Rural Marketing Initiatives

Introduction Hindustan Unilever Limited (HUL) and its constituent companies have been in India since 1931.Over these decades, while HUL has benefited from the developments in the country, it has contributed equally to these developments. The company’s main contributions include developing and using relevant technologies, stimulating industrialization, boosting exports, adding value to agriculture and generating productive employment and income opportunities. HUL has been proactively engaged in rural development since 1976 with the initiation of the Integrated Rural Development Programme in the Etah district of Uttar Pradesh, in tandem with the company’s dairy operations. So the company is contributing towards rural India over three decades.

This Programme now covers 500 villages in the district. Simultaneously, the factories that HUL has established in less-developed regions of the country have been engaged in similar programmes in adjacent villages. These factory-centred activities mainly focus on training farmers, animal husbandry, generating alternative income, health & hygiene and infrastructure development. The company has acquired a wealth of experience and learning from these activities. The principal issue in rural

development is to create income-generating opportunities for the rural population. Such initiatives are successful and sustainable when linked with the company’s core business and is mutually beneficial to both the population for whom the programme is intended and for the company. Based on these insights, HUL launched Project Shakti in the year 2001, in keeping with the purpose of integrating business interests with national interests. HUL envisions the creation of 1,00,000 Shakti Entrepreneurs covering 5,00,000 villages, and touching the lives of 600 million rural people by the year 2010.

Reasons for Project Shakti

There are mainly three important reasons why the company like HUL has started with such a project: 1. Empowering women in rural India

The objective of Project Shakti is to create income-generating capabilities for underprivileged rural women, by providing a sustainable micro enterprise opportunity, and to improve rural living standards through health and hygiene awareness. Several institutions like NGOs and Government bodies have been working closely, for nearly five years, to establish Self Help Groups (SHGs) of rural women in villages across India. Their experiments clearly indicate that micro-credit, when carefully targeted and well administered can alleviate poverty significantly. It was also learnt was that rural upliftment depends not only on successful infusion of credit, but on its guided usage for better investment opportunities This is where HUL's Project Shakti is playing a role in creating such profitable micro enterprise opportunities for rural women. 2. Catalysing prosperity in Indian villages

Under the project, HUL offers a range of mass-market products to the SHGs, which are relevant to rural customers. HUL is investing significantly in resources that work with the women on the field and provide them with on-the-job training and support. This is a key factor in ensuring the stabilization of their fledgling businesses.HUL imparts the necessary training to these groups on the basics of enterprise management, which the women need to manage their enterprises. This translates into a

much-needed, sustainable income contributing towards better living and prosperity. 3. Risk-free micro enterprise that yields high returns A typical Shakti entrepreneur conducts a steady business which gives her an income in excess of Rs.1,000 per month on a sustainable basis. As most of these women live below the poverty line, and hail from extremely small villages (with populations of less than 2000), this earning is very significant, and almost twice the amount of their previous household income. For most of these families, Project Shakti is enabling families to live with dignity, with real freedom from want. In addition to money, there is a marked change in the woman's status within the household, with a much greater say in decision-making. This results in better health and hygiene, education of the children, especially the girl child, and an overall betterment in living standards. The most powerful aspect about this model is that it creates a win-win partnership between HUL and the consumers, some of whom will depend on the organization for their livelihood, and builds a self-sustaining cycle of growth for all.

The Current Scenario

The model was piloted in Nalgonda district of Andhra Pradesh in 50 villages in the year 2000. The Government of Andhra Pradesh took the pioneering step of supporting the initiative by enabling linkages with the network of DWACRA Groups of rural women set up for their development and self-employment. Most SHG women view Project Shakti as a powerful business proposition and are keen participants in it. It has since been extended to in Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal with the total strength of over 40,000 Shakti Entrepreneurs. Other activities: To improve the business skills of the SHG women, extensive training programmes are being held. Such workshops have already covered a large number of Shakti Entrepreneurs in Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh, Tamil Nadu, Chhattisgarh and Orissa. As part of their training programme, all HUL Management Trainees spend about 4 weeks on Project Shakti in rural areas with NGOs or SHGs. Assignments include business process consulting for nascent enterprises engaged in the manufacture of products such as spices and hosiery items.

Advent of i-Shakti

A key factor that has inhibited the development of rural India has been lack of access to critical information and services. As we know, India has large geography and weak infrastructure; it is often difficult to reach out to the rural areas.

In order to impact both livelihood opportunities and living standards of rural communities ‘i-Shakti’ - an IT-based rural information service has been developed to provide information and services to meet rural needs in agriculture, education, vocational training, health and hygiene. The premise of the i-Shakti model is to provide need based demand driven information and services across a large variety of sectors that impact the daily livelihood opportunities and living standards of the village community. The i-Shakti kiosk will be operated by the Shakti Entrepreneur, which further strengthens the relationship we have already cultivated and builds new capacity. HUL expects that the information provided would improve the productivity of the rural community and unlock economic and social progress.

Introduction

e-Choupal is an initiative of ITC Limited (a large multi business conglomerate in India) to link directly with rural farmers for procurement of agricultural / aquaculture produce like soybeans, wheat, coffee, etc. The company has initiated an e-Choupal effort that places computers with Internet access in rural farming villages; the e-Choupals serve as both a social gathering place for exchange of information (choupal means gathering place in Hindi) and an e-commerce hub. e-Choupal is a Hindi word which means “village meeting place”. Market is a meeting place where vendors and customers come together to do transactions. e-Choupal is a virtual market place where farmers can transact directly with a processor and can realize better price for their produce. e-Choupal has the advantages of the market but spans very large varieties of vendors and customers. Geographical distances do not restrict participation in the e-Choupal. The main disadvantage of conventional market is that information asymmetry is inherent in the market where as eChoupal provides for transparent transactions. This enables the participation of smaller as well as larger players. Elimination of some layers of intermediaries allows for larger share of profits to reach the lower end of value chain. The main attractiveness of e-Choupal is that it can be used for connecting large producers/small producers and small users/large users, thereby eliminating the need for hierarchy of brokers. Internet is used as a low transaction cost backbone for communication. Physical delivery of produce to the processor is still done through the existing intermediaries. e-Choupal does not attempt total elimination of intermediaries, as intermediaries are indispensable in economy like India

where intermediaries are adding value to the every step of value chain at a low cost. Intermediaries have the expertise in storage, transportation, quality assessment and counter party risk reduction, which are difficult to replicate. e-Choupal provides farmers with all the market information and this helps them to become market oriented. In e-Choupal intermediaries are leveraged but they are disintermediated from the market information flowing to the farmers.

Unique Business Model: e-Choupal The e-Choupal model has been specifically designed to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries, who block critical market information from passing to the farmers and use that information for getting a big margin for themselves. The intermediaries capitalized on the economies of information and economies of physical things, which are tied together in a bundle. Due to this, the farmer does not get the proper price of its product & they continue to live below the poverty line. But eChoupal sets things in order as it smoothens the flow of information to the farmers by disinter mediating intermediaries from the chain of information flow and at the same time leverages the physical transmission capabilities of the them as they deliver critical value at every link for a very low cost in a weak infrastructure environment. The structure of e-Choupal is shown in figure.

The project e-Choupal is ITC’s unique click & mortar initiative e-Choupal is an ICT (Information and Communications Technologies) platform for carrying out trade at a number of locations. In this, ITC sets up a back-up physical service support at the village level, called Choupal, through Sanchalak: a lead farmer, who acts as the interface between computer and the farmer. ITC accumulates information regarding weather, modern farming practices, and market prices from sources like Meteorological Department, Agri-universities, mandis (regional market) etc., and upload all information on to e-Choupal web site. All information is customized according to local farmers requirements and provided into the local language through computer set up by ITC in Sanchalak’s house. Sanchalak access this information and facilitates its dissemination to farmers. Information regarding weather and scientific farming helps farmers to select the right crop and improve the productivity of their farms. Availability of market information helps farmers to become market oriented. They know what price ITC is quoting and the price prevalent in the local market, thereby helping better price realization for farmers. If farmer decides to sell to ITC, Sanchalak works as the aggregator of small farmers produce to sell them to ITC. Sanchalak also aggregates farmers input purchase orders for various items like seeds, pesticides and places them directly with the suppliers through internet and facilitate supply of high quality farm inputs as well as purchase of farm produce at farmer’s doorstep with the help of intermediaries as shown in figure previously. It can be deciphered that e-Choupal has added critical value to the existing supply chain through innovative application of information technology.

ITC-IBD has successfully reached the vastly scattered farming villages of India and facilitated the smooth flow of rich information to them by disintermediating the intermediaries in flow of information. Power of information is working as the catalyst of transformation of the life of farmers by helping them to get improved yields from their farms and better price realization. Usually it is tough to maintain the expanding scale of reach and richness into the products or services but e-Choupal is achieving it easily and we find that overall value chain has been shifted horizontally on the scale of reach and richness. e-Choupal is an ICT platform that facilitates flow of information and knowledge, and supports market transactions on line. •

It transmits Information (weather, prices, news),

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It transfers Knowledge (farm management, risk management)

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It facilitates sales of Farm Inputs (screened for quality) and

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It offers the choice of an alternative Output-marketing channel (convenience, lower transaction costs) to the farmer right at his doorstep

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It is an interlocking network of partnerships (ITC + Met Dept + Universities + Input COs + Sanyojaks, the erstwhile Commission Agents) bringing the “best-inclass” in information, knowledge and inputs.

e-Choupal is, thus, distributed transaction platform that brings together sellers, buyers along with information and service providers. e-choupal is a model with a number of non-conventional characteristics namely: •

customer centric

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capable of being used for many commodities and multiple transactions

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easily scalable once it is verified

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uses local talent and local people and develops local leaders

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can be extended to local as well as global procurers

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stimulates local entrepreneurs to extend their innovativeness

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uses all the existing institutions and legal frameworks and

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many others can join the market as transaction time is low.

Critical Success Factors The e-Choupal experience highlights that ICT platforms can provide rural connectivity and e-commerce support. These platforms have enormous potential provided they are conceptualized for the specific needs of the community and business. Some of the elements that helped the e-Choupal to work successfully are discussed below: Comprehensive knowledge of rural markets: Rural markets are both economic and social networks and there is a strong connection between the operation of social and economic transactions. Understanding the operations is vital before the systems are conceptualized. Use of local population, as much as possible helped the network to get the acceptance closely. Designing a Win-Win transaction model: The success of e-Choupal comes from the condition in which both the farmer and the processor share the benefits coming out of the elimination of middle men and hence due to timely information availability. Leveraging the logistics channels: The existing logistics of the rural markets are leveraged but they are not able to exploit the information asymmetry (unlike that in a conventional market). In that sense e-choupal uses the local institutions but eliminates the information asymmetry that they used previously. Selection of Sanchalak: Both the selection of Sanchalak and the acceptance of Sanchalak by the community are very critical for the success of e-Choupal. ITC used a trial and error method for developing the

procedure for selecting Sanchalaks. In the platform terminology Sanchalak is the interface for maintaining the platform. For the farmer the Sanchalak is the e-Choupal. Training and sensitizing him for the crucial role has been the main reason for the acceptance of the Sanchalak by the farmers. Sanchalak, thus, acts as the coordinator of the knowledge community, and a representative of farming community. Evolving an appropriate user interface: The Technology interface used in rural areas has to be very simple. Interface has to be tried for rural settings and only after its validation it has to be used. Firstly, one has to understand the user pattern and secondly, it has to be tried, tested and validated. For example, farmers do not understand the concept of insurance. e-Choupal evolved a simple interfacing arrangement that a farmer can understand. Bottom-up

model

for entrepreneurship:

e-Choupal

encourages

enormous amount of creativity at the local level along with local entrepreneurship stimulation. The farmer and Sanchalak are free to use the e-choupal and develop new uses. e-Choupal unleashes the creative spirit in the rural India.

Introduction While no definitive date has been determined for the actual conception and propagation of SHGs, the practice of small groups of rural and urban people banding together to form a savings and credit organization is well established in India. In the early stages, NGOs played a pivotal role in innovating the SHG model and in implementing the model to develop the process fully. In the 1980s, policy makers took notice and worked with development organizations and bankers to discuss the possibility of promoting these savings and credit groups. Their efforts and the simplicity of SHGs helped to spread the movement across the country. State governments established revolving loan funds which were used to fund SHGs. By the 1990s, SHGs were viewed by state governments and NGOs to be more than just a financial intermediation but as a common interest group, working on other concerns as well. The agenda of SHGs included social and political issues as well. The spread of SHGs led also to the formation of SHG Federations which are a more sophisticated form of organization that involve several SHGs forming into Village Organizations (VO) / Cluster Federations and then ultimately into higher level federations (called as Mandal Samakhya (MS) in AP or SHG Federation generally). SHG Federations resulted in several key benefits including: • • • •

Stronger political and advocacy capabilities Sharing of knowledge and experiences Economies of scale Access to greater capital

NABARD defines SHGs as a group of 20 or less people from a homogenous class who are willing to come together for addressing their common problems. They make regular savings and use the pooled savings to give interest-bearing loans to their members. The process helps them imbibe the essentials of financial intermediation including prioritisation of needs, setting self-determined terms for repayment, and keeping books and records. It builds financial discipline and credit history that then encourages banks to lend to them in certain multiples of their own savings and without any demand for collateral security. To this definition can be added the affinity dimension and the need to acquire the 6 organisational characteristics of Vision/Mission, Organisational Management Systems, Organisational Accountability Norms, Financial Management Systems, Learning and Evaluation Systems and Networks and Linkages with other institutions. Generally all members of the group should belong to families below the poverty line. However, if necessary, a maximum of 20% and in exceptional cases , where essentially required, upto a maximum of 30% of the members in a group may be taken from families marginally above the poverty line living contiguously with BPL families and if they are acceptable to the BPL members of the group. This will help the families of occupational groups like agricultural labourers, marginal farmers and artisans marginally above the poverty line, or who may have been excluded from the BPL list to become members of the Self Help Group. However, the APL members will not be eligible for the subsidy under the scheme. The group shall not consist of more than one member from the

same family. A person should not be a member of more than one group. The BPL families must actively participate in the management and decision making, which should not ordinarily be entirely in the hands of APL families. Further, APL members of the Self Help Group shall not become office bearers (Group Leader, Assistant Group Leader or Treasurer) of the Group. The group should devise a code of conduct (Group management norms) to bind itself. This should be in the form of regular meetings (weekly or fortnightly), functioning in a democratic manner, allowing free exchange of views, participation by the members in the decision making process. The group should be able to draw up an agenda for each meeting and take up discussions as per the agenda. The members should build their corpus through regular savings. The group should be able to collect the minimum voluntary saving amount from all the members regularly in the group meetings. The savings so collected will be the group corpus fund.

The SHG Model Structure of SHG A SHG is a group of about 10 to 20 people, usually women, from a similar class and region, who come together to form savings and credit organization. They pooled financial resources to make small interest bearing loans to their members. This process creates an ethic that focuses on savings first. The setting of terms and conditions and accounting of the loan are done in the group by designated members. SHG Federation As mentioned previously, SHGs have also federated into larger organizations. In Figure below, a graphic illustration is shown of a SHG Federation. Typically, about 15 to 50 SHGs make up a Cluster / VO with either one or two representatives from each SHG. Depending on geography, several clusters or VOs come together to form an apex body or an SHG Federation. In Andhra Pradesh, the Village Organizations, SHG Clusters and SHG Federations are registered under the Mutually Aided Co-operative Society (MACS) Act 1995. At the cluster and federation level, there are inter-group borrowings, exchange of ideas, sharing of costs and discussion of common interests. There are typically various subcommittees that deal with a variety of issues including loan collections, accounting and social issues.

As already described, SHG Federations have presented some key benefits to SHGs as a result of their greater scale. Increasingly, SHG Federations are being seen as a key interface with the SHG movement because of their formal registration under the MACS and recognition from bankers. But, in addition to the benefits of SHG Federations, there are some drawbacks, or constraints, that should be noted. An SHG Federation is a formal group of informal common-interest groups. As a result of its rather informal members, there are internal constraints that it faces. Namely, it has a poor capacity for self-governance, average to low quality managers and systems and process are poorly defined. Further, there is significant financial cost to organizing and registering a SHG Federation which has been estimated to be about Rs 7,000 per SHG member. To bridge these internal constraints requires savvy external assistance and there are few good quality NGOs to provide this assistance to a burgeoning number of SHG Federations.

SHG Bank Linkage A most notable milestone in the SHG movement was when NABARD launched the pilot phase of the SHG Bank Linkage programme in February 1992. This was the first instance of mature SHGs that were directly financed by a commercial bank. The informal thrift and credit groups of poor were recognised as bankable clients. Soon after, the RBI advised commercial banks to consider lending to SHGs as part of their rural credit operations thus creating SHG Bank Linkage. The linking of SHGs with the financial sector was good for both sides. The banks were able to tap into a large market, namely the low-income households, transactions costs were low and repayment rates were high. The SHGs were able to scale up their operations with more financing and they had access to more credit products.

Advantages of SHGs (Self Help Groups) An economically poor individual gains strength as part of a group. Besides, financing through SHGs reduces transaction costs for both lenders and borrowers. While lenders have to handle only a single SHG account instead of a large number of small-sized individual accounts, borrowers as part of an SHG cut down expenses on travel (to & from the branch and other places) for completing paper work and on the loss of workdays in canvassing for loans. In other words the organization provides micro loans and a package of services, including self help groups (SHG) for economic empowerment, education, sharing lessons learned and presumably networking. Additionally, they are used to create an “ecosystem for wealth creation” and bear some elements of self-organizing, given they are bottom up in nature. These groups can help overcome some of the pitfalls of launching a new business and are sometimes integrated as part of the overall debt repayment model.

Introduction According to Jammu and Kashmir’s former Chief Minister Jb. Ghulam Nabi Azad, the revolutionary Roshni Act passed under his regime i.e. the Congress-Led Government had far-reaching effects and it had gone beyond the expectations of the people, particularly farmers. Free ownership rights of 16.60 lakh kanals of state land costing Rs 20,000 crore were being given to poor farmers with a definite goal to achieve selfsufficiency in agriculture production. The Government through the same Roshni Act will be able to retrieve huge amounts from those who have illegally encroached on various parts of Jammu and Srinagar cities and were using the land for commercial and non-agricultural purposes. Jammu and Kashmir Government has received over 2.5 lakh applications for grant of proprietary rights to the people who are possessing unauthorised government land in the state this year only. As many as 2,55,222 applications have been recieved from public for grant of proprietary rights to unauthorised occupied government lands for decades under the Roshni Scheme.

Key Features Under the act, farmers have been granted ownership rights of government lands which were in their occupation for several decades. However, the act prohibits them from selling the land for commercial purposes.

The refugees of 1947, 1965, 1971 and others have been debarred from this Act while as for the benefit of peasantry class, the Government has fixed a slab of 12.5 acres which was sufficient for farmers. The classes fall under LB-6 and LB-7 categories have been already exempted from this Act.It has been urged upon the State Government to exempt all those who have been living Below Poverty Line (BPL) from the purview of the Roshni Act. Many a times various flaws in the erstwhile Roshni scheme formulated by the previous National Conference regime has been pinpointed. It has been argued upon by various members in the legislative assembly that market prices should be fixed for land which has been utilized for commercial purposes as well as encroached by land mafia.