IFMR Trust is trying to change a lot of things about rural India. I keep posting about the various initiatives once a while. They have 2 blogs – ( one and two) which are a must read to keep tab for their various works and projects.
In this short note (summary here) they explain how they are helping farmers get better returns and make farming a more lucrative option
Typically, small and medium farmers do not have access to fair market prices and finance at competitive rates due to their small volumes of production and non‐availability of modern market infrastructure in distant locations. ATMNE, incubated by IFMR Ventures ‐‐ an SEBI‐registered fund management company ‐‐ seeks to address this challenge.
ATMNE aims to provide small and marginal farmers with comprehensive access to transparently‐run markets and risk management instruments, thereby eliminating the farmer’ exposure to systemic inefficiencies and risks. A bouquet of services has been piloted in Kadi and Maliya (Junagadh), in Gujarat. The objectives are:
Realisation of better prices for farmers, in a transparent manner.
Provision of commodity‐backed finance to increase the farmer’ holding capacity.
Exploration of value‐addition in all agricultural activities by offering farmers other financialmandis (thereby enhancing small‐farm incomes), and give them access to finance at reasonable rates so that they can purchase agricultural inputs in a timely manner, and increase production.
Operations at Kadi began on February 16, 2009, through meetings and product briefings in the nearby villages. The response has been encouraging. Till March 2010, castor seeds worth Rs 72 million were traded by 925 farmers from 125 villages through the online NSEL trading platform at the Kadi centre. During peak harvest season, sales turnover per day hovers around half‐a‐million rupees. On an average, farmers have been able to get Rs 2‐3 per 20 kg more than what they would have earned at the mandi.
The price realisation is transparent and fair; the farmer can see the day’ prices before he decides to sell, and price realisation is determined strictly by quality. In February 2010, commodities worth Rs 10 million were traded through the NSEL trading platform at Kadi, compared to Rs 2 million in the same period in 2009. This clearly shows that farmers have perceived the benefits of the transparent system.
And that is only part of the story.
The note explains how IFMR Trust is using warehouse receipt financing to provide loans to farmers and help them get a better price for their production.
Hope to see this implemented in other areas as well. This place is not just about research but trying to implement them as well. So it is not like coming out with some fancy development idea and not doing anything about it. The key to development economics is not ideas but implementable ideas. There would be both successes and failures with implementation and is a big learning curve in area of development economics.
IFMR is also South Asia Centre of Poverty Action Lab. It is conducting a training program to help understand random evaluation approach and techniques. Should be a very interesting workshop.