Case Study Magasool Making agriculture viable for small
Case Study- Magasool Making agriculture viable for small and marginal farmers Dr. Ajay Tannirkulam
Outline • Organization Background • The Team • History and Motivation • Magasool Services • Group Discussion • Magasool Finances • Group Discussion • The Way Forward
What is Magasool? • Magasool (meaning yield in Tamil) is an effort to provide services ranging from machinery, infrastructure , technological know-how and training, to extensive support systems for small and marginal farmers, and farm workers. • The technological services offered are selected from interventions that have been scientifically demonstrated to be successful in lab settings. The interventions are then contextualized and tested in experimental farms for local validation.
What is Magasool? • The service catalogue can be broadly divided into: modern sowing techniques, soil health improvement techniques, agricultural-produce marketing services, and technical training/consulting services. • Magasool owns the technology, knowledge, tools, machinery, and trained operators; farmers can avail our services on a modest pay per use basis. We invest in building local talent and rural entrepreneurs by teaching enthusiastic practitioners of agriculture how to own the business model in their district
Who are we? Dr. Ajay Tannirkulam: Ph. D. Michigan, 6 years experience in impact evaluation and Executive Director, Center for Micro. Finance – IFMR Research. Founded Magasool in 2012 Mr. Jayaram Venkatesan, MS EEE, VP Country. Wide Research LA. In education and agriculture since 2007, Founded Magasool in 2012 Magasool Full Time Staff : Coordinators and Technical Staff R. Sasi Kumar R. Vinoth A. Tamizhkumaran S. Balakrishnan. R. Umapathy G. Mahesh, Head Mechanic M. Selvamani
Magasool Part-time Staff Aruna Rajan: Ph. D. UIUC, 6 years plus in research, Advisor to Magasool 18 (8 women) part-time machine operators and other field staff. All employees are young farmers/farm help trained and hired by Magasool
Why Magasool? • Crop and Country hectare) Total Production (million tonne) Productivity (tonne per • 1. PADDY • World • 1. China 196. 68 6. 5 • 2. India 133. 7 3. 1 • 3. Indonesia 64. 4 • 4. Bangladesh 47. 72 4. 2 • 2. WHEAT • World 685. 61 3 • 1. China 115. 11 4. 7 • 2. India 80. 68 2. 9 • 3. Russia 61. 74 2. 3 • 4. France 38. 33 7. 4 685. 24 4. 2 4. 9
Why Magasool? • The current practice of agriculture in India is not economically sustainable and our yields for many agricultural commodities are low compared to developed nations. • The people most affected by the poor state of agriculture in India are small and marginal farmers and agricultural labourers, who constitute about 85% of the agriculture workforce. • One factor that has the potential to hugely increase agricultural productivity and cut input costs is the adoption of modern farming methods and technology.
Why Magasool? • The bulk of Indian farmers have not warmed up to technology. • Initial capital investment in adopting any new technology for a small farmer, whose landholdings are extremely small is often intimidatingly impractical. • Complexity in adoption of agricultural innovations , aversion to risk, lack of trust and lack of role models are some of the additional barriers.
The Problem Magasool Aims To Solve • 50% of Tamil Nadu workforce is in agriculture, contribution to GDP less than 14%. • Lands highly fragmented • Average annual income per (4 to 5 member) small farming household is INR 40, 000/year. (per person of INR 30/day) • Agriculture is not a sustainable practice or source of livelihood! Small Farmer Grievances • Dropping Productivity Levels • Increasing Input Costs • Heavy dependence on manual labour. • Poor soil health and improper fertilizer use. • Poor Price Realisation
Gaps Addressed By Magasool GAP 2 GAP 1 Factors creating the GAP Macroeconomic policies, Risk mitigation Contributing factors Increasing input costs, manual labour dependence, poor soil health, lack of access, awareness, reluctance HEALTHY PROFIT MARGINS LARGE FARMERS 9% SMALL FARMERS 91% Contributing Factors No direct access to markets, no infrastructure for processing, packaging, and storage GAP 3 LOW PROFITS/HEAVY LOSSES Magasool caters to small and marginal farmers to provide (first ever!) end to end services to increase the yield through simple technology interventions, and direct market links.
Agriculture As A Service Ideation phase: involve farmer groups, National Agro Foundation, TNAU, other universities, govt extension depts. Magasool Paid Services Magasool Free Services Lifecycle of a Service @Magasool Innovative Solutions Cultivation Technology Solutions Workshops & Training Testing and Piloting Soil Health Improvement Local Leadership Building Agricultural technology, support, and extension services model that is • Personalized and hands on; guarantees high yields. • Adapted to prevailing farming conditions and low cost • Anchored on local leadership, cultivated at grassroots. • Farmers avail services for a modest pay per use (per acre) cost. Magasool Services At Scale! Market Links For Produce Policy & Advocacy With Govt Bodies
The Modified System of Rice Intensification • • Improving paddy cultivation by introducing mechanised interventions can potentially impact 32 lakh households in Tamil Nadu (TN) alone. Between May 2012 and July 2015, the program has reached more than 400 farmers in 60 villages in 4 paddy cultivating districts. On an average, farmers availing of our services across TN reported a yield increase of 10 to 20 %, translating into increased incomes of Rs. 2500 to Rs. 5000 per acre. Magasool reached 60 villages in Tamilnadu over 2 years! Magasool system of rice intensification : 600 farmers reached; average profits up by 20%. Labour problem completely solved!
Group Views • Magasool services are very skewed. The Modified SRI constitutes 70% of Magasool operations. How can this be made more balanced?
Other Services at Scale Vermicomposting units – bagged organic manure. Modest profits of 0. 5 Rs/kg to encourage adoption. 4 units in 4 districts, each producing 5 tonnes a month Train and employ women as handlers. Millet Processing – Piloted with 30 Farmers in Javadi Malai Hills First lot (1000 kgs) of processed samai (little millet) at first unit set up (2 plants). sold in market at 30% profit margins. Set up market links (large grocery stores) In Chennai and Bangalore. Employs women in processing.
Vermicomposting • Soil organic matter (SOM) is a big concern in Indian Agriculture. World over, research has shown that SOM needs to be at least 3 % by weight, for proper nutrient absorption by plants. Most Indian agricultural lands, however, have SOM less than 1%. • The small farmers of Tamil Nadu alone need 20 million tonnes of raw organic matter (or 5 million tonnes of compost) every year to restore soil balance.
Kitchen Garden Program Vegetables often show huge seasonal variations in price, leaving farmers and labourers with no choice but to forgo including them in their diets. Children and women are especially mal-nourished, and pregnant and lactating mothers receive inadequate nutrition. 39% of India’s children under 5 years of age are stunted and a large fraction of pregnant and lactating women are anaemic.
Soil-Test Based Nutrient Management • As much as 50 lakh acres of agriculture lands in Tamil Nadu are unproductive or under productive (Tamil Nadu Vision Document 2023) because of soil nutrient mismanagement. • The TN government’s attempt to lure farmers into testing their soil content by offering subsidy has not seen much uptake, as post testing, farmers find it difficult to implement the complicated and tailor-made recommendations for their patch of land. Not finding a way to interpret these tests, or follow a community approach to implementing their recommendations, farmers drop out of this program.
Magasool So Far, and Looking Ahead Investments sinception: Founder Contribution –. 75 mil INR; Ext Donor Contribution – 1. 7 mil INR Operating revenue sinception: 2. 4 mil INR. • Operational revenue projected increase to 3. 5 mil INR in 2015 -2016, and 6 mil INR by 2016 -2017. • . Expect our investments to total-revenue ratio to reduce from 50% to 30% in a 5 year period. • Expect to be completely self sustaining in 7 years. Client Base: Currently reached 1000 farmers, expect to reach 5000 in 3 years, and 10000 in 5 years.
Group Views • Farmers willing to take up many services only at subsidized rates? Is this a problem for long term financial sustainability?
Grain Processing – An Opportunity • For crops not supported by a functional minimum support price (MSP), farmers often receive remuneration lower than what the markets can support. • For farm inputs not supported by Government subsidies, prices at which items are sold often suggest monopoly (or collusive) pricing
Opportunity • Rain-fed farmers of western Tamil Nadu dependent on a network of middlemen to procure, process and market small millets. • Factors of 3 -5 difference in price between what the farmer receives for raw produce and what the urban consumer purchases at. • Factors of 2 -2. 5 difference in between the cost of processed grain and price paid by urban/semi-urban consumers.
Why Millets? • 450, 000 tonnes of small millets (Michael Raj and Shanmugam 2013, Agriculture Statistics Division) produced in India annually. Most of them marketed through channels that squeeze farmer profits and simultaneously derive large profits from the end customer • Millets require very little water, are more nutritious than rice and wheat, have high fiber content and low glycemic index (especially good for diabetes patients). • Consumption of millets has gone up by 25% between 2002 -2012 (Ministry of Agriculture). • Millets slowly becoming a part of the urban diet again and are potentially the food for the future (resistant to droughts and climate change)
Looking Ahead Magasool Program Success Metrics Current Status Target for 2017 Mechanized paddy transplantation No. of farmers reached Yield Improvement Labour-cost Savings Drudgery reduction Women farmers reached 600 10 -20% 10% 5 3000 10 -20% 100 Vermicomposting No. of farmers reached 300 1000 Kitchen garden program No. of landless laborers and small farmers reached Increase in household vegetable consumption 800 4000 30 -50% No. of farm businesses created Income improvement No. of women entrepreneurs 5 25 50% 0 100% 10 Rural Entrepreneurship
Magasool Program Success Metrics Current Status Target for 2017 Soil Health Improvement No. of farmers reached Soil fertility improvement Resulting yield improvement 15 To be measur ed 100 Food grain processing No. of farmers reached Profit Improved for farmers No. of direct market links 30 20% 6 200 20% 30 Staff recruitment & training No. of employees Wage improvement No. of women employees 25 50 – 100% 8 100% 40 Policy & Advocacy No. of policy makers reached through meetings Policy changes effected No. of farmers benefitted 5 20 0 0 5* 200, 000 No. of farmers reached Cost savings on pesticides 0 NA 1000 50% Integrated Pest Management * In talks to change crop insurance, yield measurements, soil testing uptake, improved delivery of farm mechanization subsidy & high yielding seeds
Challenges • Market risks : If a services provider working with rural poor becomes concentrated and thereby a powerful stakeholder and influencer in a region, there are several interferences by political parties and vested interests. Magasool avoids this risk by spreading itself thinly across geographies. We work across 7 districts, and take care to isolate our activities from political interference. • Execution risks: Tamil Nadu is nearly 50% urban and getting more urbanized, making it challenging to identify and retain skilled local anchors at the village level.
Challenges • • • Human Resources: Gaining and maintaining client trust is very important to any service model, and our model relies very strongly on local anchors to gain this crucial community trust. Identifying suitable local anchors has been a challenge for us given rampant alcoholism and extreme poverty in rural Tamil Nadu. A 2015 survey by the Centre for Studies of Developing Societies, New Delhi showed that more than 62% of Indian farmers want to quit agriculture and move to cities; only 18% wanted their children to become farmers. Magasool can only become successful if it manages to transform agriculture from a reluctant profession imposed by tradition to an occupation of choice providing competitive remuneration and job satisfaction.
THANK YOU
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