Producer Groups - Practical Experiences

"I learned very early the difference between knowing the name of something and knowing something."- Richard Feynman; That is why, despite knowing the theoretical concepts on the Producer Groups, there were some practical lessons gained in the field. I had worked with Producer Groups farming Groundnut, Onion, & Pulses (even one group was doing business of NTFP) at Balanagir district, Odisha. I was guided under the able supervision of Kamalendu Paul, Zonal Manager, ORMAS (Orissa Rural Development and Marketing Society). The document Community Enterprise System Manual prepared by Prof. Amar KJR Nayak came helpful during work.

All producer groups were having women members only. No producer group has been registered under any act till now. However, credit was given to them based on mutual trust between the government and Producer Groups. The legal process will be initiated soon. We were also unable to do protect farmers under the crop insurance scheme till this year. Organizing the unorganized was already done by Paul Sir before I arrived at the district. Without the help of local persons, this was not possible. The sign of government (even its vehicle) is a sign of trust in rural areas. That fast-paced our work even by Indian standards in establishing trust with the community. Our companies have usually dumped their substandard products and Chit Fund company had run away with the money of rural people. This historical tendency of companies has made business in rural areas difficult.

 

Practical Experiences:

1) 40-60 is the optimal size of the group. It is necessary for cohesion within and management of the group. Since they are small-scale, it is generally preferred that they are not much dispersed. There is an executive committee and further sub-committees in the Producer group. But, most of the members don't know the power, roles, and responsibilities of this committee. Since NRLM is a new scheme, we have to remind each time about the objective and scope of the mission to the members.

2) Producer groups were more successful in the remote areas of the district. The sense of cooperation is more seen in these regions in comparison to the relatively rich parts of the district. It is a small sample for me to draw conclusions but the poor are more honest and cooperative in nature.

3) For any business, 'budget' is the ultimate tool with which to monitor and keep an eye on the business. The lack of education becomes a major hindrance in the preparation of the annual action plans and budgets. It was easy to make them understand procurement procedures (like inviting more than one quotation) and the necessity of documentation. Since most of the women are part of SHG, they have a basic idea about documenting the meetings and cash book.

4) LSP (Livelihood Support Person) is appointed for their help in marketing linkages and proper documentation. Producer Group is more considered for a good price while the government is more strict on documentation part. An honorarium of LSP is merely 2000 -3000 rs currently. That may appear low but as per my opinion, is sufficient if billed on RS 50 per hour of interaction. Work of LSP is maximum during the post-harvesting season.

5) I have attained lectures, read articles, and even studies courses on leadership. Cooperative Leadership is not just about good communication skills, democracy – it's about sound decision-making by utilizing the capacity of the group. A producer group like any other group is leader-oriented. The trivia is that an exterior person like LSP should enable but should never drive the Producer Group strategy. Since I have been working with women producers and male LSP, this scenario may occur in the future. A leader should be groomed inside the group. Even on the proxy of gender diversity, there was only a single woman among all appointed LSPs.

6) Another difficulty that the producer group or cooperative societies encounter relates to storage facilities. Most of the surplus produce in an area is assembled and sold at the mandi. Infrastructure support is a must for the producer group. Most of the farmers even if organized for the production purpose are reluctant to store for a long time to meet their immediate consumptive need. A low-cost storage facility for multipurpose use at each GP/ village for each producer group is a good solution to the problem. It may appear cheap and effective under Panchayat but the chances of either personal usage by PRI members or no maintenance are more in it.

7) The transport arrangement to market a small volume of produce is not facilitating and rural transport cost is much higher than the urban transport cost. Hence, by combining the total produce, we were able to bring businessmen to the doorstep of farmers.

8) Line departments like Agriculture Department and its extension services support have been minimal till now. Convergence is always missing in between government departments! We are hoping for their help during the training session of producers. The fund supplied for training purposes by the government will be used in the future. The caveat of guidelines in utilizing training funds: Only half of the group will get the training. A sure way of creating a rift between members. It is better to spend less on training per member but to impart training to everyone in the group.

9) There was not much inclusion of banks till now. Without any corpus fund provided as a grant, it was difficult for a bank to provide the loan amount. And, Banks heavily discourage and delay SHG/PG  members making transactions to the respective branches. That is a big issue with multiple perspectives to be debated later.

10) Agri Produce Market is not very quality conscious, but price-sensitive to a certain extent. The credit supplied to PG is used for holding the collective produce for one or two months. In the meantime, there is a definite rise in the prices of produce. We have experience of selling Pulses for a profit of more than Rs 10 per kg by holding the stick for a period of one month.

Failure of Cooperative societies should never be forgotten in the Indian context while pitching support for such groups. Cooperative societies were not harmed much by politics but by the interference of the bureaucracy. Lack of serious attention to value-added agriculture and rural MSMEs is a big task to be handled in the future. How do we make agriculture sustainable and economically viable? That is the big question.

Initiative Taken:

Previously, only office bearers and LSP words were taken for granted in meeting at district-level meetings. Producer Group registers were the only way of checking regular meetings and updates during field visits. I have collected the maximum available mobile phone numbers of members. Hence, I can actually monitor live, whether PG meeting is happening or not from district headquarter through random calls to any member.

- A DPR (Detailed Project Report)was approved by OLM (Odisha Livelihood Mission) last year. There was no provision of a baseline survey. I tried to capture data about household socio-economic conditions so that impact assessment can be made in the coming years.

Producer Groups - Theoretical Concept

"Where the poor participate as subjects and not as objects of the development process, it is possible to generate growth, human development, and equity, not as mutually exclusive trade-offs but as complementary elements in the same process." --- Meeting the challenge, Report of the Independent South Asian Commission on Poverty Alleviation, 1992.

The problem with the modern outlook of business education is to view rural/urban citizens as target consumers. Instead, if we enable them as producers, that will surely boost the economy and well-being of our producers. Most of the producers are caught in the vicious circle of poverty and even fully dependent on the monsoon for a good harvest. The government has reworked its strategy of helping marginal and small producers in breaking out of the cycle of poverty by organizing them into producer groups. The concept of Producer Group has been lifted from the cooperative societies. This concept is based on voluntary cooperation as the rural ecosystem has limited resources and infrastructure.

Why Producer Group? The main aim of the producer group is to stop the practice of ‘distress selling’. I will give three reasons for pitching Producer Groups. 1) Creditworthiness is directly related to income, farm size, age of farmers, and level of formal education of farmers. Hence, the marginal farmer is always caught with a lack of credit. 2) Marginal farmers as rural producers always suffer from an imbalance of bargaining power in market transactions. 3) Small farmers always dispose their produce at the nearest mandi at a through-away price. The size of the market for agri-related commodities is always good but highly price volatile in India. I have written more on this topic: Market Failure and Primary Producers.

A producer Group generally consists of 30 to 150 producers [depending upon nature of the Livelihood Activity] involved in a common activity. Producers groups should be formed preferably at the village level or at the GP level for tribal areas where the size of the village is very small. Producers Group may be registered under the Self Help Cooperative Act, 2001 of the Government of Odisha (Depending on the state) or The Companies Act of India in the future. As per new NRLM guidelines, a minimum of 50% of the total members should be from the BPL category. That is a good strategy for poor and vulnerable households.

There will be service charges taken from the members for purchase and maintenance of common assets like mattresses, Chairs, Lock, Box and Weighing machines. There will be the engagement of a professional resource person called LSP (Livelihood Support Person). LSP will help them in procurement, processing, value addition, and market linkages. However, the cost of LSP will be borne by the government for initial two years depending on the honorarium decided by the Producer group. There is a provision of financial (Loan for working capital @7 % & Grant for capacity building through training) for producer group.

Generally, Indian farmers have a highly unorganized and individual approach to cultivation. Organizing the unorganized through mobilizing the whole community is the most time taking part of the formation of the Producer Group. The first step within business planning is to identify the business opportunity. This is decided by members Producer group itself only. Ensuring regular meetings and interaction from a government official is a way to sustain the producer group. With enhanced collective bargaining power, Producer groups are obtaining good prices for their produce in the market. Still, there are many practical difficulties in the whole approach. That will be taken later in a new blog post.

Transfer Order

The official stint at Balangir is over after 175 Days. I have been transferred to Ganjam district that will be effective from 18th November 2013. Life will be turbulent, may be good in coming weeks.

Since, Ganjam district has been badly affected by the PHAILIN and followed by flood due to incessant rain, it was decided to relocate eleven Young Professionals for the rehabilitation and restoration work. Transfer Order is little puzzlinh while looking at overall context of the decision. Currently, there are 36 Young Professionals employed at Odisha Livelihood Mission. There will be thirteen Young Professionals working at Ganjam district now with this official order. There are districts like Mayurbhanj, Kendrapada, Balasore and Bhadrak affected by cyclone and flash floods. No Young Professional is placed there for rehabilitation work. Hence, this skewed decision appears bias to me.

Change is constant but its hard to guess pace of the change. There is an expression that “failing to plan is planning to fail.” While it is partially true that those who fail to plan will eventually fail in achieving their goals, there is strong evidence to suggest that having a plan leads to greater effectiveness and efficiency. I am hoping for better and optimum utilization of time at new place. Dreaming to come up with self-correcting mechanisms against habit of procrastination. Self-image, hopes and dreams matter, not as part of vanity, but for the choices that I will make.

Thought of the Day: The plain fact is that the planet does not need more successful people. But it does desperately need more peacemakers, healers, restorers, storytellers, and lovers of every kind. It needs people who live well in their places. - David Orr.

Visit for Social Audit of NREGS

NREGA funds are used for natural resource management activities by generating wage employment for the poor as well as strengthening their livelihood resource base. I will ask readers to go through these two articles :[ Rural job scheme: Can we get it right? and NREGA social Audit: Myths and Reality ] on Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) before going forward.

There is social audit of MNREGS going on in Balangir district from 22-10-2013 to 26-10-2013. I attended three such meetings as an observer only. I attended social audit at Kutenpali, Jharmunda and Kandajuri Gram Panchayat of Loisingha Block. Loisingha Block consist of 18 G.Ps with 108 Villages and is 22 km away from district headquarter. The officers, Sarpanch and GRS were present for the meeting on time. Yet, there was lack of people attending the meeting held at Panchayat Bhavan. The registered person data is taken from NREGA website for the financial year 2013-2014. I have given distance from Block Office to show their remote locality.

G.P.	Distance from Block Office	Registered				In Meeting
		Household	Persons	Male	Female	Total	Male	Female
Kutenpali	7 Km	674	1899	1076	823	40	40	0
Jharmunda	12 Km	661	1686	983	703	0	0	0
Kandajuri	15 Km	457	1075	596	479	7	7	0

Key Findings -

1. There were people keeping themselves busy in a game of cards but were unaffected by any meeting. This attitude of local people was fatal to their own development. Hence, all the blame of failure of government scheme can't be solely put on the state. The lack of participation of the local population was making the whole event into a flop show.

2. GP with 40 people was considered as success by block office. It was later told that such low attendance of 5-10 people without any local NGO participation is prevalent in another block of Balangir district. With the support of community based organization, the number of participants can rise upto 80-100 maximum.

3. There was notice attached to the Panchayat office but no meetings were held on the importance of social audit. Adding to this limited communication, effective strategy of rural communication through vocal was also utterly discarded by the government. Neither NGO nor any community organization was used for mobilizing the public.

4. Land development through individual project is equally good option with community project in the remote location. Due to hilly terrain and poor connectivity, there is greater participation in NREGS in backward GPs. Most of the people working as labour in NREGS are tribal and BPL card holders.

5. The Gram Panchayat must own the data it collects; Information is a basic tool for planning. Information relevant to each area like population, Infrastructure and natural resources database is rarely available for use. Even NREGA data is available on the internet yet not available to common man in the village. Virtual transparency may give temporary relief to the government officials, whereas the reality is that villagers have to meander through a cobweb of data to search and find what they are looking for.

6. Surplus labor used in NREGS can generate productive assets that can be eco-friendly in nature. The asset base of the poor both individual (for example, Land leveling, reclamation of soil, bunding, constructing small ponds) as well as collective assets (for example, regeneration of common lands, water harvesting structures, group irrigation facilities etc) can be strengthen through this scheme. Migration of unskilled labors can't be stopped with virtually 30-40 days of the work.

In NREGA, government officials and PRI members had used fraud measures like “creating fake muster rolls, inflated bills, exaggerated measurements, and non-existent works, all through bribes and cuts from wage seekers" to make money. What need of hour is social audit, best tool we have for monitoring using community participation to curb such fraud activities. Development from design is not primarily about selecting right people for the job. It is about setting of right processes, standards and procedures followed with continuous adherence to it. I will end with the words of Omnia Marzouk, President, IofC International - : 'Nothing lasting can be built without a desire by people to live differently and exemplify the changes they want to see in society.'

Analyze This !

I saw two vans simply parked around in block office compound at Balangir district. I don't know which department/agency own the vehicles. Both are marked with the sign of UNICEF. And they are rusting like a junk. Our tax money and foreigners aid money, earned though hard work, in this case are hardly put at work. These vehicles are mere extension of wastage of public goods by our government.

Vehicle at Muribahal Block Office

Vehicle at Titlagarh Block Office,

The most reliable way to save an asset at government workplace? Make sure it is used.

End Notes :
*Photographs are taken by personal phone camera in July 2013.
**No offence to the local governance ! :)

100 Days @ Balangir

I joined OLM office as YP at Balangir on 27th May 2013. I completed 100 working days today. Let me redirect reader to details of the place where I am working : Balangir District. Balangir/Bolanagir lies in KBK (Koraput Blangir Kalahandi) region and is considered as one of the country's 250 most backward districts. KBK itself has attracted the attention of policy makers, development planners and the poverty critics due to its persistent underdevelopment from last few decades. As per my observation, this place is working with slow/numb administrative activity supported by overt political agitation.

There is no resource block under OLM (Odisha Livelihood Mission) strategy for this financial year 2013-2014 in Balangir. Hence, I have to solely work with ORMAS (Orissa Rural Development and Marketing Society). Motto of ORMAS is simple- Creating competence and values in rural Orissa. ORMAS was constituted to facilitate for a sustainable livelihood of the rural poor by working with SHG clusters. It is very common that government schemes concentrated on the input supply than outputs marketing ; They always look credit, production and market aspect as separate entities. The intervention strategy of ORMAS has been on capacity building, initiation of Micro Enterprises, micro credit linkage and facilitating sales through different channels. Currently, I have been monitoring and learning through interactions about these clusters. I term them as “islands of goodness” amid terrain of poverty.

Understanding of how public systems work at district and state levels is my first priority. I don't want to get caught up in the details of one grand scheme, losing sight of the whole picture. I have been attending few district level meeting and also trying to know at-least the name of various schemes of central and state government. That itself is a huge task.

While it is considered that the most unproductive activity in an IT company (other than negotiating a higher salary with HR) is making powerpoint presentations! No such work is given to me here. I am also not used as a data operator. That is good. I cherish my mentor for this. I do not expect full-time attention of busy mentor but surely office staff help me with various government formalities when required. I try to utilize time by reading reports and news in office. I also count plenty of time wasted/enjoyed in facebook also.

Development of a region or person is a slow process. I have been given full freedom to learn maximum from field visits. Traveling to field never appear hectic to me and a few relaxed days are always there in the office. The words of Marcel Proust, "The real voyage of discovery consists not in seeking new landscapes, but in having new eyes."  are sounding more true than ever. Each day at field gives me new insight about this place. It becomes very inspirational to see few individuals who are successfully fighting the battle for better future. Yet, scenes of extreme poverty and illiteracy breaks the heart.

I am an early adapter but still found it tough to adjust to the climate and culture of this place. I have started to understand Odiya but speaking this language is still not my cup of tea. Sometimes frustration and lethargy creeps in the work schedule but it takes time and resources to build a knowledge base. As they always say, Rome wasn't built in a day !

Street Entrepreneurs - 1

India’s most enduring heritage since independence is poverty. Poverty can't be fought by throwing doles and subsidy in the name of government schemes. It can only be done by creating suitable ecosystem for innovative and risk taking individuals. These persons need not to be engineering and management college students. A street vendor with no education is taking more risk and still pursing business is an entrepreneur. Entrepreneurship is more prevalent and still damn difficult to pursue for people working in unorganised sector. A NCEUS report estimates that in 2005 out of the 485 million persons employed in India, 86 percent or 395 million worked in the unorganised sector, generating 50.6 percent of the country's Gross Domestic Product.

Someone once told me to understand how businesses runs, interact with an entrepreneur, even if it is a pawn shop. I didn't get the point back then. Once in the college, I had read few chapters of book Grassroots entrepreneurship : entrepreneurs and micro-enterprises in rural India by Ajit Kanitkar. That became an inspiration for pursuing an interview with a street entrepreneur. I didn't record the facts like an official interview but collected it gradually in chit chat over a time of two months. What I understood of Street Vendors previously was a little value until I interacted with Mr. Binay Pradan. Our main protagonist, Mr. Binay Pradhan, is a Street Entrepreneur without any big degree and runs a Paanipuri Shop. Mr. Binay can't bear the idea of sweating tears for another person who will get profit on his hard work. He stated : "When one works for oneself, then one really puts the heart in the whole business." One of his wisdom lines remain with me - "A person must be good listener when working on the street. And, these days it has became more important to speak good & sweet rather than selling good products."

Family background - He has studied till 10th and family is located in Nayagada, Odisha. He is the eldest of 6 brothers. He was involved with farming. He also had worked in UP, Bihar and Mumbai for total of 10 years before starting his own venture. He was visiting to Harishankar temple as Bol Bam Kanwariya 11 years ago. That was the tipping point for him. He decided to start own business and migrated to Balangir. Hunch rather than market research, was the basis for opening a shop.

Business Model - Mr. Binay earn maximum upto Rs. 15,000 in a month. Cost of raw materials vary upto Rs. 200 to Rs.500 per day. While profit can fluctuate between Rs. 500 to Rs. 1000 on any given day. Also, he procure the raw material from a local trader since the inception of the business. Half the payment is given on the spot while remaining is done on credit. Payment is done as per cash flow obtained through sales. He takes day off on Sunday and rainy day. And he takes long leave for home in summer holidays.

He is married and blessed with three children. Girls are doing good in Class 6th and 9th while son is studying in class 2nd. He wants to impart best education to his children as this is only chance for next generation towards prosperity and respect. I agree with him completely. Education gives us skill to survive in economy and opening of minds. Those who dream about India becoming an economic superpower must support education and entrepreneurship around us.