This document is authorized for use only in vamnicom's PG; Strategic Management course by Dr.

Manisha Paliwal from Jun 25, 2019 to Sep 12, 2019.

Indian Institute of Management

Ahmedabad IIMA/CMA0198

“Chaklasi Village Co-operative Cold Storage”

In 1969, Shri Hirabhai Patel, Chairman of the Chaklasi Village Cooperative Cold Storage was
worried about the underutilization of the facilities. From a year’s performance he had found
out that the farmers teed the facilities only for potato crop and that this crop started arriving
around the month of March for storage and was completely unloaded by the month of
September (see Exhibit I). Thus the total period of utilization was-hardly six months.
Moreover, the full utilisation was only for about three to four months. He estimated that the
enterprise will incur loss of Rs.3020 every year unless, utilisation was increased (see Exhibit
II). By July of each year the withdrawal (unloading) started in large quantities. Except the
potato crop which was stored at the harvest time with a view to sell it in the market when
the prices rose, there were no other crop for which the cold storage had been used.

Chaklasi was one of the very progressive villages and was situated in the Nadiad Taluka of
Kaira district in Gujarat. The village, was situated at a distance of about ten Kilometers from
Nadiad town with which it was connected by road and was functionally dependent on it.
Chaklasi was the biggest village in the entire state of Gujarat. In addition to the main
settlement of village Chaklasi, it had nine sub-settlements with a total area of 10 square
miles. According to 1961 census it had a population of 16,729. Most of the residents of the
village (76 per cent) were engaged in agriculture as their main occupation. The village was
an agriculturally advanced Village and the important crops grown included Bajri, Paddy,
Wheat, Potato and Vegetables. The cropping pattern followed by sample farmers, in
Chaklasi and the villages around it was as shown in Exhibit III. In Chaklasi village itself only
about 200 acres were put in potato cultivation during the Rabi season which was only 27.4
per cent of the total gross cropped area.

The idea of cold storage developed in 1963, when one of the very progressive farmers Shri
Hirabhai Patel had sent a wagon load of potatoes to Bombay market. In Hirabhai’s words,
“In 1965, I sent a wagon load of potatoes to Bombay market. The prevailing price at the time
of despatching my produce was Rs .4/- per 10 Kgs. But when the potatoes reached Bombay,
the prices fell down to Rs.3/- per 10 Kgs. and I was offered only Rs.2.75 paise. This meant a
loss of Rs.1406/-to me. However, one of my nephews who is an engineer, suggested to me
that I should keep the potatoes in the cold storage I accepted his suggestion and acted
accordingly. After some time the prices started rising and I sold my potatoes at the rate of
Rs.6/-. per 10 kgs. This gave me a handsome profit and I was convinced regarding the utility
of cold storage facility.”

After this incident, Hirabhai started using the Nadiad cold storage quite frequently. He
talked to some fellow farmers regarding the Bombay incident and told them that due to this
facility he had earned substantial profit. A number of farmers also followed his advice and
they also started using the Nadiad cold storage.

Looking to the growing use of cold storage at Nadiad by his fellow villagers, Hirabhai
Prepared by Professors V.K. Gupta and G.S. Bhatnagar, Indian Institute of Management, Ahmedabad.
Case material of the Indian Institute of Management, Ahmedabad is prepared as a basis class
discussion. Cases are not designed to present illustration of either correct or incorrect handling of
administrative problems.
© 1970, Indian Institute of Management, Ahmedabad.
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thought that a cold storage could be constructed for the village itself. He discussed his idea
with the fellow farmers who were using the Nadiad cold storage. Most of them belonged to
his caste group and favoured the idea.

There were thirteen caste groups in the village. Out of these caste groups, Vaghela caste had
a numerical superiority over all others put together, as more than 50 per cent of the total
households of the village were accounted for by this caste (see Exhibit IV). The Vaghela
category included a number of sub-castes from the larger group of Rajput caste. Most of the
Vaghelas of this village were engaged in agricultural occupation. About half of the total
cultivated land belonged to Vaghelas (see Exhibit V). In the formal political structure of the
community also the Vaghelas held a dominant position as more than fifty per cent of the
village panchayat members were from this caste group. The same was also true about the
village co-operative. From the numerical viewpoint, the caste group next to Vaghelas was
that of Patels. Patels accounted for 16 per cent of the total households of the village and
owned about 30 per cent of total cultivable land in the village (see Exhibits IV and V). Most
of the Patels were owner cultivators and were progressive farmers. Most of the farmers from
other caste groups took the guidance of Patel farmers in agricultural matters. A study in this
village regarding the role of opinion leaders in fertilizer promotion has shown that the two
most accepted opinion leaders in this respect ware from the Patel caste. 1 One of these leaders
was Hirabhai Patel.

Hirabhai realised that his plan could be successful only if leader of the Vaghela caste group
favoured the idea. Accordingly, he personally met some of the leaders of this caste and
discussed regarding the idea of having a cold storage on co-operative basis in the village. He
explained to them the advantages that he had derived from the cold storage facility at
Nadiad. The leaders of this caste agreed with him and it was decided to create a public
opinion in favour of the cold storage.

It was estimated that the cold storage would cost about six lakh rupees. The village leaders
were quite hopeful that one-third of the total cost could be met by the village co-operative
society partly from its existing funds and partly -through fee special share-capital to be
raised for the cold-storage. Accordingly, a request was made to the Government of India, for
a loan of Rupees four lakh. The loan was sanctioned and the construction of the cold storage
was started. The village co-operative society had to raise some capital through the sale of
special shares for the cold storage, but the required number of shares could be sold with
great difficulty. Hirabhai was perturbed on account of the apathy of the people and he met
the well-to-do farmers of the village and persuaded them to buy these shares. However,
most of the farmers who came forward to purchase the shares were Patel farmers (see
Exhibit VI). As a result of the efforts of Hirabhai, the co-operative society was in a position to
contribute more than two and a half lakhs of rupees and so the construction of the cold
storage continued without any hindrance.

The cold storage was ready by December 1968, at a total cost of 6.68 lakh rupees (For
capacity and total cost of the cold storage see Exhibit VII). The cold storage was formally
inaugurated for use in January 1969 by the Chief Minister of Gujarat. In the first two months
of its existence there were not many farmers who could utilizes the cold storage as the
potato crop was to be harvested in March, So, for two months viz. from middle of January to

1
Kothari, K.B. and Murty, A.G.K., “Role of Opinion leaders in Fertiliser Promotion.” Mimeographed research
report from the faculty of Management of Agriculture and co-operatives, Indian Institute of Management
Ahmedabad.
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middle of March, the Amul Dairy, situated close to the village, was asked to give the cold
storage a trial. The dairy used the cold storage for two months, paying rupees five thousand
as rent and found that the cold storage was upto the mark.

The cultivators of Chaklasi started using the cold storage from middle, of March 1969.
(Monthwise arrivals and unloading of Potatoes is shown in Exhibit I). All the bags were
unloaded by I5the September, 1969. The cultivators were expected to bring the next crop
from next March only. So, the cold storage remained unutilised for six months.

When asked about the reasons of uderutillzation of the cold storage, Hirabhai expressed
himself in this manner, “Most of the cultivators do not avail of the cold storage facility for
storing seed potatoes. They have a prejudice that the seed potatoes which are stored not give
good yields. If the farmers start storing seed potatoes, the cold storage can be utilized for
another three month, that is, from September to November. I was interested in storing the
seed potatoes for this season in the village cold storage, but I could not do so as there were
no other farmers who were willing to utilise this facility. I had, therefore, to put the seed
potatoes in the Nadiad cold storage. I sowed the stored potatoes in October and the results
which I have obtained are very encouraging. I arranged a demonstration on my farm and
other farmers seem to be impressed by the results. I hope that during the coming year most
of the farmers will store seed potatoes in the village cold storage.”

He further remarked, “We have already tried to make our cold storage attractive by
charging Rs.8.00 per bag per season while the charges in Nadiad and Ahmedabad are about
Rs.9.60 per bag.

“Vaghela Castemen are not yet coming forward to use the services although they are also
growing potatoes. It is they, in fact, who might be more concerned if the co-operative
storage runs into losses”.
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Exhibit I: Showing the Monthwise Arrivals and Unloading of Potatoes (In tonne)

Month Arrivals Unloading

March 480 -
April 520 -
May - -
June - 40
July - 440
August - 360
September - 160

Source: Chaklasi Cooperative Cold Storage Records

Exhibit II: Showing the Income and Expenditure of Cold Storage

from March to September 1969

Total Receipts Total Expenditure

Rs. Rs.
Receipts from hiring storage 1,00,000 Salaries 6,300
Interest received 1,280 Electricity 13,250
Interest on borrowed capital 32,500
Interest on share capital 3,750
Maintenance of machinery, Building 5,000
Depreciation on Building & machinery 39,220
Misc. Expenditure 4,280
1,01,280 1,04,300

Net loss = Rs.3,020

Source: Chaklasi Cooperative cold storage records.

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Exhibit III: Cropping pattern in the three settlements (1967-68)

Kharif Irrigated Kharif Un-irrigated Rabi Hot-weather

Area % to Area % to Area % to Area % to
gross gross gross gross
cropped cropped cropped cropped
area area area area
Chaklasi
Paddy 37.8 5.8 - - - - - -
Wheat - - - - 33.3 5.1 - -
Bajra - - 21.7 33.3 - - 36.1 5.5
Kodra - - 32.7 5.0 - - - -
Potato - - - - 179.4 27.4 - -
Other Veg. 18.3 2.8 - - - - 30.5 4.7
Fodder Crops 2.2 0.3 - - - - 31.6 4.8
Lemon 20.7 3.2 - - - - - -
Other 8.0 1.2 2.7 0.4 3.3 0.5 - -
Devikapura
Paddy 4.0 4.9 - - - - - -
Wheat - - - - 2.7 3.3 - -
Bajra - - 36.4 44.5 - - 12.1 14.8
Kodra - - 7.9 9.6 - - - -
Potato - - - - 7.6 9.2 - -
Other Veg. - - - - - - 1.2 1.4
Fodder Crops - - - - - - 1.4 1.7
Lemon - - - - - - - -
Other 7.1 8.7 - - 1.4 1.8 - -
Jadavpura
Paddy 1.2 1.6 - - - - - -
Wheat - - - - 2.6 3.5 - -
Bajra - - 36.2 50.2 - - 7.7 10.6
Kodra - - 7.1 9.7 - - - -
Potato - - - - 16.9 23.1 - -
Other Veg. 0.6 0.8 - - - - - -
Fodder Crops - - - - - - 0.6 0.8
Lemon - - - - - - - -
Other - - 0.1 0.2 0.2 0.2 - -

Source: K.B. Kothari & A.G.K. Murthy, role of opinion leaders in Fertilizer Promotion, Mimeograhped Research
Report from Agco Group Indian Institute of Management Ahmedabad.
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Exhibit IV: Castewise Distribution of Households in Chaklasi

S. No. Name of caste group No. of Households Percentage

1. Vaghela 2237 52.94
2. Patel 678 16.04
5, Muslim 318 7.52
4. Christian 212 5.02
5. Yadav 188 4.45
6. Suthar 96 2.27
7. Brahmin 93 2.20
8. Rawal 86 2.04
9. Ghamar 82 1.94
10. Bhangi 73 1.73
11. Rohit 64 1.51
12. Bagri 58 1.37
13. Bhoi 41 0.97
Total: 4226 100.00

Source: Chaklasi Panchayat Records.

Exhibit V: Castewise Land Ownership Pattern

Sr. No. Name of caste group Land owned (in acres) Percentage
1. Vaghela 2732 48.19
2. Patel 1698 29.95
3. Muslim 518 9.14
4. Christian 243 4.29
5. Yadav 138 2.43
6. Brahmin 103 1.82
7. Suthar 99 1.75
8. Scheduled castes (Chamar, Bhangi, Bagri. Etc.) 138 2.43
Total 5669 100.00

Source: Chaklasi Panchayat Records.

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Exhibit VI: Showing the purchase of cold storage shares by various Caste groups

No. of Shares Value Per share Total value

I Vaghela 20 500/- 10,000
II Patel 200 500/- 1,00,000
III Muslim 15 500/- 7,500
IV Christian 10 500/ 5,000
V Brahmin 5 500/ 2,500
1,25,000

Source: Chaklasi Co-operative cold storage records.

Exhibit VII

The cold storage has two chambers each of 60’ x 40’ x 20’ with an installed capacity of 500 tonnes
each. Both the chambers can accommodate 12,500 bags of potatoes (80 Kgs. bags). The cold
storage is also having a drying shed attached to it.

The total amount of capital invested for the construction of the cold storage is as under:-

1 Buildings 2,80,000
2 Machinery 1,98,000
3 Building insulation 1,20,000
4 Land 30,000
5 Shed for sprays & Drying 15,000
6 Furniture & Miscellaneous expenses 25,000
Total 6,68,000

Source: Chaklasi Co-operative cold storage records.