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Sustainable Agro-entrepreneurship – A Suggestive Model for Tribal Farmers

of KBK Regions

Article · August 2011

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 Sustainable Agro-entrepreneurship –
A Suggestive Model for Tribal Farmers of KBK regions

By: Dr. Sanjeeb Kumar Jena 1

Most people in rural India depend directly or indirectly on farming for their livelihood. Despite
this, not enough attention has been given to agriculture to overcome poverty. The importance of
agriculture to stimulate rural growth is generally accepted, but politicians have failed to establish
the necessary frame conditions for rural economic growth. It is widely accepted that agricultural
growth and human development (in the fields of education, health and women’s issues) are key
factors for rural development. The World Bank, the Food and Agriculture Organization of the
United Nations, the International Fund for Agricultural Development, as well as bilateral
development agencies agree that investment in agricultural growth helps reduce poverty and
ensure pro-poor growth more than any other form of intervention.

The share of agriculture in India’s gross domestic product declined from about 45% in the early
1970s to 27% in 2001. Despite this decline, some 60% of India’s people still depend in one way
or another on agriculture for their livelihood. Many are small-scale farmers, mainly producing for
subsistence. Others are rural labourers, working as daily labourers on farms 1.

The agricultural sector has potential to create economic growth in rural areas. It generates job
opportunities in adding value (as in the food processing industry), in bringing agricultural
products to the consumer (market linkages), and in providing support (infrastructure, information,
quality control and training). Rising populations mean more demand for food. Improved standards
of living in much of the world also mean greater demand for quality food (more meat, dairy
products and organic food). If these demands are to be met, national farm outputs must rise, and
farmers must produce different types of products. In addition, access to food must be improved
for those who still cannot meet their basic needs, wherever they live – in remote rural areas,
marginal areas or urban slums.

Agriculture is the mainstay of economy and sustenance of life of the people in the state of Orissa.
It contributed about 21 per cent to NSDP for the state in 2006-07 (at 1993-94 prices) and provided

1
Lecturer in Commerce, Aeronautics College, HAL Township, Sunabeda – 763 002, Dist – Koraput (Odisha), Phone
- 06853-221575 (R), 9437375088 (M), sanjeebjena1309@yahoo.com, sanjeeb_aryaditi@rediff.com
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employment directly or indirectly to around 65 per cent of the total work force as per the 2001
census. Orissa is endowed with maximum natural resources in India. The development of
agriculture in the state has lagged behind due to constraints like practicing of traditional methods
of cultivation, lack of access to modern technology, low productivity, inadequate capital
formation and low investment, inadequate irrigation facilities, uneconomic size of holdings,
widespread illiteracy among farmers, helpless victims of natural calamities, inefficient
management of resources, poor performance of extension education and inadequate agricultural
marketing facilities.

Sustainable agriculture may be regarded as the successful management of resources for

agriculture to satisfy the changing human needs while maintaining or enhancing the quality of
environment and conserving natural resources (FAO 2, 1991). Sustainable agriculture integrates
three main goals - environmental health, economic profitability, and social equity. Swaminathan 3
(1993) has identified 14 major dimensions of sustainable agriculture covering social, economic,
technological, political and environmental facets of sustainability. Success in promoting
sustainable agriculture can be achieved on seven fronts, viz. Crop diversification, Genetic
diversity, Integrated nutrient management (INM), Integrated pest management (IPM), Sustainable
water Management, Post-harvest technology and Sound extension programs.

Unlike the conventional approach to poverty eradication, a “livelihoods approach” is based on a

consideration of people’s livelihoods. It tries to identify and build on people’s strengths or
“capitals”: their financial, physical, human, political, natural and social capitals. It starts with the
intended beneficiaries. It focuses on the causes of poverty, provides an understanding from the
people’s perspective, and seeks ways to improve the livelihood basis they depend on. This
approach invites more people’s participation, involvement and contribution, and improves the
chances of long-term sustainability.

The goal of “sustainable development” implies that “development” (which takes place in some
form or other anyhow) should be guided towards “sustainability”. In the past, the term
“development” was equated with economic growth. But today, new challenges call for new
strategies. Instead of “more”, we need “better” development that reflects all three dimensions of
sustainability: it must be economically viable, socially equitable and ecologically sound. Where
the poor do not participate and benefit from the development process, socially equitable
development will not take place. So sustainable development needs to be pro-poor and
environmentally friendly. Sustainable development approaches should use renewable resources,

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apply locally adopted procedures, select techniques that conserve resources and energy, clean up
waste, and rehabilitate affected landscapes.

Past experience shows that unguided economic development does not automatically benefit the
poor. If the process is left to market forces alone, better-off people usually benefit most, and the
majority of small producers are left behind. Poverty persists in communities with poor market
access, poor resource endowment and little political and social capital. To overcome this, pro-
poor development efforts have to concentrate on increasing productivity in rural areas (where
most of the poor live), with and for poor and marginalized groups, in the agricultural sector
(where most earn their living). That means engaging with small-scale farmers, landless families
and small-scale entrepreneurs. Fortunately, such development strategies are also very much suited
to boost rural economic development in general. Sustainable development must be grounded on
three principles:
• It should be holistic: connected with different sectors, engaged on different levels,
corresponding to actual needs without destroying future resources.
• It should be process-oriented: locally adapted to the natural environment and social and
cultural way of living, using procedures appropriate to the existing government and civil
society.
• It should be value-oriented. Appropriate values include participation, pro-poor growth
strategies, transparency, democracy, accountability, and professionalism.

CHANGING MARKET OPPORTUNITIES

The market for food is changing rapidly. Demand is growing for higher value food, such as
vegetables, fruit, meat and milk. Urban living boosts demand for semi-processed foods.
Burgeoning cities and rising incomes have major implications on both demand and supply. Over
the last decade, the retail market for food has consolidated rapidly. The 30 largest supermarket
chains account for about 30% of total food sales worldwide. These supermarkets require certain
quality standards – they need products of guaranteed quantity and quality, as the right time and
place. Stimulated by improved communication and transportation, global traders are penetrating
even remote rural markets. Small-scale farmers are confronted by the competition from cheap
foreign imports. Three developments bring opportunities for farmers 4.
• Population growth fuels demand for crops, while real prices are projected to remain stable
in the long run, creating a growing market in terms of volume and value.

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 • Many developing countries experience rising average incomes, assuring a widening
consumer base for agricultural products.
• Export markets are expanding rapidly, opening new opportunities for niche and high-
quality products.

It is generally assumed that only larger farms can exploit such opportunities. Smallholders indeed
face considerable obstacles to participating in global trade – obstacles they find difficult to
overcome on their own. They lack investment capital and market information. They have to make
substantial investments to meet quality standards – such as for organic certification or to ensure
product traceability. On the other hand, supermarkets face high transaction costs when negotiating
with many small producers, so they may avoid doing so.

Such barriers can be overcome if small-scale form associations in which they can develop
common strategies and follow a common interest. Smallholder producer associations that have
succeeded in producing for export generate significantly higher incomes than their neighbours
who still grow for the local market.

High-value, niche products and certified organic exports are an option only for a limited group of
small-scale farmers. The transaction costs are high, and small farms have few economies of scale,
so have difficulty competing with larger, more efficient farms. To link small-scale farmers to
global markets, producer and marketing associations would be required. The well-developed rural
women’s saving and credit groups in India might be a suitable starting point for such attempts.

Nevertheless, only a limited number of such associations can seize such opportunities, and they
have often had outside support. In general, the globalization of food markets is more of a threat to
the rural poor: rather than being able to engage in lucrative new enterprises, they risk being
marginalized further. The percentage of exported food products that comes from smallholders is
only about 18%, compared to 82% from commercial farms. This means it is important for local
actors to approach local, regional and national markets with a strategic view. They need to
identify any advantages they may have so they can link to the most appropriate market for their
situation. Because of the major challenges in trying to enter international markets, efforts should
concentrate on local and national markets. In India these have significant growth prospects.

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LINKING SMALL-SCALE FARMERS TO MARKETS

Sustainable agriculture approaches have much to offer here. Reducing the levels of external inputs
cuts farmers’ costs and their reliance on volatile, unreliable input supplies. Building on local
knowledge and resources makes maximum use of farmers’ own capabilities. Sustainable
agriculture interventions use participatory approaches and emphasize farmer organization. SHGs
and other credit groups have spread widely all over India and are a good basis for organizing
disadvantaged groups and giving them a voice, so enabling them to participate in development.
Serving local markets are promising if purchasing power of local people is rising, with the
following strategies
 Increasing returns from production - This includes improving farming methods to boost
production, introducing higher value or niche products such as fruits, vegetables, herbs
and spices, and improving storage to make it possible to sell products after the peak season
when prices have improved. Market surveys are a first step for this.
 Organizing as groups - Organizing farmers as groups is a prerequisite if they are to serve
outside markets and to ensure access to inputs, production technology, certification, and
market information.
 Responding to local demand - Often local demands are not well investigated. Market
surveys might identify untapped new options. It may also be possible to replace food
produced elsewhere by local production.
 Building on local knowledge - It may be possible to identify new options based on local
people’s rich store of indigenous knowledge. This might be converted into income, for
example by making traditional medicines or herbal products, using traditional pest-control
methods, or promoting local technologies such as water or wind mills.
 Building on the local environment - Some places may allow development based on
wind, solar or water energy, the use of specific plants that grow locally, or offering eco- or
agro-tourism services.
 Using labour-intensive technologies - Labour-intensive techniques may be more suited
for small-scale farmers than are capital-intensive investments.
 Link with local processing and marketing - It is difficult to start a new industry from
scratch. Efforts should take advantage of existing processing and marketing channels.

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KBK DISTRICTS – THE AREA OF UNPRIVILEGED 5

The three undivided districts of Koraput, Bolangir and Kalahandi are amongst the most backward
districts of the country (Debroy and Bhandari, 2003; Planning Commission, 2002).
 KBK districts have very high levels of poverty, 83 percent households accounting for 80
percent of the population lie below the poverty line
 Almost 5 times as many households in India and twice that in Orissa, go hungry
 More than half of the households in KBK districts do not own any of the assets
 Bolangir has greater poverty as well as greater asset ownership – this reflects greater
inequality levels compared to Kalahandi and Koraput
 While only one fourth of India is employed as agricultural workers, in KBK districts half
of the population is an agricultural worker. KBK districts have a higher share of
agricultural workers and lower share of other workers as compared to rest of Orissa.
 Over the last decade the share of cultivators accounting for total agricultural workers has
reduced drastically in the KBK districts, which has lesser percentage of cultivators but
significantly greater number of agriculture workers indicating that the land is concentrated
with a few.
KBK districts were purposively selected for the present study because it faces wide inequality,
improper management and over-exploitation of natural resources and explosion of population.
These have created a threat to ecological balance and economic as well as social status of
households in different areas of the region. The persistently increasing inequality has become a
big threat to the successful development of sustainable agricultural in this underdeveloped area.

Objectives of the Study and Methodology

With this background, the current research was undertaken to analyze the determinants of
agricultural productivity, natural resource management and poverty alleviation and social
empowerment under the agriculture development projects under the patronage of Central Soil &
Water Conservation Research & Training Institute (CSWCRTI) at its Research Centre, Koraput
and Krushi Vigyan Kendra (KVK), Semiliguda in the village, Kokriguda, of Semiliguda Block of
Koraput district of Odisha. For the present study, all the 78 households were selected from the
Kokriguda village of Semiliguda Block of Koraput District where the project was started 5 years
back. Primary data were collected from the respondents and undergone various statistical tests to
suggest a model for a sustainable agro-entrepreneurship to promote the livelihood of the poor
farmers.

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AGRICULTURAL ENTREPRENEURSHIP IN KBK DISTRICTS – SWOT ANALYSIS

Strength
 Rich bio-climate and biodiversity
 2000 species of vascular plant of which 21 per cent are endemic and 13 per cent are Indian
 Affluent source of medicinal plant biodiversity
 Wide range of Non-Timber Forest Products and plantation crops
 Centre of origin of rice
 Sub-tropical climate with mild summer and a good monsoon (1400 mm annual rainfall)
conducive to a wide range of crops including spices and condiments
 Assured surface water supply from perennial streams
 Well-drained deep red soils in the valleys
 Agro-ecology conducive for crop diversification
 Easy availability of labour
 Appreciable ITK base

Weakness
 Heavy soil erosion and land degradation
 Indiscriminate deforestation
 Cutting of land due to gullies
 High illiteracy, lack of awareness, malnutrition and poor health care support system
 Rigid tribal customs and taboo
 Small and marginal land holdings
 Lack of infrastructure support for agriculture and allied industries
 Poor soil fertility, low water retention capacity coupled with soil acidity
 Large unproductive cattle population with associated uncontrolled grazing

Opportunities
 Moderately high to medium moisture deficit zones
 Contribution o[winter rainfall towards post-monsoon cropping
 Number of central and state government sponsored watershed management programs
requiring expert advice
 Introduction and research on multi-storied cropping, dry land horticulture, plantation crops
agro­forestry and medicinal plants
 Refinement and blending of ITKs

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  Survey and evaluation of cropping systems for resource conservation and scientific
utilization
 Standardization of agronomic and soil conservation practices
 Water and nutrient management for jhola lands

Threats
 Shift towards non-agricultural occupations
 Changing climate
 Policy issues regarding tree cutting rights
 Immigration of outsiders for exploitation of natural resources
 Threat of Naxals

AGRICULTURAL ACTIVITIES OF THE RESPONDENTS

Occupational Distribution: The primary occupation of the populace is agriculture and wage
labour (88% of the respondents). As only a single crop is possible in the kharif season, most of the
villagers go for daily wages to the nearby towns in the lean period.
Family Composition in Different Land Size Group: Average female number per family is
marginally higher than average male members per family. The average family size is small (3.19)
which indicate that there are nucleus families. In case of marginal farmers, the size is the lowest.
Number of children per family is very less which shows that the young adult population is more.
The reason behind least number of children among landless and lower number of children per
family in the village is the mass family planning operation undergone by the villagers in late
nineties mostly to avail monetary benefits.
Table – 01: Family size and its composition among sample households
Particulars Size groups
Landless Marginal Small Large Total
No. of households 4 21 46 7 78
a) Total male 4 22 60 10 96
i) Average male / family 1 1.05 1.30 1.43 1.23
ii) Percentage 25 .00 40.00 40. 00 35.71 38.55
b) Total female 7 24 62 9 102
i) Average female/family 1.75 1.14 1.35 1.29 131
ii) Percentage 43.75 43.64 41.33 32.14 40.96
c) Total children 5 9 28 9 51
i) Average children 1.25 0.43 0.61 1.29 0.65
ii) Percentage 31.25 16.36 18.67 32.14 20.48
d) Total population 16 55 150 28 249
i) Average family size 4 2.62 3. 26 4 3.19
ii) Percentage 100 100 100 100 100

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Education Level: In education terms, the village is highly backward as reflected from the figure
that 80% are illiterate. Male and female literacy is 29.7 and 9.4%, respectively. Need of education
is not properly realized. Small family size forces them to divert children to agriculture / livestock
maintenance, wage earning, baby-sitting activities etc.
Women's share in different activities: In an average, a tribal woman in the village works for
about 16 hours a day, much more than her male counterpart. She spends about one-sixth of her
time on household duties and has to devote about one-sixth of time towards collection of fuel
wood, which involves long gruelling walks along the slopes. She also spends a substantial time of
about three hours daily to fetch water, wash utensils and clothes and ablution purposes. In spite of
all this, she also contributes to farm activities (25% of her total time).
Livestock Resources: The ratio between human and bovine population in this region is 1: 0.55 as
compared to 1: 0.52 in the state. Livestock breeds are indigenous; cattle are short and diminutive
with poor health, and maintained mostly for manure and draught purposes. Cows are also used
for ploughing. Cattles are less productive with an average of 4hr/day of ploughing. Milking,
especially ill cows, is not allowed as per tribal taboos, which preach that milk is meant for the calf
only. However, a few buffaloes are milked for market purposes. Lactation period is about 4
mouths and daily milk yield is 2.5 litres per buffalo. Indigenous breed and poor feed are the major
reasons for short lactation period and poor milk yield. Per family per year milk production is
11.54 litres. Thus per family per day milk production comes to be 0.032 litres which is sold
outside for money. The small ruminants are reared for urgent cash requirement. Lack of grazing
lands and availability of fodder force the livestock to stray and damage any plantation activities,
taken up in nearby areas. Tribes of this region do not easily adopt modem livestock technologies,
making livestock management and improvement difficult.
Land and Land Holding Distribution: Out of the total land area of the village, 50% is under
private ownership and from the rest, 47% is government land. Most of the private land is in the
upland with low fertility conditions and thus not much suitable for agriculture. About 26% of land
holdings are in lowland, locally called as jhola with almost perennial water flow. Cultivated
agricultural land is around 167.7 ha with 9% large farmers, 26% small and 59% belonging to
marginal category. About 6% of the villagers are landless. Thus land distribution is quite skewed.
Average land holding size is 2.15 ha. Male members take up hard farm operations while women
folk are involved in other operations like weeding, transplanting and harvesting. Most operations
are taken up in a collective manner, but the technology followed is indigenous and primitive
without any mechanization and with very low fertilizer /pesticide application.

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 Table – 02: Land and Its Types
Land type No. of plots Percentage Land type No. of plots Percentage
Jhola 165 26 Badi 80 13
Saria 167 26
Pada 222 35 Total 634 100
Cropping Pattern: Ragi, rice and niger (alsi) are the major crop of the region covering 41.1,
20.6and 7.2% of total agricultural land (167.7 ha). Cropping intensity of 78% indicate that not all
the area is put under crops even once a year. Further, relatively very little area is covered under
crops during rabi and summer seasons. So, immense scope exists to introduce newer crops in
winter and summer, and crop intensification in both space and time scales.
Major Crops: The major crops are as follows
Cereals - rice, maize, sorghum
Millets - Ragi (finger millet), suan (little millet)
Pulses Oil seeds – Arhar, black gram, dangar rani (rice bean), moong, soybean
Vegetables - Runner bean, tomato, chilli, cucurbits, potato, cabbage, cauliflower etc.
Cash crop – Ginger, groundnut, garlic, medicinal plants etc.
Out of 167.7 ha of arable land, 161.7 ha (96.4%) including jhola lands is rain fed. Irrigated area is
only 6.0 ha (3.6%). Low level of awareness and one-day living attitude of the villagers contribute
towards non-utilization of even irrigated area for double cropping and cultivation of cash crops,
which has led to poverty, malnutrition and poor health of the inhabitants.
Crop Diversification: Mainly rice, ragi, niger, groundnut and barnyard millet, sweet potato, and
some pulses are major field crops whereas tomato, chilli, runner bean, cucurbits are the chief
vegetable crops. Because of congeniality of climate, there is good scope for introducing new field
crops like maize, wheat, sunflower and vegetables like capsicum, cole crops, french bean, ridge
gourd, lady's finger, water melon etc.
Crop Yields: Yield of all the field crops and vegetables under cultivation at Kokriguda are low.
Prime reasons for low productivity are use of long duration low yielding local varieties, lack of
irrigation, low fertility of soils, low levels of input use and lack of knowledge on improved
cultivation practices. Time trend of crop yield was drawn after getting the yield per hectare. The
trend of crop yield showed that productivity of different crops is increasing.
Table – 03: Average Annual Productivity of various Crops
Field Crops Vegetables
Crops Yield (Quintal per hect.) Vegetables Yield (Quintal per hect.)
Upland paddy 10 Runner beans 60
Jhola paddy 14 Tomato 90
Ragi 9 Cucurbits 120
Niger 3 Sweet potato 60
Little millet 2 Curly flower 90

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Ground nut 10 Chilli 70
Boro-rice 7 Ginger and Other 130
Manures and Fertilizer Use: Use of manures and fertilizers is very low. However, ragi being
staple food receives highest amount of Fodder yielded Manure (FYM) and fertilizers (Table 2.12).
Vegetables, despite being highly potential and remunerative, receive lowest quantity of these
inputs. This may be because vegetables are rarely included in the daily diet. Low purchasing
power of the fanners is another important reason for low level of fertilizer application. FYM
production per HH was estimated to be 5.4 tonne/ha/year as against requirement of 11.5
tonne/ha/year, considering single crop of ragi or rice per year. Although there is shortfall of FYM,
about 40-50% of FYM is sold out to the resourceful and progressive farmers of the nearby
villages. Rest of the quantity is used in ragi and rice and vegetables.
Cost of Cultivation of Crop: It is observed that on an average, the human labour accounts for
81.5% of the total cost of cultivation of paddy followed by seed (5.6%) and FYM (5.3%) and net
income received un all average is Rs. 1882/= per hector. One of the important features of paddy
cultivation is that the farmers use very little quantity of fertilizers. It may be due to the reason that
the main rice lands (jhola lands) are considered to be fertile on account of the continuous
deposition of organic and inorganic fragment being brought down by monsoonal inflows.
Moreover, they are using their scarce resources to supplement the productivity of sloping dangar
lands prone to soi1erosion.
Table – 04: Economy of Paddy Cultivation (Rs. per hector)
Input Farm Size Average Expense / Gain
Large Medium Small &Marginal
Bullock labour 131.3 133.3 159.0 141.2
Male labour 836.5 1497.4 1875.0 1403.0
Female labour 1753.8 1927.1 2572.5 2084.4
Seed 235.6 237.0 248.2 240.2
FYM 250.0 228.8 208.5 229.1
Fertilizer 174.45 184.10 186.9 181. 8
Total Cost 3381.5 4207.6 5250. 1 4279.7
Yield Grain (q/ha) 10.1 11.0 12.5 11.2
Straw (q/ha) 13.9 15. 1 16.4 15.1
Total product 5581.5 6075 6827.5 6161 .3
Net income 2200 1867.4 1577.4 1881.6
Markel price: Grain - Rs. 415 per quintal; Straw - Rs. 100 per quintal

On an average, human labour accounts for largest share (80.67%) of total cost of cultivation of
ragi followed by FYM (8.58%), fertilizers (5.96%), seed (3.30%) and lastly bullock labour
(1.49%). Net income received on an average is Rs 539/ha. The medium farmers recorded highest
net income of Rs 633 /ha showing that they are more efficiently using the resources. However, all
the category of fanners arc using fertilizers along with FYM showing the importance of the crop
receive from the farmers, being their staple crop.
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 Table – 05: Economy of Ragi Cultivation (Rs. per hector)
Input Farm Size Average Expense / Gain
Large Medium Small & Marginal
Bullock labour 60 36 40 45.3
Male labour 787.5 845.7 1018.8 884
Female labour 1645 1470.7 1580 1568.2
Seed 99 98.8 102.8 100.2
FYM 300 275 205 260
Fertilizer 174.5 184.1 184.1 180.9
Total Cost 3066 2919.2 3130.6 3038.6
Yield Grain (q/ha) 6.9 6.6 6.5 6.7
Straw (q/ha) 15.7 15.2 15 15.3
Total product 3682 3552 3500 3578
Net income 616.1 632.8 369.4 539.4
Markel price: Grain - Rs. 400 per quintal; Straw - Rs. 60 per quintal
Agro-forestry: Traditional agro-forestry systems in the village include backyard / homestead
agro-forestry and occasional trees on field bunds. The shifting cultivation on temporal agro-
forestry (perennials and annuals grown in some form of the temporal arrangement other than
spatial arrangement) has long been stopped in the village. However, some hedgerow systems are
observed in pediment slopes where along stone birds, species like murrayakoengii, cipadessia,
baccifena, lantana camara, carissaspinarum are allowed to grow in a bush form to effect soil and
moisture conservation. In the back-yard agro-forestry, miscellaneous trees (around 11 species) arc
found to be grown in scattered form, but mostly concentrated on bunds. Eucalyptus, jack fruit and
mango were the most preferred tree species.

THE AGRO-ENTREPRENEURSHIP – A NECESSITY

For the past 50 years, the state as well as central government has supported the needs of
agricultural communities and their development as a strategy to eradicate poverty. Using a
combination of private funds and substantial grants from other sources, government has assisted
millions of poor people suffering from acute and chronic food insecurity and poverty. It aims to
help people in ways that go beyond restoring basic needs and to restore hope, purpose, and dignity
to communities, so that people can lead more fulfilled and productive lives. From reforestation
projects to integrated watershed management to fighting crop disease, various govt. and non-govt.
agencies have drawn upon the latest in technology and research to provide assistance to farmers
and rural communities of KBK areas. For so many who live in rural poverty, agriculture is their
livelihood and lifeline. Supporting and improving it is crucial to eliminating hunger and poverty.

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Sadly, overall funding for agricultural development has been declining for many years. Lack of
investment by governments and other agencies has led to stagnating productivity and a missed
opportunity to take advantage of improved technologies. Productivity gains and innovation have
been particularly low in KBK areas, due to lack of basic infrastructure, limited financing,
alienation to home culture and poorly structured market access.

These are difficult issues. But in an ever-changing world, being effective it requires to adapt to
new conditions and develop ways to do things better. The shift from agricultural production to
agro-enterprise is an example of such fundamental changes. This new approach believes that
placing markets at the heart of our agricultural work is an essential step in helping poor
communities of KBK districts finds those elusive but sustainable pathways out of poverty. The
agro-enterprise approach has helped reinvigorate core areas of the traditional agricultural work of
the traditional and poor farmers of the KBK region. It has enabled to view the traditional areas of
crop and livestock production in new ways, link with new partners, and foster collaboration
between programs in agriculture and in other sectors, such as microfinance, emergency response,
health, education, and water management for a sustainable socio-economic livelihood.

THE AGRO-ENTREPRENEURSHIP – A SUGGESTIVE MODEL

"Produce what you can sell! Don’t try and sell what you have produced 6”

The Objectives: The agro-enterprise model is a systematic method of shifting from a food-
security strategy focused on production to a market-oriented approach that emphasizes income
generation and profit based on market demand and sales of agricultural products. Agro-enterprise
aims to support poor farming communities. It is not commodity-specific. It incorporates ideas on
chain-wide thinking, competitive production, collective marketing, product diversification, and
adding value to construct a path out of poverty for farmers.
Seven key objectives that encapsulate the value of Agro-enterprise development approach:
1. Helps poor rural households attain food security
2. Increases farmer incomes and improves access to food
3. Is highly participatory and empowers farmers
4. Has incentives, risks and rewards
5. Links smallholder farmers with local, national and global markets
6. Accelerates integration of sectors and partners within rural communities
7. Supports reinvestment and growth for sustainability

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The Road Map: The term “agro-enterprise” refers to a business venture, typically small-scale. It
may be an on-farm venture or a service that adds value to agricultural goods. An agro-enterprise
generally involves groups of farmers and individual actors who provide services within the market
chain, and builds relationships with the traders who buy the enterprise’s products.

Interest group formation & consensus Market opportunity identification and

building evaluation

 Identify actors & initiate group formation  Rapid market identification

 Define and characterize the territory  Evaluate market options

 Build consensus for action  Farmer evaluation of market options

Strengthening the local support system Integrated agro-enterprise project

 Characterization of supply & demand design

 Identification of gaps  Supply chain analysis

 Development of action plan  Identification of critical points

 Development of action plan

This road map on agro-

enterprise development
identifies four steps that
can understand a local
business climate, help
farmers to identify
market opportunities
within a defined
geographical area, and
then produce agricultural
goods or provide services
based on market demand.
Farmer Groups: Agro-
enterprise processes are complex and it is rare to find one organization that has all the skills
required to fully support a new business venture. Therefore at the outset, rapid informal surveys
are undertaken to evaluate local partners and businesses to ascertain their interest in joining the
agro-enterprise process. To support partnership formation and define roles and responsibilities,
the lead agency team will establish a “working group”—an informal group of agencies that want

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to support an agro-enterprise process in the target area. Depending on the size of the anticipated
project, the working group
includes a limited number of
representatives from other
development organizations,
such as local NGOs, farmer
organizations and government
agricultural staff. The working
group also includes local service
providers that support
agricultural activities or provide
general business support, such
as microfinance, banks, input suppliers, traders and researchers. Participation of the more
specialized personnel is usually on a “when required” basis. The working group is essentially a
resource group that can provide knowledge and facilitate interventions, and can be drawn upon to
support and guide the emerging agro-enterprise(s). The group will support the lead agency,
provide contacts to service providers and assist the project.
Key Skill Development and Training: The approach of agro-enterprise then provides these
groups with basic training on up to five sets of skills:
• Democratic group formation and decision
making (social)
• Savings and loans (finance)
• Profitable production methods (natural
resources)
• Agro-enterprise (market engagement)
• Innovation (adapting to change)
These five sets of skills are not a prescriptive list, but
provide options to improve farmer group cohesion and
social capital, build leadership, manage resources effectively, make production systems more
competitive, and boost market performance.
Collective Marketing: Individual smallholders can achieve economies of scale by bulking their
produce with others to sell to a buyer who purchases large quantities. In many countries, poor
farmers have become accustomed to selling as individuals after the collapse of the farmer
cooperatives that used to supply government marketing boards. Farmers who are not linked into
farmer groups are often faced with the prospect of offering the market small amounts of low-
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quality produce, at times when thousands of other individuals are doing the same. One of the
basic skills that NGOs can provide farmers is to show them how they can organize themselves to
provide commercial units of sale to larger, more commercial traders. In the case of staple grain
crops, this would mean selling sufficient
grain to fill a 2–3 ton pickup or a 5–10
ton truck. Larger traders lose money
when they have to drive to many farms
to collect produce. Such traders prefer to
buy from farmers or groups who can
offer a commercial lot for sale. Quality
is clearly a major issue in collective
marketing, so the group needs to
understand the quality specifications of
the buyer and ensure it meets them. Failure to do so will lead the buyer to pay less, or perhaps
reject the shipment altogether.
Innovation and Value Addition: To remain competitive and avoid losing market share, agro-
enterprises continuously have to upgrade their operations. Markets and buyers seek value, and
most traders will retain links only with suppliers who seek to raise standards and reduce costs. As
markets change, producers need to adjust their production and keep a close eye on market options.
In its simplest form, adjusting to the market may mean supplying the buyer at a specific time in
the season, changing a crop variety or type, improving storage to reduce losses, or positioning
produce at different collection points or markets. Being able to watch markets change and respond
to these changes is the key to the longer term success of any business. In a rapidly changing
environment, even the most remote farmers need to be aware of changing market demands and
develop strategies to meet these changes. Innovation is therefore an important part of identifying
opportunities and responding to new demands. The support team can assess how to increase
overall profitability by making small adjustments in the current practice. Such adjustments may
include changing the variety, staggering planting times, changing the plant spacing or use of
fertilizer, or investing in irrigation or other technology improvements. Given the increasing
volatility of the climate, such measures may need to be considered more widely in this area.
Successful innovation adds value to a product. In many cases value can be added with basic
changes, such as bulking, getting farmers to produce the same variety, selling the produce to a
more distant market, or storing it to achieve a higher price when supplies dwindle. More
sophisticated forms of value addition can include changes in production techniques, such as
switching to organic production, or differentiating the product on the market due to specially

16 | P a g e
identified traits. Branding is part of this value adding process. Very simple branding of a farmers’
group can be enough to distinguish a product enough to create a premium in a market where other
produce is sold as an undifferentiated commodity. Farmers often make few attempts to maximize
the value of their produce because they do not appreciate the needs of traders or consumers. For
higher value produce (e.g., meat or fresh fruits or vegetables), greater attention is needed to value
addition, and more effort should be placed on all the marketing factors—price, product,
promotion and position—that can increase sale values. Agro-enterprises can add value to basic
commodities by processing them. These types of operations are typically done by a service
provider, and a support teams also evaluate the prospects of either working with local traders to
add value nearer the farms or to explore the options for processing on farm.
Co-op Development – A New Step Forward: Once several farmer groups are working in a
particular area, they are able to associate with each other into larger apex groups or cooperatives.
Initially, they came together only at the time of sale, so that members can bulk their produce and
collectively market their goods to fill up an entire truck. This simple form of association has
limited costs and can significantly raise the unit price of the goods being sold. The marketing
committee now is made up from one or two representatives of all the farmer groups. That helps
ensure that decisions can be made and messages relayed to the members quickly, and members do
not feel they are being cheated. If this approach is successful, a more formal cooperative can be
formed out of a collective marketing group. Such a cooperative may provide additional services to
members, such as low-cost input and financial advice. Higher-order structures have many
advantages, based on their economies of scale and sharing of resources and services. But these
can be achieved only if the producer groups and their associations have large enough volumes of
product and a truly democratic management that works for the association members. However,
caution is needed when investing in second-order associations as they can take a great deal of
time to become functional business units, and in most cases will require considerable and
specialized management support. Plus, many farmer based cooperatives collapse due to financial
mismanagement. This is particularly common in countries with weak legal structures and local
political agendas that seek to transform cooperatives into political machines. Caution and
transparent management systems are critical to success in this type of scaling.

THE FINAL WORDS

There are countless cases where support agencies have encouraged farmers to produce for markets
without understanding market conditions. After considerable investment and effort, farmers are
stuck with unwanted crops that they are forced to sell at very low prices. In some sense this is a

17 | P a g e
 result of a simple imbalance of inputs: it is relatively easy to introduce improved technologies, but
more difficult to empower communities with the skills required to understand, access, and adapt
to dynamic markets, when the response group is the traditional farmers of KBK regions. The
agro-entrepreneurship approach is a means of refocusing the production-based efforts within a
market-based framework. It does not replace traditional agricultural development, but it does
require a new way of thinking about agriculture: one that recognizes the market as the driver in
the system and requires that investments be aligned with market needs and evaluated against
market performance—i.e., sales volumes, product quality, profit, and timeliness.

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REFERENCE:

1
Govt. of India (2001), Census of India, 2001
2
FAO (1991) Sustainable agriculture and rural development in Asia and Pacific, Regional
Document No. 2, FAO/ Netherlands Conference on Agriculture and the Environment,
Hertogenbosch, The Netherlands, 1519 April.
3
Swaminathan, M. S. (1991) From Stockholm to Rio de Janeiro: The Road to Sustainable
Agriculture, Monograph No. 4, M. S. Swaminathan Research Foundation, Chennai, India.
4
Bharti, D. K. and Sen, C. (1997) Agricultural sustainability in Bihar: An evaluation of relative
status of different districts, Journal of Agricultural Development and Policy, 9 (2):1-13.
5
A Report by Indicus Analytics in Association with Indian Society of Agri-business Professionals
for Japan Bank for International Cooperation (JBIC), (2003), “Socio Economic Profile of
Upper Kolab and Upper Indravati Irrigation Project Areas”.
6
Saleth, R.M. (1993) Developing Indicators of Sustainable Development at the Global Level:
Approach, Framework and Empirical Illustrations, Institute of Economic Growth, Delhi.

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