India has been a predominantly agrarian economy. Yet farmers in the country are plagued with umpteen problems leading to unbearable misery. The large number of farmer’s suicides in many parts of the country are an indication of the untold miseries the farmers in India have been facing.
A little thought about the problem of the farmers leads one to realise that the whole issue could be termed as the classic case of ‘poverty amidst plenty’, in a way. While the supply side of agricultural outputs languishes the demand side is in no good a situation. While the farmers in the county suffer, the demand side of agricultural outputs remains unmet or under met, at the best. Take the case of farmers producing fresh vegetables. Apart from numerous produce related issues they encounter many hurdles in marketing their produce. At the same time institutional and individual buyers of fresh vegetables remain highly dissatisfied on various counts. The idea of corporatization of agriculture has emerged out of this premise.
Let me begin by enlisting some pain points of the supply side i.e. the important ones of the farmer’s woes: Farmers are plagued with oft repeated crop failures mainly due to the vagaries of weather. This leads to fluctuating, irregular, unpredictable incomes for an average farmer. Land holdings being small incomes are meagre too. Water scarcity remains an endemic problem in rain fed farming areas. While income is low, input costs of farming have been rising. Years of ill-planned farming has rendered many a fertile farms into infertile ones over time. Lack of all-weather roads, good storage infrastructure, timely market information, marketing skills and above all illiteracy only add to the miseries.
While all this is true for the supply side let us have a look at the demand side. Fluctuating prices, low quality, non-availability and complete absence of standardization are constant complaints of the buyers. Fruits and vegetables grown using chemical fertilizers, herbicides and pesticides make the produce un-healthy.
Corporatization of agriculture is suggested as a solution to the troubles. The suggestion is to set up an Agri-company hypothetically named, AGRICO
To clarify the model let us take an example – AGRICO will, to begin with, start operation in Delhi-NCR. It will target hotels, restaurants and organised retail chains in Delhi-NCR as its customers. The company will market agricultural produce like vegetables including tomatoes, green leafy vegetables, green chillies, carrots, radish, lettuce, grapes, beetle leaves, fresh flowers and fish to these customers. The company will assure high quality, year round availability, fixed prices, standardized produce, just-in-time, door step delivery. Chemical pesticide free produce will be another important feature of AGRICO’s offerings. Buyers will place advance orders and make advance payments for timely supplies.
Again AGRICO will take farmers around Delhi NCR into confidence. These farmers will be encouraged to rent out their farms to AGRICO, through a formal rent agreement of 35 months to begin with, and get a monthly assured rental income. In addition this farmers will be trained in new agricultural technologies and can choose to work on their own farms to earn wages. PLUS these farmers will be given an opportunity to purchase AGRICO shares and get a share in company’s profits.
The relationship between farmers, AGRICO and buyers is diagrammatically presented in Fig.I
The big question that remains to be addressed is – how will AGRICO meet the challenges faced by the farmers and make this a viable, sustainable and scalable model?
It is proposed to use state-of-art agricultural techniques and set up professionally run operations as detailed below.
AGRICO will build green house and glass houses (temporary structures) on the rented farms. In these green houses and glass house AGRICO will employ the following modern but well researched and tested techniques for growing crops:
This is the science of combining aquaculture with hydroponics. Here fish is raised in a controlled environment. It is now well researched and accepted that fish waste is a very good nutrient for growing healthy crops. Acquaponics works on the recycling of acquacultive water for hydroponics. Studies have shown that this produces better crops and much faster too!
Acquaponics has been tried in commercial farming around the world and has not only been successful but has given excellent results.
This is the science of soil-less farming which uses mineral rich water solution instead of the traditional medium of soil. Crops not only grow faster but can grow/be harvested throughout the year. It eliminates the use of herbicides and pesticides and reduces the need of constant fresh water. This ensures standardized quality controlled crops which can fetch higher prices in the markets. Hydroponics is also tested for commercial viability.
This is the science growing plants in a soilless medium which consists of mist and air. Aeroponics offers the advantages of faster growing bumper crops which greatly reduces the requirement of water and land requirement. It has been in commercial use for more than a decade now.
- Vertical farming uses multi layered farming beds up to the height of a normal; human being to maintain easy of accessibility to make very good use of land by drawing higher crop production per acre.
AGRICO plans to use all the above techniques to successfully overcome most of the challenges faced by individual framers. Corporatization is expected to make the operations highly efficient and professional.
Slowly but steadily AGRICO can set up offices and farms in other tier I cities around the country lending the much desired scalability to the whole experiment.
(The author would like to acknowledge the inputs received from PGDM students Mr Saurabh Mahendru, Ms Shubhi Jadaun and Ms Aarushi Narang)
Fig I : Corporate Agriculture Business Model
Prof. Arvind Shukla
Professor in Marketing & Chairperson – Fellow Program in Management, BIMTECH