Agriculture Practicals at a Primary School

Friends on my Facebook and Twitter network already know of a school programme I attended today, on bringing agriculture through practical work. This was at Academic Heights Public School’s new campus in Nagole (Hyderabad). This school was set up by a bunch of six professional managers / entrepreneurs who took a franchise for Andhra Pradesh from the SK Group of Bachpan fame (more popular in Delhi). Today I was the Chief Guest at the launch of their new programme called “Continuing Education and Learning Programmes for Students”. The first domain for this programme is titled “Hello Farmer” to enable students experience villages and farmers lives.

Many of you gave me valuable inputs on what I should cover in my talk. I’ve synthesized all of those ideas into my talk, as you can make out from what I reproduce below! I enjoyed the whole experience largely because of this interaction with many of you on Fb & Twitter over the last two days :-) Thanks a ton!

Before I started my talk, I wanted a sense of what the parents and kids present there thought about the whole initiative. Since the numbers were large, I couldn’t ask individual opinions. Instead I gave two options and asked for a raise of hands.

1. Parents: First choice was whether they “agree that practical / project work is great; exposure to agriculture is wonderful”. The second choice was if “all this is a waste of time and distraction from studies in today’s competitive world”. Overwhelming majority went with the first choice. There were a few who raised hands for the second choice too.

2. Kids: One choice was if “all of this was fun and joy” or anyone thought “this was pain, hard work and more burden”. Every single kid raised hand confirming this was fun!

I was therefore talking to the converted. So I focused on underscoring the value of this approach and brought out some nuances.

Here’s a summary of my talk:

I compliment the management and the faculty of the school for conceiving a structured programme that helps “learning by doing”.

In my opinion, ‘learning by doing’ is the second best form of learning, in the sequence of ‘learning by’… 1. ‘listening’ to a teacher / parent / friend, 2. ‘reading’ books, 3. ‘writing’ notes, 4. ‘seeing’ action as it happens or in films, 5. ‘doing’ by oneself, and 6. ‘teaching’ someone else using whatever method, the ultimate method of learning!

I believe, through this programme, the children learn three things:

1. Life Skills: Through any method of “learning by doing’, whether this programme or other such practicals / project work etc., children learn the very critical life skills. By life skills, I mean capabilities like gathering information, determining alternatives, making choices, appreciating future consequences of current actions, time management! These are as important, if not more, as the many subjects the children learn in the class room. Growing plants, watering them, monitoring the progress will develop a disciplined routine in the child.

2. Focus on practical work in agriculture & rural builds the character and value system in the kids: After experiencing the hardwork involved in farming, the unpredictability of survival & growth of plants, the children will value and respect a farmer. They will appreciate the dignity of labour. The children will also realize the value of food after experiencing the hard work involved in growing, and hopefully not waste food any more! Some parents know that this approach is likely to produce better results than any amount of telling and scolding the kids about wasting food :-)

3. This programme is also a great opportunity for the children to gain knowledge in some very important areas: While introducing me, the Principal mentioned ITC’s brands like Bingo Snacks, Aashirvaad Atta and Classmate Notebooks. I know, most kids are already familiar with these brands, now they will also know how agriculture is the starting point for all such products! Most of you heard about 2012 prediction, some of you may have seen the movie too… The end may not happen in 2012, but won’t be that far away if we do not bother about global warming; I am sure many of you are familiar with that phrase. I know some kids who actively farm on Farmville via Facebook are very aware of this phenomenon. It is important that all of us learn and practice various methods of conserving natural resources. Say, reusing kitchen waste water in the garden, composting vegetable waste into manure, using drip irrigation for saving water etc. I am sure the children will come back from school and teach a thing or two to the parents on this front. And, after all, if we are worried about global warming, it is for their future! Through these practicals, children will also learn about different soils, different conditions under which different crops grow, importance of variety localization, problems in growing some alien breeds etc. Most importantly, I think, the children will start loving fruits & vegetables and eat such nutritious food, without the nagging from the parents!

The beauty is that all of these important lessons – be it life skills, or value system, or the much needed knowledge – are all learnt while having a lot of fun by playing with sand and soil:-) Therefore will be internalized better!

In order to realize all of this,

1. a lot of innovation in the classroom is required, say showing films like ‘Bee Movie’ or pictures of ‘Urban farming’ using the multimedia, besides what is covered in the science class

2. supported by outdoor practicals at the school including growing a nursery from where the children can collect saplings for growing at home. Could be simple crops like pudina, coriander or even tomatoes and chillies

3. supplemented by a highly engaging homework like growing plants in pots or small patches at home, monitoring them and bringing results back to the school.

In short, an integrated design of the programme. That’s my recommendation to the school management and the faculty.

Before the launch speech, I planted a sapling. After the launch, the kids performed a skit on village life. That was lovely. At the end, all of us took a green pledge! Included in the pledge that each of us will plant at least one sapling every year and tend to it, knowing that that’s how a whole garden is taken care…

Before closing this blog, I want to again thank many friends on Facebook and Twitter who gave suggestions on what I should cover in my talk. I hope I’ve been able to incorporate all of them.

Agriculture & Climate Change: Aligning Small Farmers

Last week I spoke on this topic at the Global Forum on Food & Agriculture, Berlin. These were the broad talking points I had jotted down for myself:

A. All of us know the three dimensions of agriculture vis-à-vis climate change

1. That agriculture is a part of the problem, causing climate change through Green House Gas emissions (methane from flooded paddy fields & ruminants like cows, nitrous oxide from the soils, CO2 from fossil fuels used in farm equipment etc)

2. That agriculture is also one of the most vulnerable sectors impacted by climate change (fall in productivity due to changing weather patterns)

3. And, that agriculture can be an important part of the solution to climate change (through emission reductions, carbon sequestration, increasing soil organic matter etc)

B. At a macro level, what needs to be done to produce abundant food that is safe, healthy and climate friendly also seems to be reasonably well known!

But, unlike in other sectors, the key actors that need to implement these solutions are hundreds of millions of small farmers spread around the world.

C. The challenge of aligning the small farmers to climate change issues is four fold!

1. Bringing relevant information to farmers living in dispersed geographies, especially where the supporting infrastructure is weak

2. Personalising the sustainable crop & livestock management practices to individual farmer circumstances, and then transferring that knowledge

3. Coordinating availability of all inputs like credit, water, seeds, risk management instruments etc, so that the new knowledge is actually adopted by everyone

4. And, most importantly, providing a financial incentive to the individual farmer when he has a difficult trade-off between today’s cost and tomorrow’s benefit, or between individual effort and common good

D. There is a solution to this apparently complex challenge. In fact, it is practically demonstrated through our company’s innovative business model named ITC eChoupal; that reaches four million small farmers in India today.

Although Information Technology is the most known face of ITC eChoupal, the model has three equally important components.

1. Firstly, leveraging Internet and increasingly Mobile phones so that real time information and personalized knowledge can reach the small farmers in an audio visual mode

2. Secondly, co-opting social capital through user groups that can help equitable distribution of common resources like water; also helps in accessing indeigenous knowledge and in conducting participative research

3. Thirdly, a collaborative network of organizations working together to bring a complete end-to-end solution to the farmer through a meta-market approach

E. With this approach, I am confident that we can align small farmers in the war against climate change. This alignment will happen faster, if the international community creates a fair reward system for farmers recognizing their contributions to climate change mitigation (eg carbon sequestration activities and bio-based energy services)

Indian Agriculture 2020

A friend was doing research for his company on rural India. He asked me to gaze into the crystal ball and tell him how Indian Agriculture will look like in 2020. Here is what I had shared with him over breakfast, earlier this morning.

Mega Trend 1: A counter-intuitive aspect of Indian agriculture today is the shortage of semi-skilled and unskilled farm labour. In itself, at a macro economic level this is a good sign; but, when you sound any farmer out, the first complaint is about labour shortage and consequent high wage bill. Over time, this is likely to trigger land consolidation and further fragmentation at once, at the two ends of the spectrum. Larger farmers will accumulate more land to make mechanization feasible. Medium farmers will off-load some land and keep just about the acreage they can cultivate with the labour available within the family. Opportunities for Business: Innovations in Indian specific farm mechanization (beyond the classic approach of tractorisation); innovations in labour saving crops, farm practices and inputs.

Mega Trend 2: Swifter shifts in land usage pattern (across different crops, as well as away from agriculture) triggered by shifting cost v benefit v risk and increasing role of free markets with decreasing information asymmetry. Gone are the days a farmer would cultivate a crop because that’s what he had done last year. Opportunities for Business: Networks for gathering market intelligence from grass roots for consumption by all the stakeholders (commodity businesses, brands with agri raw material, ag input companies, ag infrastructure companies, insurance companies, Governments)

Mega Trend 3: Inroads by Bio-Technology. After the phenomenal success of Bt Cotton, Bt Brinjal is waiting by the door. Once one food crop shows the way, others will follow! Farms will then turn into factories, farming with precision and producing crops with traits desired by the consumers. This will blur the differences between independent industry verticals like farm inputs, food, pharmaceutical and packaging. In turn, this may well create a vibrant “wellness” industry. After all, human beings long for four evergreen As. Ability (Physical & Mental performance), Anti-Ageing (internal organ functions) and Appearance (external). Bio-technology promises to deliver these!

Mega Trend 4: Concerns on Food Security for the poor will be outweighed by the concerns on Food Safety of the rich and middle class… The agri-food supply chains will need to deliver identity preserved products to retail shelves, some of which need tracing all the way to farm practices! This requires a recast of the roles of players along the supply chain. Role of Information Technology will be central.

Mega Trend 5: All of these changes ride on a fundamental shift in the agri-extension service. Today, the service is barely customized to crop and region. Tomorrow this needs to be personalized to individual farmers. More complex to design and deliver! But there lies the mother of all business opportunities… raise farm incomes and take a share of that. Create Fortune for the Bottom of the Pyramid and then look for Fortune for yourself.

I was actually looking for two more trends, shook the crystal ball vigorously; but no, can’t see them!

1. More conservation agriculture to preserve environment while improving productivity.

2. More partnerships among Government, Agri Businesses and Farmers (or their Collectives) to realise everyone’s goals!

May be passive gazing isn’t enough to make these happen. Let’s do something…

Blending Innovation and Social Entrepreneurship, Changing lives

Here is a summary of my opening remarks during the panel discussion on “Blending Innovation and Social Entrepreneurship, Changing lives” at the Villgro Unconvention on 11th Dec 2009 (http://nxy.in/7rxhn)

1. What is “changing lives”?

To me, “changing lives” has two aspects and one outcome

(a) Align capacity of the people. Am saying “align” rather than the more commonly used term “build”, because I believe everyone has some sort of special capacity innately. Capacity could be social rights, economics knowledge, communication etc

(b) Enable unconstrained access to markets. Markets for information, knowledge, inputs (products and services) into production activity and access to output markets

so that

(c) everyone can fulfill their aspirations whatever they are, including a better quality of life!

2. Why do we still need to talk about “changing lives”, despite so many centuries of civilisation?

I will illustrate my arguments referring primarily to the context of rural Indian people (because that’s Villgro’s canvas, and that’s where my experience lies in any case), but many of these observations are relevant to all poor people.

Because of certain inherent and fundamental characteristics of rural people (especially farmers) and certain other challenges, their access to markets is constrained. Consequently all their hard work, innovation and risk are burnt in sheer survival rather than creation of wealth. Incidentally, in the same panel, Paul Polak described such people as “survival entrepreneurs”

I call some characteristics fundamental, because they are unlikely to change (to any significant effect) in the foreseeable future. They are:

(a) Fragmented Size: Each of the 120 million Indian farmers owns an average of just about a hectare-and-a-half of land. Consequently, they end up with weak bargaining power in any value chains they are part of. They end up buying any thing they buy at a very high retail price at the end of a long chain. CK Prahalad called this “Poverty Premium”. On the other hand, whatever they sell they sell at a whole sale price at the beginning of another long chain; receiving only a small share of the consumer Rupee as a result.

(b) Geographic Dispersion: These 120 million farmers live in some 600,000 villages spread across a large geography. As a result access to real-time information is difficult and cost of reaching goods becomes expensive.

(c) Heterogeneity: Besides the broader variations in soil types and climatic conditions across India, the individual farmers also differ from each other so much (eg. access to finance, cash flow needs, risk appetite, family labour and so on) that any generic solution is not going to be optimal for many. Personalisation of solutions is an imperative, but personalizing isn’t viable for any business when these people are fragmented and dispersed!

The challenges arising out of these fundamental characteristics are further compounded by inadequacies in the infrastructure. Infrastructure of three types. The more commonly known physical infrastructure viz. roads, power, telecom; also irrigation in case of farmers. Then the social infrastructure viz. education for competence building, health – a major reason for indebtedness in rural India. Finally, and most importantly, the still evolving institutional infrastructure viz. credit ratings, dispute resolution, commodity price risk management, farm yield risk management etc.

As a result of these fundamental characteristics and the infrastructure inadequacies, when the farmers access markets such as banks for loans, agri extension officers for farm management knowledge, mandis for selling agri produce etc their transaction costs are high; that is when they are actually able to access.
Otherwise they have to rely on middlemen in the villages who provide them all these services at one shop conveniently, but extract their pound of flesh by spinning a cycle of dependency and exploit it to their advantage!

In other words, these two options are like relying on the Devil or swimming through the Deep Sea to access the markets. What’s the outcome you then expect, except the world still looking for solutions to “change their lives”?

3. In this back drop, I propose that innovation along three vectors can make a difference and possibly hold a light at the end of the tunnel for these people:

(a) Technology: For relevant products (e.g. energy solutions – solar lights, communication solutions – mobile phones) at better value for money price points, and for remote access (information, knowledge, e-learning, health diagnosis & delivery) by side stepping or making up for infrastructure inadequacies

(b) Institutions: Fusing technology, social capital (making up the missing institutions and provide an alternative to the traditional middlemen e.g. Joint Liability Groups making up the missing credit appraisal mechanism; ITC eChoupal Sanchalak for facilitating value added access to Internet) and collaborative networks (that orchestrate an ecosystem to bring end-to-end solutions to the poor like middlemen, yet offer freedom of choice like the unbundled market institutions) to create more equitable markets

(c) New Business Models: Enmesh the interests of people and business (e.g. identity preserved supply chains in eChoupal system that raises the incomes of the farmers and increases ITC’s profits), and third party pays business models (leveraging the volume ala’ media business) for fiancial viability and scalability of the enterprises

Marketing to the Bottom of the Pyramid

Earlier this week (7 Dec), I spoke to the members of the six winning teams of ISB’s iDiya initiative (http://www.isb.edu/iDiya/). My topic was “Marketing to the Bottom of the Pyramid”. Actually, I conducted the session much like an MBA class. I just asked the questions, got the participants to respond based on their experiences, and I put it all together as a synthesized output. Here it is:

A. Why is marketing to the consumers at the BoP different from marketing to the consumers at the ToP or MoP?

• What is different about these consumers?

1. By definition, income of these consumers is low
a. Incomes are seasonal for farmers. There is also variation in incomes across seasons
b. Most of the money is spent on Food. Purchasing power for discretionary products is low
c. People prefer single serve products. Low unit cost products.

2. Awareness levels of these consumers about most products / services is low (primary focus is on subsistence)

3. Acceptance of new products is low.
a. There was also a counterpoint that acceptance of new products is actually high, if the product is relevant and the value is communicated effectively)
b. New products are accepted when opinion leaders in the community use them and demonstrate value
c. Word of Mouth is a better communication channel among the BoP consumers

4. Urban BoP is more homogenous than their rural counterparts
a. Urban BoP has lower disposal income as their cost of living is higher than that of their rural counterparts
b. A number of urban BoP consumers may not have a permanent address, as they keep migrating for jobs and / or change addresses when they come back to towns seasonally

• What are the challenges in marketing to these consumers?

1. Reaching products to them is a challenge. Supply chain costs are high and unviable, compared to product margins, as they are scattered (especially rural consumers)

2. Communicating with them is also a challenge, due to low media penetration. Difficult to reach consumers other than top socio-economic segment in the village

3. Competition from the local middleman is a problem. Because he lends, he has a grip on the consumers. He pushes high margin products, not necessarily products that are relevant to the consumers. Alternative channels (eg Banks) have the risk of defaults, as they don’t know the consumers as well as the local money lender does. Their documentation processes are rigid, and borrowers prefer easy access from the money lenders.

B. In light of these differences and challenges, how should we approach marketing to these consumers? (Answers largely revolved around rural consumers)

1. We must offer Products relevant to these consumers. These are (a) those that raise their incomes and reduce their risk (b) low cost products
i. Reach R&D to people at grass roots to increase their productivity and improve quality
ii. Reach finance. Actually complete range of financial services credit, savings, remittances, insurance
iii. Bring Crop Insurance, Health Insurance, Commodity futures
iv. Information about new investment & employment opportunities is an important service that can be provided
v. Reduce dependence on agriculture, through allied activities like livestock or even BPO. Facilitate some primary processing activities in the villages.
vi. Build capacity for these other activities

2. We must leverage technology to create such products and also to overcome the infrastructure barriers
i. Technologies include mobile phones, radio, internet
ii. Apply basic & appropriate technology to solve problems, many times learn from the BoP people themselves

3. Organise people at BoP into groups to reduce transaction costs in dealing with them
i. Thereby build scales of economy in farm inputs sourcing
ii. Collective farming or cooperative farming also examples
iii. Reduce role of traditional middlemen, by bringing educated rural youth back to villages
iv. Leverage the discipline characteristic among women to be the new intermediaries, as demonstrated by SHGs

4. Multiple organizations must come together in a collaborative way to deliver complete solution to these consumers
i. PPP is a good way. Government financial support is crucial to many projects, especially in agriculture & employment
ii. Partnerships with Not-for-Profits are useful in establishing relationships with the community, and in communication

C. What are some of the challenges you visualize while executing these strategies?

1. Many execution challenges are cannot be anticipated; so be adaptable

2. Customising products and services to the local needs; understanding the local needs itself is a challenge
i. Delivering after sales services is expensive
ii. Acceptability of new products / technology / ideas will take time to build awareness and educate people about the benefits

3. Competition with middlemen and other local players isn’t easy.
i. If the products / services improve market transparency, there may be resistance too from these people
ii. Competing with counterfeit and look alike products at substantially lower prices will be a challenge too

4. Identification of right leaders within the village will be a challenge in itself

5. Retaining talent is also challenge, as most people would like to work in urban areas
6. We need a pipeline / platform to connect companies with BoP consumers (right from consumer understanding to distribution of products)
i. Such a pipeline could be built in a collaborative mode (Government could pitch in with some subsidy, especially for services like agri extension and other capacity building activities)

Here is a picture of a part of the White Board I scribbled on; this helped in putting this note together :-)

Twinterview on Franchising

Avishek Gupta, a member of the Dairy Network Enterprises team interviewed me on Twitter about franchising. Here is a transcript

If you would like to comment on the subject, please visit
http://www.facebook.com/topic.php?uid=185594549445&topic=11066

Avishek_Gupta: What if I want to #franchise my business? What would a #franchisee look for?

S_Sivakumar: Actually just three things! RaRoI (to take home), Brand (to pull customers), SOP (to idiot proof execution)...

Avishek_Gupta: Thanks, that's precise!But, what if I don't have a brand? Will ONLY the other two work? My Query specific to small rural enterprises.
(Comment added later by Avishek to this transcript - assumption behind the question was that it will take some time to create a franchisable "brand" across different remote rural locations and hence the "lack" of brand for a relative newcomer like DNE)

S_Sivakumar: If not brand, something else to "pull" customers. Say, a unique product or service. Otherwise it's partnership, not franchising!

Avishek_Gupta: Partnership v/s Franchising!!...Thanks a LOT for the insight! :)

S_Sivakumar: When you franchise, you bring everything to the table except last mile. In partnership, you combine complementary strengths

Avishek_Gupta: How to get a rural entrepreneur set up a franchisee? How does he get to know about it? What can convince him, it works? Local NGO?

S_Sivakumar: As to who can convince your prospect depends on the profile of your prospect. Local NGO, Bank Manager, School Teacher.. Best would be to conduct a village meeting (aided by an AV showing Franchisee at Work) and create "pull" for applications

Avishek_Gupta: Is minimum revenue guarantee for start-up period an intelligent way to go to convince entrepreneur? Or is it absolutely foolish?

S_Sivakumar: Minimum Guarantee is a useful tool. Ideally you should link the guarantee to efforts on part of franchisee, not a free ride!

Avishek_Gupta: So true! And our job would be to be clear about how we would "measure" the efforts of the entrepreneur in initial periods of little revenue.

S_Sivakumar: The inputs that drive the desired outcomes will define the efforts...

S_Sivakumar: Yes, in any case you can't design reliable SOPs before running the business for a while

Avishek_Gupta: So, Franchise Package = SOP + min guarantee (proxy indicator 4 ROI) tied 2 efforts + a great service /product! Awareness thru AV of franchisee at work!

Lessons in Public Private Partnerships

Over a lunch meeting today, a few representatives of a Global Donor wanted to understand the lessons I learnt in managing Public Private Partnerships. Here are the three lessons I shared with them:

Lesson 1: Design PPP projects in specific areas where Governments have failed to deliver the goods, or where Institutions created at a point of time are not relevant any more. Identify what value Private Sector can add to change the outcome to more desirable ways. Propose an option with clear roles for both partners (Principal to Principal or Principal to Agent etc). Role of Government could be Policy Reform, Bringing Legitimacy, Make Investments, Facilitate Convergence; role of Private Sector could be in bringing Consumer Understanding, Building Market Linkages, Make Investments, Manage Convergence. Lack of clarity in roles, or lac of complementarity in roles, or lack of convergence in the outcome objectives will lead to failures.

Lesson 2: “Public” is not one entity. Understand that there are three layers in Public, viz. Political leadership, Senior Bureaucrats and Operating Level Government Employees. Understand that all three layers have different personal / professional objectives and postures. Need to build an alignment individually with the global outcomes expected from the project

Lesson 3: Need to co-opt an additional P to make the project relevant. People. Or Communities, if you were to use a PPCP instead of a PPPP! This co-option being somewhat social in nature (as opposed to purely economic logic) needs to factor in class and caste dynamics