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TITLE OF THE PROJECT: MARKET MAPPING OF AGRICULTURE AND OTHER RURAL PRODUCE OF JHARKHAND

Submitted by: Chaman Kumar (25008) Prabhat Kumar (25084) Rishikesh Kumar (25092) Saurabh Kumar Sinha (25097) Submitted to: Prof. Vishwa Ballabh

Organisational Traineeship Segment PRM 2004-06

NAME OF THE ORGANISATION: KRISHI GRAM VIKAS KENDRA, RANCHI AUGUST, 2005

INSTITUTE OF RURAL MANAGEMENT, ANAND

ACKNOWLEDGEMENT We are highly thankful to our host organization “Krishi Gram Vikas Kendra” for giving us a valuable opportunity for relating our theoretical knowledge to field activities by offering the project. We are especially grateful to our Reporting Officer Mr. Anindya Kumar Bhattacharya, Project Director (TFC) who despite having hectic schedule took pains to sit with us and discuss the project details and time to time guidance in our approach. The other people of considerable help to us were Mr. Devjyoti Kundu, Programme Executive and all other staff members who were always very prompt to provide us all the documents and information, which we required. The suggestions given by our faculty guide Prof. Vishwa Vallabh before, during and after the OTS were extremely useful for undertaking this project. Above all thanks to IRMA which provided us this opportunity to observe the organization from such proximity and equipping us with all the knowledge and learning which helped us to learn and understand the organization in a holistic way.

Chaman Kumar (25008) Prabhat Kumar (25084) Rishikesh Kumar (25092) Saurabh Kumar Sinha (25097)

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EXECUTIVE SUMMARY I. Title : Market Mapping of Agriculture and Rural produces of Jharkhand II. Organisation : Krishi Gram Vikas Kendra (KGVK) III. Reporting Officer : Mr. Anindya Kumar Bhattacharya IV. Faculty Guide : Prof. Vishwa Ballabh V. Student’s Name : Chaman Kumar(25008), Prabhat Kumar(25084), Rishikesh Kumar(25092) and Saurabh Kumar Sinha(25097) Objective: The objective of our study was the promotion of the concept of farmer’s club among the farmers, identifying the potential buyers and the volumes they can procure, and work out volumes of vegetables in the Ranchi and Jamshedpur haats. The objective also includes the identification of problems arising in the implementation of this plan and recommendations. Methodology: The survey work regarding the formation of farmers club, their land holding and production scenario has been done in thirty four villages in Ranchi and Jamshedpur. The survey was carried out by way of formal interaction with the villagers in groups. Further, data related to the supply and demand volumes of vegetables were collected both from primary and secondary sources. Scope: The scope of the project is limited to the villages of Burmu block of Ranchi and Gamhariya block of Saraikela-kharsanwa for the setting of farmers’ club. While the market survey part was concentrated to Ranchi and Jamshedpur. The produce was restricted to vegetables only. Findings: In order to strengthen the economy of the villages by way of facilitating better access to market of the for the agricultural and rural produces as well as generating a corpus of its own, KGVK has up a marketing unit called Trade Facilitation Centre (TFC). In the centre of the business plan of the TFC lays the idea of formation of farmers club in the villages where KGVK has intervention. Basically the plan is on the line of developing contract farming. The framers club will act as its production centre. There will be only 6-8 farmers in each club in order to

keep the size of the group small for administrative ease. The criterion for being the member of a club is that the members have contagious landholding. As per the plan one a particular club will grow only one type of crop and TFC would buy the produce at pre-determined price from the clubs. In the initial year of the project, TFC plans to concentrate on the vegetables mainly because both the production and demand are high in Ranchi and Jamshedpur itself. Also they would be selling the produces to institutional buyers in the initial year. The institutional buyers identified so far include Usha Martin Ltd, BIT Mesra, Tata Iron and Steel Company. One of the pre-requisition for farmer’s club is that the land of the members should be contagious to one another. The Burmu block of Ranchi where the project is implemented at the pilot basis is a major producer of vegetable like cabbage, cauliflower, brinjal, tomato etc. and a large volume is traded out to various places like Jamshedpur, Kolkata and Dhanbad. At the same time, villages in Gamhariya block were not producing vegetable on large scale. But because of increased irrigation facilities through watershed development, these villages are also emerging as vegetable basket. The nearby markets to the villages of Burmu are Brambe, Mukhmandro, Pithoria whose distance varies from 7 to 10 kms. However in Jamshedpur the distance is in the range of 10 -12 km. The average transportation cost therefore comes to be around 1 Rs/kg of vegetables which is big enough for the farmers to bear. Currently there is no weighing and pricing information system available to the farmers and that causes them to loose to the traders who take their produce in the near by towns for selling. Conclusion: For the success of this venture, successful running of the farmer’s club is the crux which largely depends on how properly the group has been formed and the profit is appropriated to them. Also the TFC will have to set up a big network of transport and market information which is quite a capital intensive task.

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Table of Content 1.0 Introduction………………………………………………………1 2.0 Objectives…………………………………………………………2 3.0 Methodology………………………………………………………2 4.0 Scope of Study…………………………………………………….2 5.0 Limitations………………………………………………………...2 6.0 Present Agriculture Situation……………………………………3 6.1 Small size of Land holding………………………….…..…4 6.2 Lack of irrigation facility…………………………………..4 6.3 Difficulty in getting quality inputs……………………...…4 6.4 Technical limitations………………………………………4 6.5 Lack of financial assistance…………………………….…5 6.6 Difficulty in selling the output……………………………..5 6.6.1 High Transaction Cost……………………….……5 6.6.2 Dependency of Middlemen………………….……5 6.6.3 Glut in Market…………………………………..…6 6.7 Supply Fluctuations……………………………………….6 6.8 Price Fluctuations………………………………………….7 6.9 Large number of middlemen…………………………..…..7 6.10High Transportation cost………………………….…...8 7.0 Trade Facilitation Centre……………………………………..…9 7.1 Rational for the formation of Trade Facilitation Centre…..9 7.2 Mission of Trade Facilitation Centre (TFC)………………10 7.3 Conceptual framework of the TFCs business plan………..10 7.3.1 Aggregation, Pooling, Selling Input and Buying Output.11 7.3.2 Simple Value Addition………………………….....11 7.3.3 Complex Value Addition………………………..…11 7.4 The Business Plan of TFC………………………………….12 7.4.1 Activities to be undertaken by TFC……………….12 7.4.2 Providing technical and financial assistance to the farmers..12 8.0 First Phase………………………………………………………….13 8.1 Capturing Institutional demands…………………………….13 8.2 Formation Farmers Club……………………………………14 8.2.1

Farmers club and its dynamics……………………15

8.2.2

Group Formation…………………………………...15

8.2.3

Four basic principles in group formation………..15

8.2.4

Rules and bylaws of the Farmers club……………16

8.2.5

Rationale for Farmers Club for TFC……………..16

8.2.6

Rationale for Farmers Club for farmers………….17

9.0 Problems Of The Proposed Farmers Club……………………….17 9.1 At the formation stage of the farmers club………………….17

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9.1.1

Social and family dynamics of the villages…….……….18

9.1.2

Scattered land holding……………………………………..18

9.2 At the operational stage …………………………………………..18 10.0Financial Viability Of The First Year Of Project………….……….21 10.1Realisation to farmers from vegetables selling………………...21 10.2Realisation of TFC by supplying inputs………………………..22 10.3Economics of the project………………………………………22 11.0Second Phase Of Business Plan Of TFC………………………..…..27 11.1Marketing strategies to be followed in the second phase……..28 11.1.1 Establishment of Retail Outlets………………….…….…28 11.1.2 TFC Mobile traders………………………………………..28 11.1.3 Branding………………………………………………….….29 12.0 Major Reflections on the TFCs plan ………………………………….29 13.0 Recommendation…………………………………………………….….32 References………………………………………………………………….....34

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LIST OF TABLES , FIGURES AND CHARTS Table 1: Transportation cost of farmers in different haats………………………….8 Table 2: Economics of Vegetables………………………………………………….21 Table 3: Profit margins generated through selling of inputs………………………..22 Table 4: Expected Profit from Fertilisers……………………………………………24 Table 5: Economics of Selling of Outputs…………………………………………..24 Table 6: Cost associated with the operations of the TFC in First Year…………..…26 Chart 1: Break up of production of vegetables in Jharkhand……………………..…3 Chart 2: Break up of area under vegetables in Jharkhand……………………………3 Chart 3: Fluctuation in the supply of various vegetables (in tones)……………...…..6 Chart 4: Fluctuation in the supply of various cereals and pulses (in tones)……….…7 Chart 5: Price fluctuation of vegetable……………………………………………….7

Figure 1: Present supply chain of the Agricultural produce………………………..…9 Figure 2: Three steep business model…………………………………………………11 Figure 3: Supply chain after TFC intervention………………………………………..20

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