Prepared by : U312027, U312029, U312031, U312047,U312048

Wardha Cotton and Soy Producers Company Ltd.:

A Farmers Company Run by Farmers

Wardha Cotton and Soy Producers Company (WCSPCL) is a producers company established
by farmers in the Deoli Block of Wardha District in Maharashtra. The Wardha district is part
of Vidarbha region of Maharashtra in the news for the farmers suicides. The initiative is
under project Agrarian sustainability through action research. This project was
implemented by Indian Grameen Services (IGS, BASIX) and supported by Sir Ratan Tata
Trust (SRTT).The company was registered in December 2011. There are currently 8 board
members and 1 representative from IGS working as CEO.
Industry Scenario:
The farmer producer organizations are working in the space left vacant by the failure of
state cooperatives to cater to farmers. The FPOs are good example of decentralization and
the involvement of civil society in creating community based organizations. The FPOs are
working in the area of representing marginalised farmers and bridging the gap between the
market and the farmer. Similar efforts are going in African Nations as well where FPOs are
engaging with government and corporates to better the farmers conditions.
The WCSPCL is working for creating opportunities to increase farmers income and
knowledge levels to improve their overall condition.
Vision of the WCSPCL is To serve to small and marginal farmers for their sustainable
livelihood.
Mission of the WCSPCL is To support, take initiatives for end to end services in agriculture
and allied production so as generate sustainable and respectful livelihood to the small and
marginal farmers.
IGS has tried to encourage the concept of producer groups (PGs). They encourage the Self
Help Groups (SHGs) to produce something and thus become entrepreneurial. The internal
savings of the producer groups are employed for purchase of common assets for the group
which can help them in the agriculture activities or to start new ventures. Generally, the
producer groups consist of the farmers. The WCSPCL is formed by integrating the producer
groups together. The Board of Directors (BoDs) of the WCSPCL is formed by the members of
the producer groups. The process followed is very democratic in nature. Elections are held
for the formation of BoDs and PG members vote to decide the board of directors. The BoDs
elected are responsible for the decision making and the working of the company. No non
farmer can become the member of the WCSPCL and thus the representation in the BoDs is
100% by farmers from the PGs. The BoDs have fixed tenure and thus elections are held after
stipulated amount of time.
Envisioning a better future:
The objective of the company is to take up and support agriculture and crop services to the
farmer members. It encourages and supports the agri allied activities like dairy, goatary, bee
keeping and poultry etc. through input support, fodder and feed services, health check-up
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and marketing. It helps to procure and supply agri inputs like seed, fertilizer, manure,
pesticide, micro-nutrient etc. to the farmers at economic rates, timely and at doorstep. To
create infrastructure for procuring, storing, grading and processing of agriculture produce of
the farmer members and support the farmers for marketing through direct purchase,
linkage and value addition. It provides extension services in close coordination with the
Agriculture and other line departments for reaching the benefits to the small and marginal
farmers. It does business of production, harvesting, procurement, grading, pooling,
handling, marketing, selling, export, import, storage, bottling, packing, buying, selling,
supplying, trading, processing including preserving, drying, distilling, brewing, venting,
canning and packing of all agricultural, horticultural, vegetables, medicinal, spices crops
including of cotton and soybean and agro inputs like seeds, growth promoters, manure,
fertilizers, pesticides, farm machinery, farm tools, animal feed etc.
Organizational Structure:




Shareholder
s(Farmers
Only)
Board of
Directors
CEO (Out side
Professional)
Finance Marketing Procurement
Field
Workers
Human
Rsource
Knowledge
Management
Prepared by : U312027, U312029, U312031, U312047,U312048
Understanding the stakeholders and working of Producer Company:
IGS is an important stakeholder in the company. IGS has played the role of a mentor to the
WCSPCL. They helped the farmers in the formation of the company. IGS worked to get Legal
Clearances for the WCSPCL and also helped in getting the initial operations rolling. The
capacity building of BoDs was also done by IGS so that they can fulfil their duties. The
members of the company were groomed to interact with government officials and agencies,
to do marketing activities for the company, to mobilize the people in the village to involve
them in WCSPCL activities. The main objective of IGS is to make the BoDs of WCSPCL self-
reliant so that they can work on their own. The organizational structure can be summarized
as follows.
WCSPCL has encouraged the PG members to become the shareholders in the company. The
motive being as the company grows, the shareholders will secure the benefits and other
being more people will get involved in the company. The company also gives preference to
its shareholders while launching any new activity and service.
Various activities taken up and processes followed by Producer Company:
The company has been active in the direct soy bean purchase from the farmers. The
company has tried to eliminate the middle men and thus give farmers the appropriate
prices by reducing the brokerage farmers pay to the middle men. The initiative has also
helped in reducing the transportation cost and the handling cost for the farmers. This has
resulted in hassle free process for the farmers. For soy purchasing activity market prices are
checked and then the prices that are to be offered to the farmers are decided. The prices
are slightly less than market prices as to recover the transportation cost for the company.
The price is a better bargain for farmers as it reduces the hassle of transportation on their
part as the company takes care of it and other miscellaneous expenses like the food
expenses, lodging expenses in the market area are eliminated.
The grading done by the WCSPCL is more trustworthy for the farmers and thus they get the
right price. The company has also encouraged the farmers to get the soy filtered through
gravitational filters owned by WCSPCL so that they get better price while final grading. The
company official sets up a weighing scale in the village at a convenient location. Then
grading of farmers produce is done at their door step and accordingly the price is set. If the
farmer agrees to the price then he brings his produce to the weighing scale. The soy is
weighed and filled in the gunny bags of 100Kg each. The breakeven point for the company is
around 5T by which they recover their expenses and maintain a small margin in the
operation. The soy thus procured is transported to the soy mill and the payment is collected
for the same. The payment mode for the farmers is part payment is made at the time of
purchase and the remaining when the balance received from soy mill. By directly tying up
with the soy mill the company has eliminated the middlemen.
The company engages in the Tur dal purchase activity as well. The method followed is the
same. But for Tur dal they have gone for processing to add value. The processed dal goes for
a higher price than the unprocessed dal and thus helps in securing better price. The WCSPCL
has encouraged farmers to avail the facilities of Dal Mill set up in the Kavatha village in
Wardha under the IGS guidance. The Mill is also run by farmers and one of the BoD of
WCSPCL is in-charge of the mill. WCSPCL has been successful in selling their dal to Tata
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Chemicals Ltd. for their I-Shakti brand of Dal. The rest of the produce is sold in the Latur
market.
The company engages in selling of agriculture inputs to the farmers. The company has tie
ups with agriculture input companies and sells seeds, pesticides and fertilizers. The company
generally procures in bulk and thus gets discounts from the companies and big dealers. The
company in turn passes these benefits to the farmer members. The farmers get benefited
by the reduced input costs and the availability of required resources. Moreover the trained
officials in the company have helped farmers to reduce the input quantity by scientific
methods which have also resulted in reduced costs for the farmers. Preference is given to
members who actively trade with company in other areas like soy purchase, tur dal
purchase.
The Decision making process:
Decision making process is always critical part of any organization. In WCSPCL they follow
model of collective decision making. If a BoD has to take a decision regarding an activity like
purchase, sell or any other financial matter then they will call at least 4 directors to discuss
the decision. There is a register kept in the office known as the decision register where all
the minutes of discussion are recorded and signed by the persons involved in the decision
making process. The process helps to take decisions acceptable to all and various aspects
relating to the decision are discussed with different viewpoints, making the decision more
holistic.
Issues and challenges faced by WCSPCL during operation:
The WCSPCL is run by farmers. The BoDs were not exposed to the responsibilities of running
an organization as a collective. It was a challenge for many of them to develop their soft
skills to run an organization but many have adapted new roles and are working efficiently
for the progress of the company. The company lacks knowledge in terms of technical
expertise and is dependent on external agencies for support. But through help of IGS,
WCSPCL is building its own knowledge base for informed decision making. Many BoDs have
become efficient in using computers and its use for better governance. But the challenge
still remains to get all members on board. The company also faces many challenges in terms
of its operations. The size of staff members is inadequate so many a times some of the
active members get overloaded with work. The company does not a very active mechanism
to follow the market. The company faces issues with the fluctuation of prices of
commodities in the market. The company charges very low handling charges to the farmers
so it has to maintain its volume for break even. The company also faces issues regarding the
marketing of its product. The company is trying to create its own brand but for meanwhile
its supplying its produce to other companies and selling under their brand. Agriculture is a
seasonal phenomenon and the credit cycle is long. Sometimes the company has to give agri
inputs to farmers on credit and the repayment period is long. The company has to incur the
cost because of late payments. It has been a challenging task for the company to mobilize
new farmers to associate with the company and sustain the relationships as the farmers are
not used to the concept of company run by farmers. But the company is trying to build trust
through honest operations and activities to improve their conditions. Through this company
can build long time base for its operations.
Prepared by : U312027, U312029, U312031, U312047,U312048


The implementation of BIS:
The WCSPCL can implement the BIS to monitor the business processes and the output
report from the BIS can help them in evaluation of their performance as well as streamlining
their operations. WCSPCL does not have enough financial resources to build a BIS system on
Information Technology format. Also infrastructure constraints like electricity will also cause
problems in the implementation. The company also does not have enough skill to maintain
such system. But to counter the problem, the company can go for a completely manual BIS
system. Then system can contain manually kept record in organised format which when
consolidated can give performance for a period. The record can be shared in scheduled
BoDs meeting and then conclusions can be derived on the performance for the time period.
This will be really helpful for the soy purchasing processes, dal mill as well as HR processes.
BIS can help company to judge the level to which it has been successful in fulfilling its
objectives. While implementing the BIS, Key Result Areas will be defined and metrics will be
derived which will help company in implementing activities. The BIS can be simplified by
computerizing the records so that the data can be shared easily. The formats can be given
to BoDs with easily understandable formulas so that they can compute the data themselves
manually and less depending on the external help.
One of the sample formats which can be used in the company is attached as below:
Procurement and Operations:
KRA Metrics Business Strategies Functions
Increase the soy
collection by 20%.


(This years soy
collection Previous
Years soy
collection) / Previous
Years soy collection

Engaging with more
villages








Procurement
Function
Tur dal collection by
10%.
(This years tur
collection Previous
Years tur collection)
/ Previous Years tur
collection

Formation of more
producer groups

Reduce the down
time in the dal mill
by 50%.

(New downtime-
Initial
downtime)/Initial
downtime
Upgrade technology
Formulate operation
manual. Translation
of operations manual
in regional language.
Human resource:
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Adequate staffing


Capacity building of
BoD.


Increasing employee
satisfaction

Increasing ground
level manpower (10
personnel)

Hire more
manpower




Human Resource Increase training
instances (approx
once in six months)
More exposure visits
Provide
reimbursements to
board members
according to
meetings attended
Provide financial
rewards

Monitoring for Dal Mill Activities:
Machine: Grader Machine
Date Operator Start Time
(1)
Stop Time (2) Fault
Duration
Total
Running
Hours (1)-(2)
Quantity
Processed




Output from the table will be total down time and running hours, quantity processed.
Machine: Polisher
Date Operator Start Time
(1)
Stop Time (2) Fault
Duration
Total
Running
Hours (1)-(2)
Quantity
Processed



Output from the table will be total down time and running hours, quantity processed.
Machine: Tapper Roller
Date Operator Start Time
(1)
Stop Time (2) Fault
Duration
Total
Running
Hours (1)-(2)
Quantity
Processed



Output from the table will be total down time and running hours, quantity processed.
Machine: Disc Roller
Date Operator Start Time
(1)
Stop Time (2) Fault
Duration
Total
Running
Hours (1)-(2)
Quantity
Processed

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Output from the table will be total down time and running hours, quantity processed.
Spare part Name Quantity Required (1) Quantity Present (2) (1)- (2) Quantity to order



Output from this table will be required inventory which needs to be maintained.
The above form of information system can be used to achieve the overall target of reducing
the downtime in the dal mill. The above system will help to maintain logs in the dal mill and
help identify problem areas. It will also help to maintain the required spares in the dal mill
to reduce the downtime. From the above table overall process time can also be calculated in
terms of average quantity processed in the dal mill. This will also help to operators to get
better idea about what other operator did and the inventory of spares present. Weekly logs
can be analysed by stakeholders to identify key issues and suggest solutions. The strategy
which will emerge from the dal mill monitoring system will be contributing to the KRA of
reducing down time in dal mill.
Implementation of BIS in WCSPCL:
One of the key challenges in implementing BIS will be training of BoDs and their
participation in making the BIS successful. It will be very important for BoDs to be convinced
about the use of BIS. Unless BIS brings about positive changes in the operations, it will be
waste of the resources. Since the stakeholders involved are new to the business
environment, the BIS should be carefully implemented so as not to cause hindrance in
normal operation. Mechanisms should also to be constructed which can help in
implementing the findings from the report of BIS. BoDs should be trained in computer and
information technology so that the BIS automated in future.
The ROI of BIS can be calculated in terms of the improvements observed in the existing
processes. The ROI can also be calculated in terms of achievement of goals. In this case the
cost of implementation of BIS will not be very high as the system implemented will be
manual. The BIS can help in comparing performances with objectives and thus help in future
planning. E.g. When implemented in the dal mill, the output from the records maintained
can help us to judge hourly processing rates, daily processing rates, performance of
operators, faults and spares data. From the data collected from the soy process we can
judge what will be the break-even point for the company. This can help company to design
the operations in such a way to maximize the returns. The example can be when it is known
that when it is known that Total Fixed Cost for Operation of Soy procurement around 70km
from Deoli is Rs 4100. The variable cost for operation is around 2700 approx per quintal. The
selling price per unit is around Rs 2800 approx per quintal. This gives BEP of 5T approx for
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the company in the soy process. Thus company can now design the processes to gain
maximum from the transaction.
FC VC Spu (8)
Truck (1) 3000
Cost per
quintal
handling (5)
2 2820
Workers (2) 900
Cost per
quintal to
farmer(6)
2720
Food (3) 200
TFC (4)= (1)+(2)+(3) 4100 (7)=(5)+(6) 2722
(4)/{(8)-(7)} quantity for
break-even= 41.83673469 quintals
assuming distance of 70km
Table giving soy procurement analysis
The inputs for this table are the various costs involved. The output from the above table can
be used to decide the quantity and price combination for the purchase of activity. Simple
formula based manual sheets can be prepared which will minimize the work for the BoDs in
terms of calculation. The calculations will be done with the help of simple calculators. The
summary of these sheets can be fed to computer to maintain data base. The BIS can help
the BoDs in better decision making and avoid costly mistakes due to lack of information
about internal processes. There will be a record keeping process to store the reports and
data from the BIS. The reports from BIS can be taken up in the monthly board meetings.
After observing organization like WCSPCL which is run by farmer community, we feel the
conventional automation based system may not work as the stakeholders are not aware
about the automation processes. But the implementation of BIS is very much relevant in this
case as the use of BIS can significantly help to alter the internal and external processes they
follow. It will help the organization in deriving key areas for performance monitoring and
the metrics on which they will be measured. This will help them to decide them their future
VMG.
AS the company grows further, the BoDs will gain exposure to the various scenarios in
business. Moreover, there is good chance that they will adopt new technologies for the
operations in the company as they shown lot of enthusiasm in adopting new techniques in
the agriculture fields. Implementation of BIS in this organization can help to prepare a
template which can be used for other producer companies which are involved in similar
activities.


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Social ROI as a result of WCSPCL:
The company was an initiative that mobilized farmers towards collective decision making.
The farmers now participate in Board meetings and ask questions regarding how the
company is functioning, also give suggestions on how it should function. The company has
mobilized people towards creation of common assets and preserving them. Knowledge level
among farmers has increased because of exposure to different activities under WCSPCL. The
farmers started realizing the importance of wealth creation and thus mobilized towards
achieving financial growth.
Political ROI for the farmers:
Increased bargaining power of farmers cannot be ignored by traders and corporates, thus
giving fair representation in the market. The company BoDs have struggled towards getting
the APMC rules relaxed. Lobbying with government departments for incentives to expand
the company have resulted in interest of higher officials in the government about
functioning of producer companies. Members have become politically active and contesting
the panchayat elections.
Acknowledging the growing importance of producer organizations like WCSPCL, the finance
minister is budget for 2013-2014 has given them incentives.
To quote his budget speech Farmer Producer Organizations (FPO), including Farmer
Producer Companies (FPC), have emerged as aggregators of farm produce and link farmers
directly to markets. To signal our support to them, I intend to provide matching equity
grants to registered FPOs up to a maximum of Rs.10 lakh per FPO to enable them to
leverage working capital from financial institutions. I propose to provide Rs.50 crore for this
purpose. Besides, a Credit Guarantee Fund will also be created in the Small Farmers' Agri
Business Corporation with an initial corpus of Rs.100 crore. I urge State Governments to
support such FPOs through necessary amendments to the APMC Act and in other ways.