Take something simple, like an apple, and imagine how many people’s lives that fruit can change. It is hard to imagine all the implications that a juicy little sphere has in economy, finance, society, culture etc. However, issues like farmer economic exploitation by middlemen can be traced directly to the control on the crop. Redefining the rules of ownership and responsibility of the products is possible, and some people have tried to find solutions.
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Mr.L.P. Semwal from the NGO Shri Jagdamba Samiti started reflecting upon this some years ago. In 2006 they came up with the idea of using apples, the main cash crop in Uttarakhand and Himachal Pradesh (HP), to start with the aim to fully empower farmers in the value chain.
They launched The Apple Project in 2007 and the brand Mountain Love in 2015. The team now works with 5000 marginal apple growers across 150 villages in three districts of Uttarakhand and HP. Each farmer produces about 300 kg of apples allowing The Apple Project to have a turnover of Rs11 crore in 2014-2015. Their secret lies all in their creative business model which allows farmers to become share owners of the whole production system. We spoke with Pallavi Deshpande, who manages Mountain Love, to learn more about this innovative model.
The three tier system
The team noticed that the main challenges farmers faced were lack of bargaining power and storage facilities to preserve apples. Almost 40-45% of the fruit produce of the state goes completely waste due to lack of appropriate cold storage facilities in the state. So that’s where they started from.
“The first step was to collectivise farmers and their products. We helped create ten farmer trusts, which give them the chance to mitigate the problem of poor bargaining power, because they can now take collective decisions about apples’ market prices” explains Pallavi.“Moreover, the trusts are platforms for us to reach out to the farmers and share technology, data, and organic farming practices. This creates the opportunity to learn from each other,”she adds.
The second tier is the joint venture company. “Lack of bargaining power is not only due to the absence of coordination among farmers. The other reason is that they don’t have access to market and to information about the ongoing rate. So, we set up a joint venture company which is a link between the farmer trust and the social investor,” explains Pallavi. “This is also because, when farmers manage the daily operations in a cooperative, they often compromise the organisation/enterprise in the long run because they want to sell all their products right away and get money as soon as possible. Instead, we push for selling their apples off season, which delays the revenue flow but increases the prices.”
“Moreover, the farmer trusts legally cannot show revenue, which is why we need a legal structure – the joint venture company- through which sales are carried out.”
Lastly, The Apple Project introduced specific technology for long term storage. “Infrastructure is very important for perishable products like apples. In India, there are many cold storage systems, but none to control the level of the atmosphere. We have Asia’s third largest control atmosphere system: not only are we maintaining a certain temperature, but we also keep the same atmospheric conditions as in the orchards. This is a huge step ahead in terms of storage methods.”
The Dutch partners and Rs 15 crore in seed funding
“SHGW (Stichting Het Groene Woudt), one of our social investors, put us in touch with a Dutch technology provider called Fresh Food Technologies Pvt Ltd. They have really managed to top the standards of preserving and conserving methods. So, after raising Rs 15 crore in seed funding we’ ve been able to import that technology – which has a capacity of 1’200 metric tons – and implement it successfully.”
Parallel to their technology, The Apple Project claims that what differentiates them from other apple producers in India is their system for sorting and grading apples. “We’ve got 20 varieties of apples and being able to grade them gives us a state-of-the-art supplier value. This is how we can really take our farmers to the next level.”
Squeezing the whole potential: Mountain Love
The Apple Project managing team had until 2013 dealt mainly with men. When they approached women of the village to encourage them to participate more actively, they found that, according to local customs, it was men’s exclusive priority to bring the best produce – grade A apples – to the market. Although groundwork is carried out almost exclusively by women, they are allowed to sell only grade B and C products.
“With grade B and C apples (which are simply smaller in size and lighter in colour), we make 100 per cent pure and organic apple juice, with neither added sugar nor preservatives.” Thanks to a second partnership with Fresh Food Technologies and their previous experience in juicing technology, Pallavi and her team started apple juice production under the label Mountain Love. “We launched the project two years ago, but we started producing and selling only last year. We have got the capacity to produce 2000 litres per hour, but we are not at that level of production” says Pallavi, adding that they have recently partnered with Ananda Spa for supplying them with organic juice and and are in the process of signing new partnerships.
Farmer the owner
One of the most striking elements of The Apple Project and Mountain Love is the strategic choice of funding, aimed since the beginning to turn farmers into owners of the technologies they received.
“We raised debt funding and gave farmers 10 per cent economic right of the local storage facility. 90 per cent for the moment is with the social investors, but we’ll be able to repay this investment over the next five to seven years. By then, the farmers will be 100 per cent owners of the long-term facilities and they will benefit from all the profits coming from the sales of apples,” says Pallavi
“Having said that,” she continues, “even when all the economic rights go to the farmers, the professional management will continue to have an important say in the daily operations.”
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