad

FDI in multi-brand retailing in India: Issues and Im-

plications for smallholders

Dr. Sukhpal Singh, IIM Ahmedabad

Contents

08

25

15

11

17


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Contents

Beyond The Campus:

Achieving 20% Bio-fuel blending

Akansha Saxena, SIIB

Winning the Rural Mind

Saiket Mondal, IIM Lucknow

Rural Entrepreneurship - Exploring Opportunities

Saurabh Dhawan, IMT Dubai

Others:

Invitation for Articles

Rajendra Singh - Jal Purush or Waterman of Rajast-

han

Spirulina - The Latest and Greatest Superfood defined

New Interesting Innovations in Food technology

Some Facts

22

27

30

33

10

14

24

21


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September 2010

Featured

Tapping the Rural Markets

Participatory inclusion of rural markets has always been a matter of vehement debate and

discussion. This article will largely focus on the more fundamental issue of recognizing the

significance of financial deepening in the larger perspective of economic growth.

Given the sophisticated array of markets and services that are available in the financial domain

today, the work of policy executives is as much to innovate as it is to find ways and means to

reduce the existing skew of these services merely

towards large enterprises. According to World Bank

estimates, close to 51% of the Indian population is

financially underserved as compared to 45% globally.

These numbers convey a significant urgency of

analyzing the current state of financial inclusion in

India and devise means of improving these statistics.

Reserve Bank of Indias credit policy for 2006-07 re-

quired the Convener Banks of the SLBC in all states to reach 100% financial inclusion in at least

one district under their area of operation. The No frills Bank accounts approach has the clear

objective of reducing the cost of financial intermediation so as to reduce entry barriers for the

rural poor. The Priority Sector Lending scheme imposes mandatory obligations on banks to

provide as much as 18% of net bank credit for direct agricultural activities.

Despite these efforts, it is still imperative to say that establishment of infrastructure both in an

institutional as well as in a technological sense form the core of any advancement towards

incorporating the rural population in the financial mainstream. Building strong institutional

infrastructure is pertinent. Though private capital is welcome, there is greater merit at this time

to encourage Public Private Partnerships which can help in developing more efficient systems.

Existing services

The presence of myriad microfinance institutions in the developmental sphere over the past

few decades has been noteworthy. It is remarkable that more than three thousand models

Ms Arpita Kar is an IIM Ahmedabad alumna from the PGPABM 2010 batch. She is presently

working as a Consultant with Deloitte. She can be contacted at [email protected]


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Featured

have emerged of a framework that relies on the basic ideology of the poor being capable of

taking responsibility of their lives and being self reliant. The primary impediments to the

transformation process vary from regulatory to ideological to operational issues, each of which is

significant enough to obliterate the process. Some of these are given below:-

Requirement of improving customer service As regulated commercial institutions, MFIs will be

in a position to provide a range of financial instruments. It is therefore imperative that these

institutions raise their level of customer service to address the need of an expansive client base.

Requirements of accountability An increased focus on the regulatory purview brings issues of

maintaining transparency and accountability.

Regulatory environment Evolving a legal structure unique to the requirements of the

microfinance industry poses a definite challenge. Resolving this criterion requires environment-

specific solutions that take into account political viability as well.

Human resource requirements A strategic cultural shift to a regulated financial institution

requires communication to the staff and giving clear direction and vision to the organization.

Requirement of competitiveness - While the advantages of a wider stakeholder base will be

available to the MFIs they will also have to deal with the repercussions of increased expectations

and competition. This will require operational efficiency as well as translating clientrequirements to a product portfolio to satisfy them.

The Private Equity Model

The recent interest of private equity in the microfinance sector is quickly blurring the division

between social and financial objectives. PE firms are primarily observed as substantially more

aggressive and difficult to regulate. However, there are inherent benefits to pursuing this road.

These may broadly be listed as

Substantial returns

Building scale while reducing costs

International expertise in finance and technology

However, the associated problems are both significant in number as well as magnitude. They are

Aggressive lending leading to over-indebtedness of clients

Shift of attention from poorest areas due to lower costs of transaction

Financial statistics may overrule development objectives


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September 2010

Featured

In the light of this, it can broadly be concluded that the reduction of cost of financial

intermediation in India is still work in progress and definitely requires to be closely watched by

traditional fundamentalists.

References

1Reference- FINO, retrieved from http://www.moneycontrol.com/news/business/ncrfino-partner

-to-overcome-barriers-to-fin-inclusion_383801.html

2Reference- Financial inclusion calls for new initiatives, retrieved from http://

www.hindu.com/2006/07/31/stories/2006073103551500.htm

Rajendra Singh-- Jal Purush or Waterman of Rajastan

Rajendra Singh is popularly known as the Jal Purush or Waterman of Rajasthan because of his

commendable efforts in revival of Johads, streams and rivers in the Alwar District of Rajasthan.

He and his organization Tarun Bhagat Sangh, is working along with the help of local villagers on

finding solutions for water harvesting. The organization also worked on revitalization of the five

rivers that went dry for a long time. Due to the active participation and hard work of the teammembers, River Ruparel and Arvari River basin

have revived and have become sources of water

after three decades of dryness.

Rajendra Singh has expansion plans in other

villages and also taking up a project on River

Luni. The work done by Rajendra Singh is an

inspiration for millions of others in the nation.

He was awarded Magsaysay Award for

community leadership.

Source -

1. http://www.ecoindia.com/education/water-man-of-rajasathan.html2. http://www.tarunbharatsangh.org/
http://www.moneycontrol.com/news/business/ncrfino-partner-to-overcome-barriers-to-fin-inclusion_383801.htmlhttp://www.moneycontrol.com/news/business/ncrfino-partner-to-overcome-barriers-to-fin-inclusion_383801.htmlhttp://www.hindu.com/2006/07/31/stories/2006073103551500.htmhttp://www.hindu.com/2006/07/31/stories/2006073103551500.htmhttp://www.ecoindia.com/education/water-man-of-rajasathan.htmlhttp://www.ecoindia.com/education/water-man-of-rajasathan.htmlhttp://www.tarunbharatsangh.org/http://www.tarunbharatsangh.org/http://www.ecoindia.com/education/water-man-of-rajasathan.htmlhttp://www.hindu.com/2006/07/31/stories/2006073103551500.htmhttp://www.hindu.com/2006/07/31/stories/2006073103551500.htmhttp://www.moneycontrol.com/news/business/ncrfino-partner-to-overcome-barriers-to-fin-inclusion_383801.htmlhttp://www.moneycontrol.com/news/business/ncrfino-partner-to-overcome-barriers-to-fin-inclusion_383801.html


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ExpertOpinion

Dont Fight Nature: Yours And Others

The winter and fall seasons* have lived up to their nature. Retail Industry has seen the worst

winter. For the organized retailers this is the first real winter after a very prolonged spring. I

always wonder how we try to alter the nature and the nature comes back to prove its real

nature. Came this winter and you could see white all over. The large trees covered with no sense

of life and the medium ones buried. Interestingly, small retailers, like grass, are flourishing and

seem to have come out winners. Everything seems to have gone into hibernation. Whatever

leaves were there on some of the trees fell during the fall season. Never ever did the Indian retail

industry witness such a wrath of nature. This time of course it was the human nature of greed

and running after a rainbow.

In spite of all this, I firmly believe in the Phoenix. Those with good intent and customer value

based business model would rise from the ashes.

When I look at the players in the industry, I can very clearly see the emerging classification of

retailers. The players need to understand that they have a DNA of their own and any other kind

of behavior would need genetic engineering which may not always be successful. The

classification is based on the size of a firm and its posture as given in the figure -

Dr. Piyush Kumar Sinha is Professor, Marketing and Chairperson, Center of Retailing at the In-

dian Institute of Management, Ahmedabad. He has over two decades of academic and industry

experience. Dr. Sinhas areas of research include retailing and consumer behavior. He can be

contacted at [email protected]

* The article was written in November 2009. Readers are advised to bear that in mind.


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ExpertOpinion

Tiger Retailers

Predators by nature, these are large players with killer instinct. They have power and speed. They

would identify their targets and would keep pursuing till they have hunted them down. Very

shrewd in their thought, they are much focused and would not mind using guile. They have the

ability to hunt during night. They are aware of the market and its structure to the T. What adds to

their stature is their majestic look and poise. Like the real jungle, they cannot let another tiger

enter their territory. Any other tiger coming in would face very stiff challenge which may lead to

one of them being killed. A constant warfare would be witnessed, till they have settled their

territory or one of them has been recognized as the leader of the pack. Such retailers are very

aggressive in their customer acquisition plans. After all they are hunters and would hunt even for

customers. They would tend to play the price and promotion game almost as a chore. The low

margin necessitates a large customer base and a large merchandise mix to service them. This

leads to larger store sizes fuelling the need to sell more due to higher costs. Thus, like the tiger in

a jungle, they would hunt the customers and feed on it to the fullest. Their business model is

designed to generate higher share of the wallet in every visit of the customers.

Elephant Retailers

These are large but are not predators. They have power but do not tend to be fast, unlessagitated. They are likable, look docile, and are respected for their unexercised power. They are

playful and believe in being part of a group. They set their target and keep moving on a

designated path. Nobody dare cross their path; not because the fear of attack, but the fear of

being stampeded by chance. Elephants feed of a variety of foodstuff and would seldom destroy

the tree or foliage. Essentially herbivorous, they know that their customers would not run away

and hence would tend to build a longer term relationships than a transaction based relationship

as in case of tigers. Their competitive strength comes from the fact that despite being powerful,

they use their energies to care and service the customers. Even when they match the prices of

other competitors, they use non-price values to attract customers. While due to their large size

and slow movement, they seem to be easy target. But they are not. They are nimble footed when

they choose to be one. As they say, one of the most pleasant sights in the jungle is a dancing

elephant. And the only animal that the tiger is afraid of is the elephant. Their business model is

designed around maximizing the share of the requirement of the customer.


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September 2010

ExpertOpinion

Piranha Retailers

These are small retailers who are week individually but as a school they can eat a whale out

within no time. Their power is their unity. Examples of these were seen when Cadila wanted to

enter the retail business. Just before their launch, the retailer association threatened to boycott

their products. The company had to postpone their launch and could not start their operation for

almost a year. Similar incidences were noticed with the entry of Metro as Reliance. As a move to

counter hypermarkets, some of the shops in the main street of Rajkot adopted the same brand

name. The small retailers in Europe form or become members of buying groups or centers to

achieve the economies of buying and offer product at a competitive rates.

Grass Retailers

These are independent small mom-and-pop stores. Most of the retailers in India would fall into

this category. Like the grass, they survive on small resources and grow everywhere. Unless the

weather is very harsh, they do not die. They live even during peak summers and winters. Even

after being weeded out, they pop up. Their resilience is well known. Even after being stampeded

by elephants they grow up. Most importantly none of the other types; Tigers, Elephants and

Piranhas eat them. They also do not attack and are happy with whatever comes their way. Their

competitive strength comes out of the immense emotional value that they create with theircustomers.

Recognize Your Nature

This classification brings out the fact

that while all of them live in the same

jungle, they have their own territory

(customer segments) and path. Despite

the power of the large retailers, even in

Europe and USA, more than 75% stores

are small. It is also noticed that even

the oldest formats are existing today.

Added to this is the information that

despite being the largest in the world Wal-Mart has just about 12% market share, indicating a

very fragmented industry. With the low cost of entry and exit of the small retailers, the

competitive intensity is high and consolidation a longer process.


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September 2010

ExpertOpinion

It is an established fact that, as consumers, all of us have a primary retailer and secondary

retailers, indicating that customers derive different values from these different formats, even

when buying the same merchandise. The business models of each of the formats is different,

hence the DNA of each of the types of retailers is different. Thus, even if a company enters

through a hybrid format of large and small store, the way of managing them is very different and

unless the company is designed and structure differently, it would be difficult to succeed. There

are not many examples of retailers across the world that has succeeded with several formats at

one time. Even Tesco and Carrefour started with one format, consolidated their business and

then introduced other formats one by one. Thus, If this is the nature of business, Indian retailers

must realize that (a) they need to co-exist with small retailers who simply cannot be obliterated,

( b) do not bite more that what they can chew and (c) recognize that to change the DNA and

behave like other formats one requires genetic reengineering.

SpirulinaThe Latest And Greatest Superfood defined

Spirulina is a microscopic blue-green algae in the shape of a spiral coil, living both in sea and

fresh water. It is a common food supplement produced primarily

from two species of cyanobacteria: Arthrospira platensis, and Ar-

throspira maximaProtein

Spirulina contains an unusually high amount of protein with,

between 55% and 77% by dry weight, depending upon the

source. It is a complete protein, containing all essential amino

acids. Apart from essential amino acids it also contains, vitamins,

minerals, pigments, essential fatty acids.

Spirulina has been proposed by both NASA and the European Space Agency as one of the pri-

mary foods to be cultivated during long term space missions.

Key Features of Spirulina tablets are:

One 3 g (6 x 500 mg tablets) serving supplies the

nutritional equivalent of TWO servings of

fresh vegetables!

Rich in antioxidants

Boosts energy and cellular health

More than 60% easy-to-digest all-vegetable protein

Rare food source of the essential fatty acid GLA

References:

1.http://www.relfe.com/

spirulina_health_benefits.html

2.http://en.wikipedia.org/wiki/Spirulina_

(dietary_supplement)

3.http://www.feralfoods.org/Spirulina.html
http://www.relfe.com/spirulina_health_benefits.htmlhttp://www.relfe.com/spirulina_health_benefits.htmlhttp://en.wikipedia.org/wiki/Spirulina_(dietary_supplement)http://en.wikipedia.org/wiki/Spirulina_(dietary_supplement)http://www.feralfoods.org/Spirulina.htmlhttp://www.feralfoods.org/Spirulina.htmlhttp://en.wikipedia.org/wiki/Spirulina_(dietary_supplement)http://en.wikipedia.org/wiki/Spirulina_(dietary_supplement)http://www.relfe.com/spirulina_health_benefits.htmlhttp://www.relfe.com/spirulina_health_benefits.html


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CampusH

ues

Biodynamic Agriculture In India

Amid the whole hullaballo of sustainable agriculture and organic agriculture, yet another name

has come to join the queuebiodynamic agriculture. Its proposers say it is a mix of art and

science of sustainable agriculture. Although it is an age old debate about soil being living or

non-living, they consider soil to be living as a worker on the farm. Biodynamic agriculture

involves certain principles and practices for healthy soil, plant and food for human beings and

feed for animals. In this system, energies from cosmos, mother earth, cow and plants are

systematically and synergistically harnessed.

So what is it all about? How are farmers taking it? How is market recognizing it? Is it profitable

enough to practice this mode of farming or its just like the corporate social responsibility type of

concept? Lets walk through this page to find answers of these few questions.

Bios means life and dynamos means energy, so here comes the word biodynamic which says

about keeping the nature forces at balance while producing food which will nourish and vitalize

humanity. By now, it must be clear to the readers that it involves using all the organic methods of

farming i.e. fertilizers, pesticides and most of the inputs which are generally used in their

chemical form. But it has some other features also which differentiates it from organic

agriculture. In biodynamic agriculture, people plan their activities according to lunar calendar i.e.

right from ploughing, sowing to harvesting, everything is planned with lunar calendar to have the

right balance of all energies in their farm ecosystem.

Jyotsna Kumari, PGPABM-II, IIM-Ahmedabad. The Author can be contacted at

[email protected]. You can also write to [email protected]


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CampusH

ues

Biodynamic agriculture provides a lot of benefits to the farmers though its a slow process and

takes time to show results. Farmers are slowly realizing its benefits. Here are some favorable

results obtained from biodynamic agriculture:

Biodynamic agriculture is a relatively new concept. It was introduced in India as late as 1993. It

has a formal association called Biodynamic association of India (BDAI) which certifies the farms

which are practicing Biodynamic agriculture and the produce of such farms get the label of being

biodynamic products which has great significance in the exports market. It is widely practiced in

various places including the tea gardens of Darjeeling, Maikaal cotton project in Madhya Pradesh,

South India (Singampatti Oothu), Iskcon farm, Nandavan Estates etc. This association also gives

training to farmers through some formal courses.

To put it in a nutshell, it seems like this unique mode of farming is here to stay and give new life

to the soil and agro-ecosystem of the farms where it is being pursued successfully. And the

emergence of new markets with environmentally sensitive customers will only add to it s growth.

References

1.http://www.biodynamics.in/

2.http://www.fao.org/es/esc/common/ecg/278/en/Pathak.pdf

3.http://www.agricultureinformation.com/mag/?p=6404.http://planningcommission.nic.in/aboutus/committee/wrkgrp/wg_organic.pdf5.http://www.i-sis.org.uk/biodynamicFarming.php
http://www.biodynamics.in/http://www.biodynamics.in/http://www.fao.org/es/esc/common/ecg/278/en/Pathak.pdfhttp://www.fao.org/es/esc/common/ecg/278/en/Pathak.pdfhttp://www.agricultureinformation.com/mag/?p=640http://www.agricultureinformation.com/mag/?p=640http://planningcommission.nic.in/aboutus/committee/wrkgrp/wg_organic.pdfhttp://planningcommission.nic.in/aboutus/committee/wrkgrp/wg_organic.pdfhttp://www.i-sis.org.uk/biodynamicFarming.phphttp://www.i-sis.org.uk/biodynamicFarming.phphttp://www.i-sis.org.uk/biodynamicFarming.phphttp://planningcommission.nic.in/aboutus/committee/wrkgrp/wg_organic.pdfhttp://www.agricultureinformation.com/mag/?p=640http://www.fao.org/es/esc/common/ecg/278/en/Pathak.pdfhttp://www.biodynamics.in/


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ExpertOpinion

FDI in multi-brand retailing in India: Issues and

Implications for Smallholders

Introduction

The discussion paper put up by the Department of Industrial Policy and Promotion (DIPP) for

public discussion and comments describes the various aspects of the Indian retail sector like its

size and nature, growth over the last few years, and

its economic and social significance besides the limi-

tations of the present setup before going into posi-

tive and negative implications of Foreign Direct In-

vestment (FDI) in retail sector based on the recom-

mendations of various committees, studies, and

bodies- both academic and business/political and

official and non-official. It, then briefly summarizes

the experience of other developing countries like

China, Thailand, Russia, Chile, and Indonesia with FDI in retail including the policy on FDI in retail.

After this, it goes on to make an argument for FDI in retail trade in India and lists issues for

discussion. This article discusses the existing domestic perishable produce supermarket

experiences in India from a smallholder perspective in section 2 followed by the Asian experience

in section 3. It concludes with discussion of regulatory issues and mechanisms for protecting the

interest of smallholders in the presence of supermarkets.

The Indian Food Supermarket Experience

The DIPP papers concern about producers share in consumers rupee being lower in India than

in other countries is really not so valid as, in value added products, it is not percentage share, but

the absolute net surplus which a producer gets which matters, because even after getting a

higher share of consumers price, s/he may still make a loss. The operations of fresh food retail

chains in India have not made any difference to this producers share in consumers rupee so far,

Dr. Sukhpal Singh is Associate Professor in Centre for Management in Agriculture at the

Indian Institute of Management Ahmedabad, having Ph.D.(Economics) from ISEC, Bangalore, Dr.

Singh's areas of research include Agribusiness and Rural Development Policy and Management

with focus on marketing, and the WTO related issues. He can be contacted at

[email protected]
mailto:mailto:[email protected]:mailto:[email protected]


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September 2010

ExpertOpinion

other than lowering the cost of marketing of the producers, as retail chains have collection

centers in producing areas unlike the Agricultural Produce Market Committee (APMC) markets

(mandis) which are in distant cities and

town. But, these retail chains buy only A

grade produce and only a part of the

farmers output. The farmer ends up going

to the APMC mandi to dispose off the

remaining or rejected produce. Recent

studies across chains and states reveal

that other than lower transaction costs,

the farmers did not realize any major

benefits from dealing with these chains.

The chains were procuring from contact farmers without any contract or commitment to buy

regularly. Further, it was relatively large and/or resourceful farmers who were working with the

chains, with the exception of just one or two retail chains (Singh and Singla, 2010; Pritchard et al,

2010). Thus, the involvement of supermarket chains with producers was low and there was no

delivery of development or improvement in supply chain efficiency.

So far as investments needed in farm sector for improving supply chain efficiency are concerned,

the case of fruits and vegetables is highlighted in the DIPP paper with estimates of wastages and

value addition potential. But, it is important to remember that fruit and vegetable crops account

for only 2% of gross cropped area in India and suffer from lack of production and/or market risk

management at the farmer level as cost of inputs is high, quality standards are crucial, there is no

minimum support price, yield risk is high, and bargaining power low due to absence of

collectivities of growers. Further, by and large, retail chains or food processors or exporters do

not work with smallholders due to higher transaction costs of doing so. Therefore, the noise

about smallholder benefit in high value crops due to retail chain linkage is exaggerated and the

direct linkage is either not there or is pretty weak.

An important question in supermarket chain linkage is: Why do chains, in general, and those in

India, in particular, have only informal arrangements with growers which have come to be known

as contact farming instead of contract farming? There are no formal contracts as the

supermarkets do not want to share the risk of the growers. The system of no written contracts


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September 2010

ExpertOpinion

and consignments places the financial risks solely with the producers/suppliers and super-

markets/buyers do not run any financial risk as they need to maintain no stocks, carry no price

risk and have no commitment to buy. Besides, they have control over and traceability of produc-

tion, reduced risk of low quality produce, can impose standards and production requirements

anytime, and lower prices as there are no intermediaries. This puts farming businesses under

pressure which is passed on to the workers on the farms, who are often women, which results in

deteriorating work conditions, very low pay, and casual employment (Stichele et al., 2006).

The implications of the rise of supermarkets for farmers do not come from the type of store but

from the methods of procurement used and the quality standards applied. Supermarkets do not

use one channel of supply, they have multiple channels through the system of category

management and suppliers range from spot markets, or traditional wholesalers to preferred sup-

pliers and direct contracts with independent large growers, with the latter two increasing in im-

portance. Carrefour, Malaysias fresh fruit and vegetable supply chain was made up of

wholesalers (41% of total supplies)), semi-direct suppliers (wholesalers and suppliers) (41%), and

direct suppliers (18%). Similarly, GIANT obtained its supplies from multiple channels like farmers,

Federal Agricultural Marketing Authority (FAMA), contract growers and wholesalers, which were

delivered at its distribution centres in Malaysia. In 2002, it had 200 vegetable suppliers, whichcame down to only 30 in 2004 which included specialized wholesalers, general wholesalers,

farmers with oral contracts, and suppliers without contracts. In Thailand, similar changes have

been seen following the introduction of the TOPS distribution centre which had 250 suppliers to

begin with (Chen et al, 2005). This is known as supplier rationalization in supermarket

terminology. Though supermarkets initially offered higher prices to producers than those offered

by traditional channels, but farmers incurred extra costs like processing and packaging,

marketing, transport, and other transaction costs unlike their counterparts in traditional channels

(Cadilhon et al, 2006).

Regulation of food supermarkets

The biggest fear of allowing FDI in retail trade in

India is not that the FDI per se is worse than

domestic corporate investment for farmers; it is

that the government and its agencies may not

be able to regulate and monitor the operations


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of the global retailers. If the monitoring of wholesale cash n carry stores so far is anything to go

by, there is no regulation and the norms are being flouted openly at the store level by the

existing players who do retailing while being wholesalers.

Given the Asian and the Indian experiences, there is need to limit buying power of the

supermarkets by strengthening the competition laws. If contract farming is only an extension of

the flexible production systems prevalent in industry to farm production, then it is only logical to

extend legal provisions on the lines of Japans Fair Trade Commission with necessary

modifications to farming contracts. The Indian model contract farming agreement under the

amended Agricultural Produce Marketing Committee Act (APMC) 2003 is quite fair in terms of

sharing of costs and risks between the contracting agency and the grower. But, it leaves out

many aspects of farmer interest protection like delayed payments and deliveries, contract

cancellation damages if producer made firm specific heavy investments, inducement/force/

intimidation to enter into a contract, disclosure of material risks, competitive performance based

payments, and sharing of production risks.

There is a need to reduce the vulnerability of the growers due to fluctuations in market prices by

offering minimum purchase prices, not market based premiums as is being done by the chainsand other contracting agencies now. The essence of contract farming, among other things, is a

pre-agreed price which reduces farmers market risk. But, market price based price no way

reduces the farmer risk. Also, provisions for legally binding and clearly worded rules for fair

treatment of suppliers, an independent authority like a retail commission to supervise and

regulate supermarkets for supplier, consumer and labour aspects and support to local retailers,

are required. This kind of agency should ban buying of products below cost and selling below

cost, improve local traditional markets for small growers, delay the pace of supermarket

expansion, establish multi-stakeholder initiatives in the chains and provide support to small

producers. On the other side, the farmers organizations and the NGOs need to monitor and

negotiate more equitable contracts with the supermarkets. Government should also play an

enabling role by legal provisions and institutional mechanisms, like helping farmer co-operatives,

producer companies and producer groups, to facilitate smooth functioning of the contract

farming system, and not intervene in contracts directly.


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References

Bukeviciute, L, A Dierx and F Ilzkovits (2009): The Functioning of the food supply chain and its

effect on food prices in the European Union, European Commission, Directorate-General for Eco-

nomic and Financial Affairs, Occasional Paper no. 47, European Communities.

Cadilhon J-J, P Moustier, N D Poole, P T G Tam and A P Fearne (2006): Traditional vs. Modern

Food Systems? Insights from Vegetable Supply Chains to Ho Chi Minh City (Vietnam),Develop-

ment Policy Review, 24(1), 31-49.

Pritchard, B., C. P. Gracy and M. Godwin (2010) The Impacts of Supermarket Procurement on

Farming Communities in India: Evidence from Rural Karnataka, Development Policy Review, 28

(4): 435-456.

Chen K, A W Shepherd and C da Silva (2005): Changes in food retailing in Asia-implications of

supermarket procurement practices for farmer and traditional marketing systems, AMMF Occa-

sional Paper 8, FAO, Rome.

Singh, S (2009): Organic Produce Supply Chains in India-organisation and governance, Allied.

New Delhi.

Singh S and N Singla (2010): Fresh Food Retail Chains in India: Impacts on Small Primary

Vegetable Producers and Traditional Fruit and Vegetable Retailers, Final report, CMA, IIM,

Ahmedabad, April.

Stichele, M V, S v Wal and J Oldenziel (2006): Who reaps the fruit? Critical Issues in the Fresh

Fruit and Vegetable Chain, Centre for Research on multinational Corporations (SOMO), Amster-

dam, June.

Some Facts

India is the third largest market for alcoholic beverages in the world.

Largest market for packaged foods is for packed tea, followed by packaged biscuits and

then soft drinks.

In India, food is the largest segment of retail industry. There are about 3.7 million stores

with a turnover of 7400 billion.

Indians spend about 51% of their income on food, Americans 10%, French 18% and British

22%

Other than fruit, honey is the only natural food that is made without destroying any kind of

life.


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Campus

Achieving 20% biofuels blending: All Smoke and No Fire

The recent decontrol of fuel prices will now make oil price spikes a

regular feature which we might have to deal with. With India

fulfilling more than half of its crude requirements through imports

which form 32% of the total imports, biofuels are gaining

increased public and scientific attention, driven by factors such as

the need for increased energy security, and concern over

greenhouse gas emissions from fossil fuels.

The National Policy on Biofuels announced by the Government of

India in September 2009 is loosely based on the National Biodiesel

Mission submitted by the Planning Commission of GOI in 2003

(Altenburg et al. 2009). The National Policy on Biofuels clearly reflects high expectation of GOI for

biofuels to address two important developmental problems, i.e. meeting rapidly increasing

energy demand and stimulating rural development for poverty alleviation.

The major policy instrument is very ambitious blending mandate, i.e. a minimum 20 per

cent blending mandate for both diesel and petrol with biodiesel and bio-ethanol, respec-

tively, across the country by 2017 implying a 30 times increase in the current plantation.

Setting minimum purchase prices for biofuels and minimum support prices for feedstock to

encourage biofuels and fuel crop production and to promote rural development.

As a whole package, this policy clearly reflects the ambition of GOI to revitalize rural economy

through significant scale of production of fuel crops (mainly Jatropha Curcus and Pongamia) on

marginal land, but it entails high uncertainty. Against this high expectation, the production of

biofuels in India is still at an infant stage and the current production level is negligible.

Secondly, feasibility of fuel crop production on marginal land is questionable. The National Policy

on Biofuels assumes that Jatropha Curcus can grow on marginal land without watering norfertilizing, but the accumulating evidence suggests that commercially viable yield requires good

Akansha Saxena, is a student of SIIB, Pune. The author can be contacted at [email protected].

You can also write to [email protected]
http://en.wikipedia.org/wiki/Energy_securityhttp://en.wikipedia.org/wiki/Greenhouse_gashttp://en.wikipedia.org/wiki/Fossil_fuelhttp://en.wikipedia.org/wiki/Fossil_fuelhttp://en.wikipedia.org/wiki/Greenhouse_gashttp://en.wikipedia.org/wiki/Energy_security


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agricultural practices as well as appropriate condition of crop land (Biswas et al. 2010). The long

gestation period of at least three years (in the case of Jatropha) is another reason for the rather

slow development of the biofuels sector in India.

Thirdly, availability of land and water are quite severely

limited in India and drastic increase of fuel crop production

may negatively affect food supply.

Apart from this, the existing policies in hand such as

providing heavy subsidies on the price of conventional

fuels particularly diesel, keeping it artificially low do not

support the production and use of biofuels in India.

The major cultivation practices for biofuels include:

Government-centered cultivation, characterized by

cultivation on government (forest and/or revenue) and communal land, government as

risk-taker, and social motivations (employment generation for the rural poor, increasing the

national forest cover, and protection of the soil from further degradation). Farmer-centered cultivation, characterized by cultivation on private land, shared risk between

government, farmer and private processing companies, and the objective of developing

additional sources of income and/or new energy sources to sustain farmer livelihoods

without incurring major investment risks.

Corporate-centered cultivation, characterized by large-scale cultivation, private oil companies

as the main risk-taker, and the objective of achieving high returns on investment.

The main objective of corporate investors engaging in the biodiesel sector is to maximize

productivity and returns on investment. This objective implies the main potential of corporate-

centered cultivation: Large-scale investments in proper agricultural practices and R&D on TBOs

can boost the supply of biodiesel and possibly allow for spillover effects to other producers.

The effects of large-scale plantations on rural development may be far reaching but they are

ambiguous. On the one hand, they have the potential to generate employment and expand green

cover substantially. On the other hand, the need for productivity maximization may lead to


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monocultures and environmentally harmful use of inputs. Additional risks relate to the possibility

that corporate investors may invest on land that was previously used by the local poor, jeopardiz-

ing income sources and local food production.

The promises seem to have been made, the policies formulated and the committees set into

motion, but the groundwork still seems to be absent. A mere Rs 34 per litre procurement price

for biodiesel does not even cover the production cost. Will this be enough to increase supply by

2017? The common sense says No but the babus beg to differ.

New Interesting Innovations in Food Industry

Nanotechnology in Food - Flavor Changing Candy: Yes, when you put these babies in your

mouth, the flavors will change as you suck on it, like magic. It comes in 3 flavors (Apple, Grape

and Soda) and they each change to a different flavor after consumption. Japanese confectionery

company Kanro has introduced this product.

New Goody Good stuff sweets launched in the UK made using bio-gum: A new range of

gummy sweets made using pioneering techniques and natural fruit and vegetable extracts for fla-

vouring and colouring, the range alleviates the need for meat based gelatine.

New vending machine delivers a pizza in minutes:A pizza vending machine which can make

the classic dish from scratch in three minutes and costs around 3.30 has been launched in Italy.

References:

Altenburg T. et al., Biodiesel in India,

German Development Institute, 2009

National Policy on Biofuels, Govern-

ment of India

Gonsalves Joseph B.,An Assessment of

the Biofuels Industry in India, United

Nations Conference on Trade and

Development, 18 October 2006.
http://www.foodtechie.com/2009/10/changing-candy-does-just-that-it.htmlhttp://www.fdin.org.uk/2010/07/new-goody-good-stuff-sweets-launched-in-the-uk-made-using-bio-gum/http://www.fdin.org.uk/2009/03/new-vending-machine-delivers-a-pizza-in-minutes/http://www.fdin.org.uk/2009/03/new-vending-machine-delivers-a-pizza-in-minutes/http://www.fdin.org.uk/2010/07/new-goody-good-stuff-sweets-launched-in-the-uk-made-using-bio-gum/http://www.foodtechie.com/2009/10/changing-candy-does-just-that-it.html


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Featured

Opportunities and Challenges in the Indian Dairy Sector

India is the largest producer and consumer

country of liquid milk in the world in volume

terms. The total milk production in India cur-

rently stands at 112 million tonnes in year 2010

and has grown at approximately 3.5 percent per

annum for the last decade. India offers a unique

combination of a large existing market with an

established dairy culture and substantial growth

prospects driven by income growth and the

introduction of value added products. The organised dairy sector, estimated to be INR 457 billion,

is expected to expand between 15%-20% over the next five years. Growth of organized retail

industry in India is resulting in the development of front and back-end infrastructure. Increase in

different food service formats is also driving out-of-home consumption of dairy products.

Increasing incomes, improved lifestyles, increasing health consciousness as well as need for

convenience are leading to a steady consumer shift to branded packaged products of high

quality.

Milk demand in India, projected by National Dairy Development Board, will be c. 180 million

tonnes by 2020. While the Indian dairy market offers enormous growth opportunities, clearly the

realization of this potential relies on securing enough milk at an affordable price. The local supply

base will struggle to keep up with potential demand unless appropriate investments are made.

While farmers have done an admirable job of keeping pace with demand in the past, in recent

years this has become more difficult to achieve. Poor monsoons in 2009 had led to lack of

adequate domestic supply of milk. As a result, in 2010 the Indian government allowed duty free

import of certain products to ensure the market remained balanced.

Improving milk yield per cow remains the key challenge, as most farmers do not have thefinancial resources to increase the number of cattle. Indian cows on average yield 980 kilograms

Mr. Shiva Mudgil is an IIM Ahmedabad alumnus from the PGPABM 2005 batch. He is presently

working as a Dairy Analyst with Food & Agribusiness Research and Advisory (FAR) division

of Rabo India Finance Ltd. He can be contacted at [email protected]


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Featured

of milk per annum, less than half of the global average. It is also difficult to source quality feed

throughout the year, with a shortage of around 34% of green fodder, mainly due to the

prioritization of land used for growing crops for human consumption. The cost of producing milk

in India has already increased substantially in recent years; with cattle feed prices leaping 70-80%

in the last two years.

The Indian dairy sector will not only have to find a way of sourcing enough milk at affordable

prices in coming years, but it will have to embark upon the reconfiguration of its supply chain.

With vast majority of milk produced by farmers with just a couple of cows each, achieving

delivery of high quality milk, and efficiently, to the factory gate is extremely difficult.

Hand-milking is still predominant at farm level and results in a high bacteria count in raw milk.

Lack of supply chain infrastructure such as Bulk Milk Coolers between farm and dairy plant has

restricted the reach of quality milk to dairy plants for processing. Adulteration of milk between

farm and factory gate is also not uncommon in the informal sector. Only 20% of the total milk

produced is processed by organized players.

Currently less than less than two percent of total milk production is procured through dairy

farms. Part of the answer may lie in establishing larger farms. Extension activities like qualitybreed development, feed availability, proper hygiene along with infrastructure for immediate

cooling and storage of raw milk before its processing can be easily implemented with minimal

overheads compared to the option of servicing fragmented mass of small and marginal farmers.

However, the business viability on a large scale is still to be established, given that for small farms

the cost of labour is not really fully factored into the price of milk.

While Indias milk demand has increased significantly over the last two decades, issues like the

lack of adequate back-end infrastructure, huge unorganized market and restricted global trade

movement have made many players taking a cautious approach. Overall, while the Indian Dairy

sector offers immense opportunities, the above mentioned challenges must be overcome to

successfully engage in India.


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Winning the rural mind

Introduction

With growing size and demand base, the Indian rural market offers great openings to

marketers. The rural markets form an important part of the total Indian market as two-thirds of

countries consumers live in rural areas and almost half of the national income is generated

here.

With great opportunities come great challenges too. There is nothing qualified as Real Brand

Success in rural set up. Fast growing brands in urban markets see disastrous ends in rural

markets. The often failed companies even qualify rural market success as nothing but luck. The

companies which understand the social dynamics and attitude variations within each village,

succeed to create brand successes. Hence, any company cannot simply enter the market and

walk away with a substantial piece of share. Lately, the Information Revolution has helped

bridge the gap between the brands and their information to the rural customer, thanks to the

penetration of cable and satellite channels which have brought down the world at the finger

tips of the common man. But the picture is not that all rosy. There is still a wide divide in the

rural and urban psyche. While their ethos may be the same, their manners, lifestyles and

languages are still quite different. Therefore, the marketers need to develop a completely

different set of marketing mix strategies to win the rural market.

Rural Communication

Brand Managers often forget to take care of the Communication Strategies which play a very

vital role in rural set up. A simple local language which is devoid of jargons is the best for rural

communication. Communication has to take care of the regional disparities. Companies should

concentrate on regions with high population density and use non-traditional methods/

mediums of advertisings and promotions. There is also a need to carry rigorous studies in

targeted rural areas and then make communication strategies specific to particular areas.

How to hook the rural audience: Use of unconventional media

Some of the unconventional media which had been used to trap the rural psyche are as follows:

Saiket Mondal, is a student of Indian Institute of Management, Lucknow. The author can be con-

tacted at [email protected]. You can also write to [email protected]


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September 2010

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When Castrol entered in rural West Bengal, it painted the

Castrol logo on both sides of motorized launches and

ferries which used to ferry people across the distributaries

of the Ganges. Wall painting, though banned in urban

areas, is another effective medium that can be used for

advertising in the rural market as it is considered a status

symbol in rural India to get ones shops and houses painted.

In fact, HUL tried this for Lifebuoy and Wheel, and off late

Coke has also followed suit.

HUL went with its famous Vim

Bar Challenge in the rural districts, where the sales people

demonstrated how efficient Vim Bar was in cleaning utensils. Even

Kissan Tomato ketchup used dummies to foray into rural India.

Eveready tried a strategy through nautankis (village dramas): In

between nautanki performances, the lights used to go out. An

artiste carrying a torch appeared. The ray of light used to be so

bright that it disturbed actors on stage and one said, Who was

there? What was it that was shining so brightly? That wasEveready trying to make its mark ...

There is also a huge need for personal selling in rural India. For promoting Annapurna Salt,

Hindustan Unilever Limited educated people on the benefits of iodized salt and distributed free

samples. Companies like Star TV, LG and Britannia have used postal stationery (inland letters, en-

velops and postcards), vans and letterboxes for brand communication.

Though conventional media like TV and Radio help in developing a national reach for brands, the

use of unconventional media is indispensible in rural set up. Conventional media, in most cases,

fails to generate the desired change in attitudes of the rural consumers. The message may be

very good and the media may have good reach, but the rural consumers may not be able to

identify themselves with the advertisements. In this scenario, unconventional media seems

appropriate to win the rural mind.

The best part:

The best part about Rural Advertising is the faster responsiveness of rural customer due to his

interest and receptive nature. Arun Kumar of Aegis Media suggests that rural people would


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embrace mobile marketing at a faster rate than its urban counterparts. This is because of the

unique element of communication offered. He further suggests that once there is decent

penetration of mobile phones into rural India, mobiles would become the next platform for

advertisements in rural areas.

In fact Nokia recently soft-launched Life Tools, a new service for the rural population in India that

provides educational and agricultural information through entry-level handsets. The language

and information has been customized according to different regions. This would totally change

the advertising landscape in rural India.

The road ahead

Just a few years back, the rural market was given a step-motherly treatment by many companies

with firms taking the shortcut route of pushing the same urban communication by merely

translating the advertisement copy into a local one, but things are now changing for the good.

The greatest challenge for advertisers and marketers continues to be to understand the mindset

of the rural consumers. On an average the attitude of the villagers towards various non-

conventional and folk media has been found to be very positive and approving. With

conventional media like radios and television making entry into rural areas, marketers can use asensible mix of conventional and unconventional media. Further, it is important to be glued to

the region-specific requirements and cater to the typical tastes of the regional consumers, both

in terms of product offerings and communication packages. Therefore, marketers who

understand rural consumers and fine tune their strategies accordingly, are the ones who will

succeed in future.

References:

1. Sanal Kumar Velagudhan (2008), Rural MarketingTargeting the Non-urban Consumers,

Response Books, a division of Sage Publications.

2. Varma and Aggarwal (2008), Rural and Agricultural Marketing, Forward Publishing Com-

pany.

3. Parameswaran A M G (2008), The Great Indian Rural Consumer, The Business Standard(Online), February 15, accessed February 26, available at: http://www.business stan-


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Rural Entrepreneurship - Exploring Opportunities

Introduction

Encouraging rural entrepreneurship has been going on since a long time in India and world

over. In the year 2000, Hindustan Lever Ltd., started reaching millions of rural Indian

population with an innovative idea of empowering rural women to develop into entrepreneurs.

Started with Andhra Pradesh in year 2003 by encouraging woman named Mrs. Nandyala, who

took a $200 loan from a state-run microcredit agency to start her business, the work was

challenging and the returns modest -- $16 a month is her average profit. From 2000 to year

2005, 30% of revenues of the company came from its rural market.

With a big market still waiting to be captured, revenues that can be generated from rural India

are immense. 70 percent of worlds second largest population still lives in villages. As most of

women engage only in household

work, still a lot of work needs to be

done for generation of small jobs,

business opportunities and income for

the poor. With more and more

companies targeting rural India

(Specially Consumer Goods Sector),

more initiatives like one by Hindustan

Lever are yet to come.

In Bangladesh, according to the Financial Express, managing director of Bata Shoe Company

(Bangladesh) Ltd, J D Hearns, and assistant country director of CARE Bangladesh, Stav Zotalis,

signed the renewal agreement. Bata and CARE are working together to help increase the

income generating capacity of women and create new job opportunities through door-to-door

sale of Bata products. The number of women working under this program was 3000 by the year

2009.

Generating Rural Entrepreneurship and Economic Profits

Finance and credit services reached rural India more efficiently with MFIs when social cause

was linked to economic profits. More and more funds were invested from commercial banks in

Saurabh Dhawan, is a student of IMT Dubai. The author can be contacted at

[email protected]. You can also write to [email protected]


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September 2010

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MFIs. Standard Chartered Bank India is in deals with SKS Microfinance & Spandana Sphoorty

Financial Ltd, and from capital market as well with NCD of SKS worth INR750 million (US$15

million) listed on BSE. Similarly rural entrepreneurship programs have to come up as a social

cause with a mix of economic profits.

Only Non- Profit NGOs and Government organizations will not be able to reach to and provide

the much need entrepreneurial training in rural India. To extend the opportunity of a regular

income source to all, a model of economic profits with social cause has to be developed in rural

entrepreneurship programs as in case of

credit and financial services extended by

MFIs.

Rural Entrepreneur Program and MFI

Due to the low population density, opening

branches in the rural areas is not economical

for the MFIs. Thus alternatively agents can

be really helpful for MFIs to extend their

reach to the unreached and benefit of the

credit can be reaped by many. Here, agents are not only post offices and cooperatives but people

in the villages. If proper training and knowledge is given to the people in the village, the

penetration of the MFI can be much deeper because a villager with local dialect and same cast

will be in a better position to make people understand the usefulness and impact of micro

finance on their earnings.

Agents will prove to be cheaper than setting up small sale points in different locality and will

impart job knowledge to the rural population. This will be extremely helpful for microfinance in

expanding their reach and reducing cost of setting up branches.

Rural Entrepreneur Programs and Organizations

With a large number of micro finance institutions giving loans to the poor for starting something

of their own, opportunities offered by the organizations such as BATA in Bangladesh and

Hindustan Lever Ltd. in India can prove to be a sustained source of income and secured

investments for MFIs. Programs such as regular milk collection by companies like AMUL in India
http://www.standardchartered.co.in/personal/home/en/index.htmlhttp://www.spandanaindia.com/http://www.spandanaindia.com/http://www.standardchartered.co.in/personal/home/en/index.html


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have helped the poor to take loan to buy cows and generate regular income.

Formal training on the sales and marketing and lessons on animal hygiene and care are given.

This requires initial investment from the organization but long term revenue generation from the

rural Indian consumers will cover the cost of training in long term.

McCain Foods India in the year 1997 started to invest in potato fry business in India. Research

was done on Indian potatoes and new breeds of potatoes were developed for the right quality of

potato fry products. This initiative not only proved helpful for the company in getting the right

quality of potatoes but also helped farmers learn about new varieties of potatoes and better

profits linked to them. This is yet another example showing how investment in tainting of

villagers can prove to be a long term benefit for the company and the poor.

Conclusion

For social and economic growth of the poor, job and business creation is as important as credit

reach to the rural areas. Organizations conducting Rural Entrepreneur Programs will work

wonders because of long term return of the investment to big organizations. It will not be a

profit only for organizations but will help poor develop sustained source of income for the poor

as well.

References

1. http://www.leathermag.com/m/fullstory.php/aid/13482

2. http://www.microfinancegateway.org/p/site/m/template.rc/1.9.35005/

3. http://www.thaindian.com/newsportal/business/gujarat-potato-plus-mccain-foods-is-mcdonalds-

indian-french-fry_10025269.html
http://www.leathermag.com/m/fullstory.php/aid/13482http://www.microfinancegateway.org/p/site/m/template.rc/1.9.35005/http://www.thaindian.com/newsportal/business/gujarat-potato-plus-mccain-foods-is-mcdonalds-indian-french-fry_10025269.htmlhttp://www.thaindian.com/newsportal/business/gujarat-potato-plus-mccain-foods-is-mcdonalds-indian-french-fry_10025269.htmlhttp://www.thaindian.com/newsportal/business/gujarat-potato-plus-mccain-foods-is-mcdonalds-indian-french-fry_10025269.htmlhttp://www.thaindian.com/newsportal/business/gujarat-potato-plus-mccain-foods-is-mcdonalds-indian-french-fry_10025269.htmlhttp://www.microfinancegateway.org/p/site/m/template.rc/1.9.35005/http://www.leathermag.com/m/fullstory.php/aid/13482


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September 2010

Dont you want to be here?Claim your space in The Hyphen*

*Articles Invited for the next issue: mail the articles to [email protected]

Kindly restrict your article to 1000 words .The Best article will get a cash prize of Rs. 3000.All published entries will get Letter of Appreciation and Gift Hampers worth Rs. 1000 each.


34/35


September 2010

AGRI-BUSINESS CLUB

Vaibhav Kumar

CoordinatorAbhinav Jha Abhishek Gupta Anu Anupam

Maneka BhogaleJyotsna Kumari Namita Bansal

Bhanu Prabha

Chitanya Tarun

Mohan JDevarshi Mandal

Ram Kumar Ravleen Kalsy Shelly GeraSourabh

Srivastava

Sudeshna Dey

DeepakBisnoi

PragatiOjha

AbhinavBhalla

HemantTiwari

ShyamMohan

Agarwal

SufalKumar

Gupta


35/35

Ask The ClubAgri-Business club opens the forum for any questions, queries or doubts that you

may have regarding Agri-Business, Agriculture and other emerging sectors like Bio-

technology, Food technology etc.

All the question will be answered by experts in the field. The best 5 questions may

find place in next edition of The Hyphen.

You can send your queries through mail to any of the following Ids:

[email protected],

[email protected],

[email protected]

Contact DetailsSnail Mail:

Agri-Business ClubC/o Vaibhav Kumar

Dorm 17, Room 05

Indian Institute of Management, Ahmedabad

Vastrapur, Ahmedabad - 380015

Phone:+91-9824347852, +91-79 66327705

E-Mail :

[email protected]

[email protected]

AGRI BUSINESS CLUB

IIM AHMEDABAD
mailto:mailto:[email protected]:mailto:[email protected]:mailto:[email protected]:mailto:[email protected]

the hyphen_agri-business club

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