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CHAPTER – 1
SCOPE AND OBJECTIVE
Dates may be grown either from seeds or from offshoots. When grown from seeds
approximately half of the palms will be male and produce only pollen. No two seedling plants
would be alike, and few of them are likely to produce fruits of good quality. However, when a
seedling plant appears outstanding in any way, it can be propagated by its offshoots, which
will always reproduce the parent type. The most well known varieties of dates are:
Arabs distinguish four stages in the growth and ripening of the fruit – kimri, khala, rutab and
tamar. In the first stage (kimri) fruit grows rapidly and is distinguished by its green color.
Fruits enter the khalal stage when it has about reached its maximum size and green of the
growing period is replaced by a shade of red and yellow or a combination of the two colors
characteristic of the particular variety at this time. Fruit enters the rutab stage when the tip
first begins to soften or lose its khalal color. When the fruit has fully ripened and has dried
until it will keep without spoiling, it is in tamar stage.
1.1.2 Pruning:
The bearing capacity of the date plant is in proportion to the number of green leaves that it
carries. An in sufficient number of tree leaves in proportion to the amount of fruits results in
low quality fruit during the current season and fewer inflorescences in the following spring.
Therefore it is necessary to retain all good green leaves unless there is some definite reason
for removing them. Removal of leaves is justified under certain conditions. Some may have
to be removed so that bags or covers may be placed over the fruit bunches.
1.1.3 Pollination:
Date palms are the dioecious: that is the male flowers that produce the pollen and the female
flowers that produce the fruit are borne on separate palms. For commercial production, the
female flowers must be pollinated by hand. The most common method of pollination is to cut
the strands of male flowers from a freshly opened male inflorescence and invert two or three
of them between the strands of the female flower cluster during the first 2 or 3 days after it
has opened. The different methods of pollination are: Hand pollination, Mechanical
pollination and air pollination.
Fruit thinning necessary for: increase the size, improve the quality, and prevent delayed
ripening of the dates, to reduce the weight and compactness of bunches, and to ensure
adequate flowering in the following year. Thinning can be done by reducing the number of
fruits per bunch or by reducing the bunches per palm. Since in the commercial practice both
the operations are employed, it is necessary to give special attention to each of them.
It is necessary to protect the fruit from the rain water by covering the bunch during the
ripening season. In some part of the world like California and Saudi Arabia wax paper bags
are used. This sheet of wax papers are wrapped around the bunch and tied to the fruit stalk.
Dates are unique in that they constitute a set of properties and characteristics that distinguish
them from all major fruits. Dates are consumed in at least three major stages of maturity, i.e.
in khalal, rutab and tamar stage.
Post harvest operations include fumigation, cleaning and subsequent grading. The fruit is
taken to the packing house and fumigated as soon as possible after it has been picked.
Methyl bromide is generally used for fumigation of the date fruits. Fumigation is done at
60 F for efficient fumigation. Cleaning involves passing dates fruits through very high air
pressure. After cleaning fruits are graded according to the ripeness, consistency, size and
appearance for further handling.
The Kutch district lies in the state Gujarat on the West Coast of India. Gujarat and kutuch
border the Arabian sea to southwest while kutuch in the north west is close to the Pakistan
border. In this sparsely populated region the Gandhidham –Kundla industrial complex and
free trade port area is the major trading area in kutuch while Bhuj serves as the district
capital. Agriculture, trade and handicrafts have been the traditional economic activities in
Kutch. Date Palm production is a traditional activity and the Kutch region provides almost all
of the dates produced commercially in India. Kesar Mango of Kutch are famous in the
country and known as the “Kutchhy Kesar”.
1.2.1.11Rainfall: Kutch is an arid region, it has desert –like conditions throughout the year.
Average annual rainfall is approximately 350 mm with about 70% of the rain coming in July
–August. A severe drought affected the area in 1997-1998. Because of the low rainfall in the
region there is depletion of the ground water continuously. Most of the farmers have bore
wells whose depth ranges from 350-600 feet.
1.2.1.12Temperature: The temperature ranges from cold 1 degree Celsius in the winter to 45
degrees Celsius in the summer. In the relatively cold winter season, temperatures very rarely
fall below freezing .Relative humidity levels vary considerably depending on the season and
on the time of day.
Kutch is the main region of date production in India. The dates of Kutch are being sold not
only in the domestic market but also in the markets of Rajkot, Junagardh, Mumbai and kerela.
There are fourteen lakh trees of dates in the region all of them have been grown by the
farmers in the corners of their fields. Nearly all of the trees have been grown by the seedlings
so each plant is unique in its self. Because of non uniform variety of date exporting these date
is not possible in the international markets.
One of the specialties of the dates in Kutch is that they reach in the “khalal” stage in the
month of the August, which is two month early then anywhere in the world. This can give the
date grower of Kutch first mover advantage in the international markets, in the month of July
and August.
The date in Kutch as mentioned earlier do not belong to any particular variety , that is why
putting them in a particular type of variety category would be impossible due to unevenness
in color, size and taste. The fruits from the same plant vary in size, and taste as the farmer
does not take care of their date trees. Per tree yield of the trees is also different here it ranges
from 50 kgs to 150 kgs but most of the trees gives yield up to 50 to 100 kgs which very much
less then the international standard of 200 kgs.
Date palm project is the most ambitious project ever taken by VRTI. The planning of the
project was started in 1999, VRTI worked with Gujrat Agriculture University and Bhuj to
select best available varieties present in the Kutch region, for that they surveyed nearly two
lakhs of trees. From the finding of survey it was clear that, because of using seedlings
technology all the trees are one of its kind i.e. they do not belong to the same variety so total
3.5 lakh of varieties are present in the Kutch region. But due to unevenness in the trees it was
difficult to commercialize the production of any variety of trees in the Kutch.
So it was decided to import one lakh plants developed by tissue culture technology of Barhi
variety from Jordan at the cost of 2000 rupees (per offshoot) so that the risk of non
uniformity can be reduced.
As this project requires extensive knowledge of the international markets for dates and its
plantation process so it was decided to include any foreign expert company. For this purpose
both Agrocel and VRTI worked together and they made an agreement with the foreign
collaborator (Agripro)a Israel based company, who operates in marketing of the dates in the
gulf region. One memorandum of understanding was signed between the three for planning
and implementing this project of date plantation. This MOU includes formation “KADEC”
which is the joint consortium of the three above mentioned organizations the roles and
responsibilities of the all the three are:
-Drip installation
• FOREIGN COLLABORATOR :
- - Overall management
-Market linkage
The objective of the MOU is to establish the “Kutch” brand of dates in the international
market by growing quality dates in the region and providing farmers access to the
international markets.
VRTI has identified the 1600 farmers in the area of Mandvi, Anjar and Bhuj Taluka of the
Kutch region and work has been started to mobilize the farmers to join this project. To join
this project first the farmer has to sign an agreement with the KADEC (Kutch agriculture
development consortium).The technical aspect of the project includes:
Intercropping: In order to provide current income for farmers and for return of capital
investments, the project will plant the date trees in several stages, mixing date plantation with
annual production of vegetables. The annual crops will be planted in area adjacent to or
between the date palm rows. In early years, the largest portion of land will be planted with
annual vegetable crops while the initial date palms mature. As the date palm mature, the
annual cropping areas of vegetables will be reduced in order to provide more space for more
dates.
Drip Irrigation: In this date plantation project, it has been proposed to use drip irrigation
system to save ground water. This will help in reducing the salinity of the soil also.
1.5 Methodology:
The Study was carried out in three distinct phases. The first phase focused on studying
the issues related with production cycle of dates and analysis of the target farmers in
the various parts of the Kutch, The second phase consisted of market study of the Anjar
market to see the present market situation of the dates , While the third phase was
utilized to explore the possible linkages of the organization with the farmers so that
farmers can be mobilized.
farmer survey of 30 farmers was done as a part of target group analysis. These farmers
were segmented according to the location and crop cultivation practices.
Observations of the survey have been shown in the target group analysis in the next
chapter.
Interactions with Israeli experts on date and vegetable production helped in realizing
the various issues related to the procurement, production and marketing date and
vegetables. Secondary data was collected from published reports of FAO, national
horticulture board and census.
CHAPTER – 2
FRAMEWORK OF PREPARATION, PLANNING AND IMPLEMENTATION FOR
MOBILIZING COMMUNITY FOR SPECIAL PROJECTS:
This framework talks about each of the stage of preparation, planning and implementation.
For agriculture investment project it is first necessary to have knowledge of the current
agricultural situation in the identification stage, so that we can find what is the need of the
farmer’s community other than the improvement in their income levels. This is important
because, we can identify the suitable crop according to the need of the soil, water and
environmental conditions by this approach.
For example in the region of Kutch there are so many horticulture projects like Mango,
Banana and Cashew development which are being implemented without looking on the fact
that these crops are not saline resistant and requires very high amount of water for
propagation.
After identifying the current agricultural needs of the farmer community, it is important to
search for the suitable crop options available for the farmers. Before taking decision about
any particular crop it is necessary to estimate market size, demand and deficiencies in the
current marketing practices. Market analysis of the current marketing practices will know-
how about the returns which the farmers are getting in the current market situation. Based on
market and demand analysis we can take decision about the crop which to be promoted for
the development of the targeted region.
After taking decision it is necessary to have idea about the knowledge level of the farmers of
that particular crop cultivation practices. This process of analysis of knowledge level may be
called as the “Target Group Analysis”. By target group analysis we can find the following:
o The criterion of differentiation among the target group i.e. income levels, know-how
of agriculture practices and marketing knowledge.
o The potential problem faced by the given different group of farmers.
This process of “Target Group Analysis” will help in understanding the approaches to be used
for the community mobilization for different group of farmers.
After identification next stage is preparation and planning stage. This stage requires preparing
a financial and marketing plan. by evaluating the information on technologies required, and
government policies available (subsidies and tax benefits etc.) a Financial plan can be made.
It should be based on the realistic estimation of prices and input cost so that it would be easy
to explain the farmers in the mobilization stage. For calculating the farmer’s expenses, a
exploratory farmers survey can be done.
Based on the approaches identified for community mobilization, farmer’s community can be
mobilized by giving them information about the financial and marketing plan.
The next stage of implementation requires the prior knowledge of time which would be
utilized in each component of the implementation of the project this will help in making a
time frame for implementing the project.
CHAPTER – 3
IDENTIFICATION STAGE
It was observed that even if the financial analysis of proposed technological change shows
apparently attractive results for the intended beneficiaries, there is no guarantee that the
changes will be adopted by the farmers. What is needed in this date plantation project is the
understanding of the socio-cultural setting of the project area and the farming systems
existing in the region.
In the date plantation project it is important to have the knowledge of the following in the
identification stage:
Agriculture was hit by two consecutive years of severe drought, which led to a contraction in
out put of nearly 13 percent in the year 1997/98, and 2 percent in year 1998/99. The areas
most severely affected by the earthquake were also worst affected by the drought. Previously,
the region had been struck by two cyclones in the past 9 years.
Because of the importance of agriculture to employment, much public effort has been
devoted to agricultural development. In particular, development of water resources has been a
priority in Gujarat. Alongside the state government, many non governmental organizations
encourage farmers to adopt modern farming techniques. Over time the cropping pattern in
Kutch is changing gradually. Crops requiring less water and yielding more cash are the
pattern of the day. Date being the saline resistant crop, can be grown easily in the Kutch
region. In future mango and sapota will not give good returns to the farmers due to over
supply and less saline tolerance. That is why it is necessary for the farmers to shift towards
dates cultivation.
In this project there are two types of farmers which have been identified; these are date
growers and cotton growers. So first it is important to understand their knowledge and
perception about the date plantation so that what activity that should be focused on can be
identified. For this purpose one farmers survey was conducted during the study. This survey
not only covered the knowledge and perception of the farmers about date plantation but also
covered the present marketing systems through which date are being sold in the market. The
survey covered all the two types of farmers.
In the Kutch region most of the farmers have Mango and Sapota as the most remunerative
crop a farmer in the peak season gets nearly Rs 6-7 /Kgs in from the commission agent. In
case of the dates it is ranges from Rs 2-50 /Kgs.
Many of the non date growers think that because of the low returns and high initial
investment date is not suitable crop for them. This low returns date growers are getting
because the quality of the dates which is sold in the local market is not of good quality.
lack of
high invs tment
knowledge high
25% invs tm ent low returns
33%
high water
requirem e high water
nt requirement
lac k of
5% low k nowledge
returns
37%
The potential of the dates is very high as in the local and outside markets. Many of the
farmers are getting high prices nearly 20-50 Rs/Kgs by a good quality produce. If dates of
good quality can be produced in then the farmers will get much higher prices then what they
are getting in the market by any other crop.
Most of the date traders do not have uniform variety of dates. The reason behind this is that
they have used seedlings for growing dates. Farmers do not have knowledge about the
varieties of date available in the Kutch region. Farmers do not have knowledge of the
offshoot plantation that is why the mortality rate of the offshoot plant is very high. Most of
the farmers have grown their trees by seedlings that is why they have male/ female ratio of
6/4 i.e. 60% of the plant do not give date fruits.
both
(seedlings seedling
and tissue
culture) tissue culture
20% seedlings
offshoots
seedling offshoots
10%
tissue 60%
culture both (seedlings
seedlings and tissue
10% culture)
Average yield per tree in the region is in the range of 41-80 kgs. The reason behind this is that
most of the farmers do not have the idea about proper pollination process, and use of poor
variety of seedlings, in the farmers survey it got revealed that farmers who are getting good
prices in the Kerela market also not aware of the thinning, pruning and offshoots technology.
These processes are very much important to get good size and sweetness of the fruit.
Farmers do not have adequate knowledge about the packaging of the date fruits this also
reduces the market price of the date which they get in the local market. I observed in one of
the date farm that the farmer because of lack of knowledge to pack the fruit compromised to
take two Rs less per kg from the traders of Kerela. Problem of the salinity of the water is also
one of the factor due to which farmers do not get good quality of the dates and vegetables.
The idea of increasing date production in India should be seen in the context of the world
trade in dates. Of total a total world trade of about half a million tons m India accounts for
close to 40 % of all the imports in the world.
Gulf countries today import over 600000 tons dates, including high price, high quality
product as well as cheaper dates.
the main consumer of dates in Europe are found in the large and growing ‘muslin community
that mainly consists of people who emigrated from North Africa , and the middle east.
About half of the all the dates imported to the EU are Madjool variety. Traditionally these
dates have been shipped by the North African suppliers to Southern tier European countries
and often consumed by North African immigrants. Imports price levels are generally over
2000-2500 euro/tons for quality product.
The domestic demand of the dates is in markets of Rajkot, Mumbai and Kerela. Most of the
time large number of trader from these places regularly comes to the Anjar market.
The dates of Kutch are mainly being sold in the markets of Kerela, Mumbai, Rajkot and in
the local markets of Kutch. The farmers sell good quality of dates in the outside markets to
get good prices. As the quantity of good quality of dates is very less so the percentage of date
sold in different markets is also different and it keeps varying year by year depending on the
quality of produce. The buyer from Kerela regularly comes to the specified villages and they
give the maximum prices, but they only take best quality of dates. The percentage of dates
sold in the outside market is less than 15 % of the total dates produced in the kutuch.
There are some farmers to whom consumers directly comes to them to their produce.
But these consumers only take good quality produce from them. That is why farmers
do not sell complete good quality produce to them because farmers keep this good
quality produce with mixing it with the poor quality produce.
2. Farm contractor:
There are some farmers who give there farm to the contractor on the basis of the
quality of the produce that they have. The contractor depending upon the number of
trees who give good quality dates decides the total price at which he will the contract
to the farmer. The responsibility of the farmer is to take care of the produce.
3. Commission agent:
Most of the farmers sell their produce in the anjar marketing yard through
commission agent. The farmer has to bring all his produce to the shop from where it
is sold through the auction process. Price of the produce is being determined by the
market dynamics i.e. on the availability of the produce, number of buyers and
retailers present in the market, previous day prices, on quality of the produce etc.
There was no facility in terms of the storage of the vegetables so what ever the
farmers had brought in the market he has to sell it on that day it self.
In anjar market wholesaler from Rajkot and Mumbai regularly comes to purchase
dates. These traders also follow the auctioning system of purchase through
commission agent because they have developed relationship with the commission
agent so that agent always quotes the less prices in favor of the wholesalers.
Many farmers send their produce to the markets of Rajkot, and Mumbai. These
farmers follow a team leader system in which, a representative of farmers takes this
produce to these markets and he shows the produce to the commission agent.
Depending upon the auctioning price the produce is sold. One of the disadvantage of
the this team leader system is that the team leader only takes care of his produce to
get good price from the agent, because of this other farmers gets less price.
Farmer
Wholesaler
kerela
Commission
Agent
Contractor
Wholesaler
(Rajkot, Mumbai)
Retailer
(Local market)
Retailer
Final consumer
Anjar marketing center is the biggest marketing yard in the region. This is main marketing
yard for mangoes. This was established by the help of the initiative of some farmers who
approached to the district magistrate for setting up a marketing yard for farmers so that the
farmers will get access to the buyers.
The marketing yard samiti has 4 traders,8 farmers, 2 government officials, 2 independent
government officials and 1 representative of the municipal corporation.
The responsibilities of the Samiti are:
This yard was formed in the year 1992 and in 1994 first time the auctioning for the shops in
the yard was done for 30 shops available in the yard. Annual fees is being charged to the
commission agents which is 100 Rs. Not a single shop has been auctioned to any other person
till now i.e. all the commission agents own these shops for last 11 years.
In this marketing yard farmers do not pay any commission to the agents. The commission of
7% is being charged to the wholesalers and retailers. The vegetables and dates are sold to
wholesaler and retailers. In the Anjar market wholesalers from the Mumbai and Rajkot comes
regularly to purchase dates and fruits. All the fruits and vegetables are sold by auctioning
process. This auctioning process is being carried out in each of the shop of the commission
agent in the yard. The farmer has to bring all his produce in the yard and where it is weighed
in the electronic or mechanical weighing machine. Depending upon the market dynamics i.e.
availability of the buyers, previous day market price in the retail market, and supply of the
produce in the marketing yard the commission agent quotes the price for the vegetables and
fruits. Depending on the suitability of the wholesalers price is being fixed and purchase
process gets completed after registering the name of the buyer and price which he quoted in
the auctioning process.
The present system is more favorable to the commission agent and traders in the business; the
farmer is only getting small percentage of the total price in which date is being sold in the
domestic markets. The farmer only gets 15-20 % of the prices at which date are sold in the
retail markets.
As mentioned in the previously that due long chain of intermediaries it is impossible for the
farmer to get the good prices even if their produce is of good quality.
• In the case of the dates and fruits like Mango, when a farmer comes to know that in
the particular vegetable market prices are high then he goes to that market this
happens with the other farmers also. This causes the huge supply of the fruits at a
particular time and the farmer get the lesser price.
• In the Anjar market, farmer do not have to pay any commission to the commission
agent, this is also works as the disincentive for the agent to give good prices to the
farmer, he only quotes for those prices where the buyer (wholesaler) agrees to pay
them, Even if there are large number of buyer in the market then also agent do not
quote high prices. All the decisions are taken by the agent and the buyers’ farmer do
not have any role to play in deciding the initial prices which is being quoted in the
auctioning process.
• There is no facility for the storage of the produce which comes in the market, a farmer
can not return with his produce once he entered in the market because of the high
transaction cost involved in transporting the vegetable, buyer take advantage of this
and most of the buyers do their purchase at the last time of the auctioning process,
when the auctioning prices go down.
Because of having poor quality of produce farmers does not grade the dates while
selling it in the market. This also causes them in getting low price as during the
auctioning process.
3.4 Infrastructure:
In the targeted region of Anjar, Mandvi and Bhuj there is Kandla and Mundra seaport.
These ports can be very much useful for exporting the date and vegetables as they are
very perishable in nature, reach to the market should be on time. This will be helpful in
reducing the cost of transportation and storage. The condition of roads is good and most
of the villages have good connectivity from the markets.
In targeted region there is ample number of cold storage house which can be used for
storing dates and vegetables. Because of good electricity supply it would be easier for the
farmers to use drip irrigation system.
State government of Gujarat has recently announced giving up subsidy on drip irrigation
up to Rs 50000, this subsidy will come from GGRC (Gujarat green revolution company)
which is established by the state government. National horticulture board provides 20%
subsidy for any horticulture crop, under this scheme there is limit of Rs. 25 lakhs on the
amount of investment.
These government schemes can be used for reducing the initial investment of the farmers.
Strength Weaknesses
- Early variety i.e. fresh date is only - Farmers are paying huge margins to
available in the month of June, July the commission agent and getting low
and August in Kutch. This will give prices.
the first mover advantage. - Farmers do not have good quality
- Availability of good infrastructure in dates of the same variety that is why
terms of road, electricity and it is impossible to establish the Kutch
communication. dates in the international market.
- Some farmers are aware of the date - Farmers do not have knowledge of
cultivation practices. the basic date plantation practices.
Opportunities Threats
- Establishing the Kutch brand of - No further market development
dates in the international markets. possibilities for Kutchi dates.
- Getting best available prices in the - Farmers may get lower prices
domestic markets also. in the incoming years.
- For developing a institutional
arrangement for farmers so that they
can get maximum benefit.
- To use the government subsidies
- This arrangement can be extended
for the other crops like mango, sapota
etc.
The entire exercise of production cycle analysis, target group analysis, market analysis
and SWOT analysis points to the fact that the date cultivation in Kutch is in bad need of
an institutional support at district level in conducting and continuing the business in a
sustainable manner. The crucial functions of procurement planning, quality
improvement, marketing etc. lacks market orientation and fails to address the farmers
and export market needs. In order to develop a market focused rural enterprise based on
date and horticulture resources, a proper institutional mechanism should be envisaged
and developed to support its day-to-day activities. The activities ranging from
procurement planning, quality improvement, transporting and marketing of products
should be canalized through this institutional mechanism.
CHAPTER- 4
RURAL ENTERPRISE – SUGGESTED INSTITUTIONAL MECHANISM
The first and foremost action in the proposed enterprise development is to identify the
potential villages suitable for the first phase of intervention. A mix of villages in select
3 regions constituting both date and vegetable growers has to be selected to form the
collection and mobilization center. The selection should be based upon certain criteria
such as raw material availability, manpower/skill availability, and proximity to
infrastructure.
The intervention region identification is almost done by VRTI for setting up of the collection
centers. Each collection center will have cluster villages under its potential service area.
Since it is impractical to develop all these villages at once in to rural enterprises, the next step
should be to focus on one or two villages in these regions to develop them into self
sustainable model villages. “Khedoi” , “Jarpara” and “Khambra” are the villages having the
potential to be developed as a model village because date growers in this region are very
progressive because they know about the potential of dates. This will help in further
mobilizing community in the subsequent phases of the implementation. Being the first level
of intervention time and resource requirement in developing these villages will be
considerably high. Support from government agencies and Bank (to provide farmers
subsidies and loan) should be mobilized for this purpose.
The next step is to mobiles the community to orient them with the mission of developing
these select villages into a date and vegetable based enterprise. For community mobilization
those approaches should be used which are aimed at Individual Level Behavioral Change.
Because here our prime target is a farmer for this individual behavioral change it first
necessary to inform, educate and communicate the individual farmers. These three processes
involve informing the individual farmer about the proposed project and the reasons why they
are not getting good prices in the market as well as about the export potential of the dates.
1. Date grower big farmer(some of them are mango exporter also) (land holding of 25-
100 acres)
2. Date grower small farmer ( land holding of 5-10 acres)
3. Date and cotton grower (land holding of 5-10 acres )
And whenever possible try to include same type of the farmer in the small group education,
so that it would be easy to understand the concerns and motivations of the farmers. For
example in the case of date grower big farmers they knows that they can grow the good
quality of dates so the emphasis while explaining them about the project should be on the
exports markets potential of the dates and what advantages that we have in the international
market. The difficulty will arise in convincing 2nd and 3rd type of the farmers because as these
farmers have only 5-10 acres of land so for them devoting one hectare of land for period of
four year means a large investment and with a risk. So in the discussion with the small
farmers, it was found that they were more concerned about the minimum prices that they will
get and the subsidies available to them in the project.
In order to develop a market focused enterprise based on dates and vegetables, a proper
institutional mechanism should be envisaged and developed to support its day to day
activities. The activities ranging from procurement, storage, transportation to gulf and
Europe. This should be canalized through institutional mechanism.
Most feasible option for creating an institutional mechanism is to register a new organization
with the above said mandates of procurement to marketing of date and vegetables. The new
organization can be registered as a producer company, cooperative society or a non- profit
organization.
Cooperative would be registered under Companies Act as a producer company; the reasoning
is that in case of producer companies it is legally possible to enter into joint venture
agreements with the organizations other than the cooperatives also.
Foreign collaborator
Marketing Collection
MARKET
center and CPH centers
NHB
Producer
GGRC Company of Agrocel
JV will be a Private Limited Company registered under the Companies Act. The general
provisions applicable to any private limited company will apply to it but those, which are
specifically provided for it, will supersede the general ones.
As per the provisions of the law there would be restrictions on selling of shares by any of the
three parties and transfer would be allowed only by the approval of the board
Brand and trade mark of the products will be owned by the JV even when the marketing
linkages are provided by the foreign collaborator
There will be 10 board members in all including the chairperson and representation of various
shareholders will be in the proportion of the share holding
Chairperson will be selected by the majority of the directors present in the meeting called for
the appointment of the chairperson.
The members of the cooperative will be from the villages of Mundra, Anjar, Bhuj and
Mandvi Taluka. The climatic conditions of this area are conducive for the growth of date and
vegetable plants. At the same time the productivity in this area is the highest in the state.
Moreover other sources of income are limited in this area and hence the member centrality
will be higher.
The cooperative will have a membership of 250 farmers with an average land holding size of
10 hectares. Each farmer will have to contribute Rs. 1650 only towards the equity of the
producer company in the new joint venture. There will be a council of members in each
village that will have a President and a Secretary. From, among the Presidents of these
village councils, the Board of governors and Chairman of the cooperative will be elected.
Due to the stakes involved, the farmers will be discouraged from selling their produce to
other players of the market.
The cooperative will collect the dates and vegetables from the farmers and supply it to the
JVC. The cost incurred by the cooperative for procurement will be borne by the JVC as cost
of produce. The JV will be responsible for marketing of the products. The ratio of shares in
the JVC between the cooperative will be in depending upon the agreement between the
farmers and promoters. The foreign collaborator would be given commission on sales on per
ton basis.
The objective of the KADEC project is capacity building of the farmers so in the later part of
the years the equity of the stake holders can be reduced by increasing the shares of the
producer company of the farmers.
1. Procurement of dates and vegetables: the cooperative will procure the dates from the
farmers at a pre-decided price.
2. Storage: the joint venture company will be the sole buyer and as per its demand the
cooperative will store and supply through out the year
3. Transportation and supply to the Joint Venture will also be the responsibility of the
cooperative and it would hire transporters for the same
4. Farm Inputs to farmers: to improve the productivity of the dates and vegetables,
cooperative would supply various inputs like seeds, pesticides and fertilizers, Kisan
credit cards under the central government scheme by providing linkages with the
banks
1. Providing technology, know-how: its main role would be to provide latest technology
as and when required.
2. Marketing linkages and distribution network: since the collaborator is already into this
business and has established distribution linkages, it would also provide linkages to
the joint venture company
The stake holders (Agrocel ) will provide funds for the initial investment in the project such
as funds for setting up of the cold storage, nursery and developing demonstration units.
Chapter - 5
Operational Plan
The important functions in any horticulture based enterprise include training to the farmers to
get a good quality of dates and vegetables, procurement and marketing. These independent
but highly interrelated activities cannot be ignored or seen with lesser importance in
comparison with one another. So the proposed organization should have three different major
functional divisions –Marketing Center, Procurement and Mobilization Center, and
central packaging house. VRTI will act as a facilitator in developing this institutional
mechanism. Marketing center which would be located in Bhuj will be directly interacting
with Israeli company AGRIPRO for international marketing of dates along with it, marketing
center will have the responsibility to market these dates and vegetables in the domestic
market. The procurement and mobilization centers will procure the produce from farmer;
these centers will also have the responsibility to mobilize the farmers for joining the project
plus working with the farmers SHGs’ to make them aware of the date cultivation practices.
All the three components will be working under the common head to improve the information
flow between them, which is crucial for sustenance.
Training to farmers of
Demonstration units (3)
date cultivation
practices
In this project mobilization would be a continuous process for four years, in the first year it
is possible to mobilize 250 farmers. Vegetable and date plantation can be started in the first
year for these 250farmers i.e. 250 hectares of land. For vegetable it would be required to set
up collection centers. Procurement center will be established at each cluster level. At present
KADEC has three demonstration units, the demonstration unit can be used for training and
awareness building to the farmers. This awareness building would be a continuous process
which is to be carried out by these demonstration units so that extension of knowledge and
skills can be done easily.
A village procurement centre will cover the nearby 8-10 villages. Farmers will bring their
produce to the procurement centre by their own transport vehicle. Farmers have to bring their
produce at the pre decided time that will be decided on the basis of availability of transport
vehicle for sending the produce to the central packaging house in Mundra. If a farmer is
failed to supply its produce on the given specified time, the produce will be sent by the next
round vehicle. KADEC will not be responsible for the deterioration in the quality of the
OTS – 2005 31 DEEPAK DUBEY
New Approaches to project preparation ,planning and implementation to mobilize community
produce in the meantime. The farmer will be paid for final quality of the produce. At
collection centre farmer’s produce will be weighted first. Then a sample will be taken on the
random basis from the produce of each farmer separately. On the basis of this sample quality,
price of the produce will be decided. After this the whole produce will be sent to the central
packaging house in Mundra. Information regarding everyday prices of all types of vegetables
and dates will be provided to farmers. These prices will be different for different quality
produces. Payment will be given once in a week to farmers.
For managing the collection centre one secretary and two support staff will be appointed at
each collection centre. The secretary will be a permanent employee of KADEC who must
belong from agriculture background and must have knowledge about dates and vegetables.
The secretary will help the farmers in solving their field problems also in the free time. The
support staff will be appointed on the temporary basis from that village only. Their main
work will to load and unload the produce of the farmers.
Commission on the basis of per ton procurement will be given to every collection centre for
making it self sustainable in bearing its expenses of salary, rent etc. in the first five years Rs
62per ton procurement would be given to the collection centre for vegetables and after 5th
year it would be increased to Rs 100 per ton for dates procurement.
Central packaging house can be established in Mundra as it comes under ‘Special Economic
Zone’ and all the infrastructure facilities like electricity, road, and railway, port are available
here. Main reason of choosing this place for establishing the central packaging house is
availability of very good port facility here. As KADEC is planning to export most of its dates
and vegetables, availability of nearby port will help in reducing the transportation cost.
Dates and vegetables from all collection centres will be collected here. First the produce will
be checked for chemical residuals according the specifications of the buyer in the quality
testing laboratory. Then all one type produce will be graded. For grading semi automatic
system will be established. Then produce of different grades will be packed differently
according to requirement of the buyer. Then it will be sent to cold storage until it is sold.
The cold storage plant of capacity 500 tons is required to the joint venture company, so as to
store five days of procurement. This would be needed because demand and prices of
vegetables and dates keeps fluctuating in the domestic and international markets. For giving
better returns to the farmers it is important to have such cold storage facility so that supply
according to the market conditions can be done, without compromising on prices.
5.4 Grading:
After cold storage the vegetables and dates would be supplied to the packaging house. After
grading of the whole produce if the average grade is coming higher than the average grade
decided at collection centre, bonus will be given to farmers for compensating the mistake
occurred at the collection centre level.
SWOT analysis has been done in present context of the date project. After looking into the
progress in the mobilization of the farmers, and necessary infrastructure required for this
project in the first phase of the implementation;
Strength: Weaknesses:
1) VRTI has the expertise on field support by 1) Over dependency of foreign experts on
presence in the villages, so supervision can be marketing might create problem in future.
done with some ease. 2) Marketing linkages in the domestic
Opportunities: Threats:
1) Establishing Kutch brand of dates 1) Supply chain and logistics have to be
2) Kutch kesar mangoes has the export potential, managed efficiently
the arrangement of dates project can be utilized 2) Demand and prices of dates and
for exporting mangoes vegetables in different market keeps
3) Formation of cooperative will help in fluctuating
elimination problems in current marketing 3) Same variety of date offshoots may
system of dates and vegetables because of not be delivered by the Jordan company
awareness of farmers towards current marketing 4) plan for the vegetable plantation has
practices been delayed by one year
CHAPTER – 6
ORGANIZATION STRUCTURE
To ensure the success of the proposed enterprise there should be a fully functional,
independent and professionally managed operating system. The Two functional
divisions in the organization marketing and procurement would be made as a
independent centers and should be headed by experienced professionals in relevant
areas. To coordinate between these two centers, there should be one Project Manager as
the head of the proposed organization.
Project Manager
Procurement
coordinators
Marketing
Coordinator Social Mobilizers (4)
Accountant (1)
Sales Executive
Entomologist (2)
Drivers (2)
The marketing center will be under the marketing coordinator and there will be two
sales executives. The procurement center will have one procurement coordinator and
under him there would be a team of agronomist, entomologist, and social Mobilizes.
Depending upon the size of the collection center in terms of the procurement and
number of farmer members the size of the team can very.
For ensuring the success of the proposed enterprise there should have a fully functional,
independent and professional marketing center. It should be the responsibility of this center to
market the dates and vegetables procured by the proposed enterprise...
A professional manager with relevant marketing experience should be made the head of this
center. Three different heads covering product manager, sales executives and market research
manager are required for the smooth functioning of this center.
Roles & Responsibilities of each independent wing will be as follows:
1. Marketing coordinator
a. Manage date and vegetables sells in the different export markets and keeping
watch on the fluctuations of the prices in the international market, and
accordingly taking decision to supply date in respective markets.
b. Coordinating with the Agripro personnel for selling dates and vegetables.
c. Coordinating with the procurement center related to the fixing of the supply
schedule.
2. Sales Executives
a. Grading the dates and vegetables in the central packaging house.
b. Responsible for selling the products in various domestic markets.
c. Arrange tie up agreements with bulk buyers.
d. Identify and collaborate with domestic buyers to generate bulk demand
e. Collection of market information (consumers and competitors) and passing on
the necessary information to the marketing coordinator.
f. Managing transportation of dates and vegetables in the domestic markets.
g. Taking information from the procurement centers regarding the quantity of the
dates and vegetables available in the collection center.
The marketing department will have the responsibility of giving feedback to the
procurement center on the quality of the produce in terms of the international standards
so that produce can be transported easily.
c. Arranging farmers visits to the demonstration units so that the farmer can
benefit from the experience.
d. Keeping record of the yield of the farmers and the problem that they are facing
in growing good quality dates and vegetables.
e. Maintaining records of the SHGs.
3. Agronomist:
a. Working with the farmers in installing and maintaining drip system.
b. Giving information to the farmers for timely use of the fertilizers and
pesticides.
c. Explaining farmers about thinning and pruning process to get quality dates.
What care should be taken in growing vegetables?
CHAPTER- 7
FINANCIAL ANALYSIS OF THE DATES AND VEGETABLES JOINT
VENTURE COMPANY
The total initial investment for the project would be for setting up cold storage, setting
administrative infrastructure and working capital requirement. The total investment would be
Rs 55.75 lakhs.
The total installed capacity of the cold storage plant is envisaged to be 500 tonnes. This cold
storage in the initial years would be used for the vegetables and in the later yeas for dates.
Store capacity of four to five days of procurement is the assumption in calculating the total
capacity requirement. The establishment cost of setting a cold storage plant would be 30
lakhs and the operating cost of cold storage would be 3-4 lakhs per annum.. Cold storage
calculations and details are given in the Annexure; 1.
7.1Working capital:
In this date development project the initial investment would not be so high because of using
hired collection centre and packing house. The total requirement for transportation, packing
house and operating cost of the cold storage including the labour charges can be arranged by
paying them after 8 days. The payment to the farmers for procurement would given after 8
days. The operating cycle of the proposed set would be 8 days as shown in the table:
Procurement from a farmer 1 day
Storage 4 days
Shipping and transportation 4 days
Payment from wholesaler and subsequent 4 days
transfers to farmers accounts
Payment to farmers 8 days
Working capital for 5 days will be required; this can be funded by the equity. This will be
required for only first operating cycle of the operations.
The cost of sales includes the collection to procurement centre, commission to foreign
collaborator, operating cost of the cold storage, rent grading and packaging, administration
expenses. In the first year profit is 2919280 Rs which increases in the second year due to
increase in number of farmers joining the project. Cost and profitability of the project are
given in the Annexure; 2.
7.3 Breakeven:
The breakeven quantity has been calculated by equating, total cost of sales and depreciation,
with the return per ton of procurement. The return from per ton procurement from different
crop is:
Beans - 2700 Rs (wholesaler price – 7700 Rs, price paid to the farmers - 5000 Rs.)
Chilly - 3000 Rs (wholesaler price – 7800 Rs. price paid to the farmers - 4800 Rs)
Tomato - 3000 Rs (wholesaler price -7200 Rs , price paid to the farmers – 4200 Rs)
Brinjal - 2900 Rs (wholesaler price -6900 Rs , price paid to the farmers – 4000 Rs)
This return from per ton of procurement has been calculated by deducting the wholesale price
with the price paid to the farmers. The breakeven level of procurement in the second year is
10315 tons of vegetables. In third year breakeven procurement is 14960 tons of vegetables.
For breakeven calculations see the Annexure; 3.
The joint venture company is set to earn a positive cash flow of Rs 12.95crores. The
company will get back its initial investment in the 2nd years of its operation. At the end of the
third year the proposed company would have earned a positive cash flow of Rs 1.015 crore
which is more than the initial investment of Rs 55.75 lakh.
7.5 Funding:
yr-1 yr-2 yr-3 yr-4
promoters 5162500 4750000 4337500 3925000
farmers 412500 825000 1237500 1650000
no of farmers 250 500 750 1000
investment requirement 5575000 5575500 5575750 5576000
Out of the total initial investment of Rs 55.75 lakh, major part can be funded through
promoters’ equity and rest by the farmers’ equity. For equity contribution from farmers Rs
1650 per hectare can be taken. In the subsequent years the number of farmer member will
increase. By increasing the farmer’s equity we can reduce the equity contribution of the
promoters up to five.
equity sturucture
6000000
5000000
4000000
investment 3000000
2000000 farmers
1000000 promotors
0
1 2 3 4
years
The per member contribution from the farmers would be on the basis of hectares on which
the farmers are growing the dates. For convenience in calculation it has been assumed to that
each farmer will contribute 1650 Rs per hectare only. From fifth year the equity structure
would be the same and Producer Company of farmer will get the 30% of profit of the joint
venture company.
In this date development project investment for setting up of date farm is very high in
comparison to the membership fees. That is why farmer would not need to take any bank loan
for becoming member of the producer company.
In the proposed arrangement it has been assumed that there would be 3 collection centers
needed for the procurement. These three collection centres will procure vegetables from the
nearby 8-10 villages and will cover nearly 80 hectares. In the first five years Rs 62 per ton as
a commission to a centre would be given. Then this will increase to 100 Rs. For date
procurement. The income and expenditure statement of the three collection centre in the first
year of operations is as shown in following table:
This profit can be kept as reserve so that we can utilize it for day to day operations of the
producer company. The collection center calculations are given in the Annexure; 4.
The total initial investment required for starting date plantation would be Rs. 455843. This
includes purchase date offshoots and drip irrigation system installment cost. After deducting
subsidies provided by GGRC (Gujrat Green Revolution Company) and NHB (National
Horticulture Board) the total initial investment required from the farmer is Rs. 275973. This
would be financed by the term loan from the bank at 11% rate of interest.
The margin money required for farmer for investment in the initial fixed cost is Rs. 48701. In
the first year the returns to the farmers are Rs 52191. The pay back period to the farmer
would be 6 years, with the net present value of Rs. 9.89 lakh. The return to the farmer from
supply of dates to the joint venture company is given in the Annexure; 5.
Farmer
Income/Ha.
Initial
Investment 324675
yr-1 yr-2 yr-3 yr-4 yr-5 yr-6 yr-7 yr-8
income
Dates 67500 90000 247500 337500 506250
tomato 134400 134400 67200
brinjal 76800 76800 38400
beans 38400 28800
chilly 35000 26250
Total Inc 211200 73400 211200 122550 195600 247500 337500 506250
Expenses
Dates 45982 48757 50882 68107 127702 133882 123957 129147
tomato 83487.6 83488 41744
brinjal 29538.8 29539 14769
beans 30800 22260
chilly 29680 23100
Total Exp 159009 109237 163909 113467 184215 133882 123957 129147
Net
income 52191 -35837 47291 9083 11385 113618 213543 377103
Returns
From JVC 768.95 2431.1 4090.9 3023.3 3149.4 3901.9 7431.5 13184
total
income 52960 -33406 51382 12106 14534 117520 220975 390287
NPV 989744
The details of returns of the farmer from the tomato, brinjal, and beans and chilly per hectare
are shown in the Annexure; 6, 7, 8 and 9. The Annexure; 10 shows the supply estimation of
the date.
Because of the stake holding in the producer company a farmer will get the additional return
from the proposed organization set up. The returns of the individual farmer in the first three
years are: Rs 768.95, 2431.25 and 4090. This per year return in the tenth year would be Rs.
30765. The returns of farmer and promoters from the date project are given in the Annexure;
11.
CHAPTER 8
IMPLEMENTATION PLAN
The date development project requires a lot of complex operations in the whole
implementation stage. From importing date offshoots to export of date fruits in the world
markets.
The procedure of dividing the overall project into sub elements is called work breakdown
structure. The main purpose of breaking down structure is to divide the whole project into
small parts so as to make possible the preparation of project schedules and cost estimates and
to assign management and task responsibility.
Each subcategory and sub subcategory is the activities that are required for the completion of
the project. This will help us in identifying the missing activities if any and hence improve on
the project by including the missing activities. The purpose of the WBS analysis is to reduce
the project into work elements, which, are clearly defined so that budgeting, scheduling of the
work elements can be done easily. WBS will be used as a control mechanism to check the
completion of work against the time scheduled for it.
code
1 Farmers mobilization 48
2 Setting quarantine nursery 2
3 Supply of vegetable seeds .5
4 Setting cold storage plant and 4,2
Collection center
5 Marketing of vegetables 4
6 Marketing of the dates 1.5
8.1Farmer’s mobilization:
This activity would be a continuous activity for four years. It has been assumed that every
year 250 farmers will join the project. This activity includes sub activities like:
• Explaining farmers about the proposed project
• Organizing farmers for collective decision making
• Providing them GGRC, NHB and KADEC registration forms.
• Completing process of registration
This activity will continue for five years, it includes the following sub activities:
• This includes the identifying the buyers in the domestic markets and subsequently
contacting them for supply vegetables.
• Arranging transport agency for vegetables marketing.
• Procurement of vegetables and storing them in the cold storage. After that according
to the demand of buyers we can supply vegetables in the different markets.
After fifth year the marketing of dates would be done through the foreign collaborator and the
infrastructure of vegetable marketing can be used for marketing of the date fruits. Activities
like farmers awareness about date plantation would be a continuous process.
The date development project has potential to give farmers good returns. By this project a
farmer will not only get good returns from the Barhee variety of dates, but he will also be
able to improve the quality of the local variety of dates due to increase in knowledge of the
date cultivation practices. Simultaneously if the farmers will be organized for this project
OTS – 2005 45 DEEPAK DUBEY
New Approaches to project preparation ,planning and implementation to mobilize community
then the new established mechanism can be used for the local variety of dates and Mangoes,
this will be the additional benefits for the farmers.
The present condition in the region of Anjar is very much suitable to start the project at this
moment of time because many farmers in this region are now aware of their exploitation by
the traders in case of Mango and dates. Therefore villages of this region can be developed as
the model village.
The project has a lot of threats in terms of the resource requirements and technicalities
involved. For this project care has to be taken in each step of its implementation i.e. from
importing dates offshoots to marketing of date and vegetables. Because of the technicalities
involved it is important to first have a team of professionals in field of marketing, agriculture
and social work because the existing human resources in the organization for implementing
this project are not sufficient.
References:
1. “Financial Analysis in Agriculture Investment Project Preparation”, FAO Investment
Centre Technical Paper,1991
2. “Guidelines for Preparing Agriculture Investment Project”, FAO Investment Centre
Technical Paper,1991
3. Abbott, J.C. (1970) “Marketing Fruits and Vegetables”, FAO, Rome.
4. Korten David C. (Ed.), “Community Management”, Kumarian Press, USA
New Delhi
7. www.indiaagronet.com
8. www.agmarknet.nic.in
9. www.nhb.org
10. www.fao.org
11. www.nabard.org
Assumptions:
Following assumptions were taken before doing the financial analysis of the project.
1. 125 offshoots will be planted in one hectare of land at the spacing of 9*9 meter.
2. There can be maximum 35% mortality in offshoots.
3. Production will start after four years of planting the offshoots.
4. In fourth and fifth year 60% of the trees will give average production of 20 Kg. per
tree.
5. In sixth and seventh year 80% of the trees will start to produce dates and the
production will be 55 and 75 Kg. per tree in sixth and seventh years subsequently.
6. From eighth year onwards all the trees will produce dates and production will increase
upto 150 Kg. per tree in the tenth year.
7. Each offshoot will cost around $41 to farmers.
8. Every plant will give average two offshoots in sixth and seventh years.
9. Farmer can sale his offshoots at the price of Rs.750 per offshoot.
10. KADEC will able to provide at least Rs.45 per Kg. to farmers for their produce of
dates.
11. Vegetables and cotton will be planted as intercrops for the first five years. The area
covered under inter crops will be 80% of the total area and it will reduce upto 40% at
the end of fifth year. After that intercropping will not be possible.
12. Bank will provide loan for 85% of the net project cost. The loan can be paid in next
ten years.
13. Farmers will grow vegetables according to the schedule provided by KADEC and
they will rotate the crops as per requirement.
14. KADEC will start its project with 250 hectares initially. The area will increase upto
1000 hectares in fourth year.
15. We will get only 50% A quality produce in the first two years of production. It will
increase to 60% in third and fourth year and 80% in the following years. B quality
produce will be 25% in first two years and then it will reduce to 20% in the following
years. C quality will not be produced after fourth year of production.
16. The farmers cropping pattern of the vegetables is shown in the table:
17. In case of tomato two grades have been considered, while in the other crops no grades
have been considered in the calculations.
18. The capacity of the cold storage plant required will be 500 tons per day considering
storage capacity will be sufficient for 4 days of procurement of vegetables.
19. The export price of dates considered is 1.5 $ which is free on board price (FOB).
20. The total cost of transportation, grading and packaging is considered as Rs 2/kg.
While in case of dates it has been considered as Rs. 5/kg.
21. In the first five months the commission the procurement centre will be Rs.62/ton, and
from sixth year it will be Rs 100/ton.
22. The number of procurement centres assumed to be three.
23. It has been assumed that up to five year we will have the procurement of all four kind
of vegetable, i.e. some farmers will grow tomato, and others will grow beans and so
on.