A Tata Chemicals official stationed in Babrala, Uttar Pradesh, Mr Singh was part of a recent training programme for farmers – an initiative TKKs regularly undertakes – which addressed some of the problems the agricultural community in the region faces.

"Local farmers suggested that since [the TKKs] were providing training, it would be a good idea to sell our products there too," says Mr Singh. Tata Chemicals set up a retail outlet at each kendra, where it stocks all kinds of products: seeds, fertilisers, spades, shovels and, on an experimental basis, Tata Salt. "The TKK fulfils all of a farmer’s agricultural requirements."

That was the aim behind the setting up of the kendras. They were conceived as a one-stop platform for farmers, offering holistic solutions from the seed-sowing stage to post-harvest management and the marketing of agricultural produce. Each TKK is equipped with all kinds of infrastructure utilities, which enable them to act as comprehensive resource centres to fulfil the needs of the franchisee TKK network. The agricultural products, services and information that TKKs provide make the farmer an equal partner in the development process.

"In the TKK network, we appoint one franchisee in a 10-km radius. He caters directly to the needs of the farming community in surrounding areas. Each franchisee has about 60-70 villages under him, which means about 1,500 farmers. We don’t allow any intermediaries in the channel. The franchisee provides services at various levels, quality inputs at moderate prices, farm machines, etc. Some franchisees also lease out farm machines as these are expensive and cannot be purchased by farmers. Basically, the franchisee takes care of relationship-building with the farmers."

"The kendras also conduct a variety of training programmes to develop a stronger relationship between the farmer and the franchisee. Additionally, we have programmes such as those that encourage farmers’ children to excel academically. We have instituted a special prize for children who stand first in classes V and VIII (we give them a cash award of a Rs 1,000 each)."

In this interview, Mr Singh takes time out to explain what the kendras and their activities are about.

How much does the franchisee network help Tatachem’s sales? Earlier the wholesaler took care of sales; now the responsibility is yours.
This arrangement works much more smoothly than the earlier system of selling to wholesalers. That’s because a wholesaler will never work exclusively for Tata Chemicals. He may be a wholesaler for a number of other companies, so his loyalties are questionable, and one is always under threat from competitors. Therefore, we prefer to deal with franchisees who work exclusively for us.

What kind of inputs do franchisees seek?
Usually, farmers seek knowledge inputs, like how much fertiliser to put, which fertiliser to use, the latest farming techniques, etc. Each franchisee or his employee makes daily visits to his assigned pool of farmers. And all TKKs maintain similar standards as far as services and other parameters are concerned.

Each franchisee has to invest about Rs 75,000 while starting out (this is not reimbursed by Tata Chemicals) and most of them have cash reserves of about Rs 3 lakh. The franchisee benefits from the deal in that he has exclusive sales rights to Tata Chemical products, so he has a virtual monopoly in the surrounding markets.

The franchisees are, typically, businessmen, though there have been instances of unemployed agricultural graduates entering this business. Most have considerable domain expertise and significant cash reserves, besides, of course, localised knowledge. Franchisee outlets have different designs but they follow a standard format in terms of what is being offered to farmers.

What is the status of Tatachem’s Geographic Information System?
We have digitised nine districts in all and we have developed a concept model for a village that comes under the Ujani TKK. Demographic information is available for 67 villages and we have prepared the fertility data for one village. This task can be outsourced, but we chose to do the job ourselves. We will be launching soon in Ujani.

This is the first initiative of its kind in India. Kribhco is talking about it, but nobody other than Tata Chemicals has made substantial efforts in this direction. There are companies that run service centres, but the idea of running a business by building up a network of kisan kendras was pioneered by Tata Chemicals. Besides us, there is very little non-governmental initiative in Punjab, Haryana, Uttar Pradesh, Bihar and West Bengal, the states where we are active. But there are projects of a similar kind being done in Tamil Nadu by the M. S. Swaminathan Research Institute.

Besides effecting a transfer of technology, we are also successfully using this concept to conduct business, and this is a groundbreaking effort. We have started libraries where farmers can access research papers, publications and magazines about or relating to agriculture and crops. These serve as a valuable knowledge base. Each TKK also has a soil-testing laboratory which evaluates, for instance, the nitrogen, phosphorous and potash content in the soil. We make recommendations based on the constitution of the soil.

Though the Uttar Pradesh government has similar laboratories in each district, these are largely defunct. Our laboratories can even analyse the composition of micronutrients. We did this for free until recently, but we now charge a nominal amount (maximum Rs 50). Only 10-15 per cent of farmers really value and use these reports. Though a whole lot of them express an interest in soil analysis, most have a cash problem that prevents them from actually implementing our recommendations. Detailed soil analysis requires expensive equipment that government laboratories do not possess, at least not in Uttar Pradesh.

How much testing do you do?
About 250 samples per month, only 15 per cent of which are followed up. But the number will come down now that the service is not free. Eight mother centres (out of 40) are fully functional. We have purchased land for 12 more, but construction hasn’t commenced there yet. We are starting operations in all these locations by leasing out the premises. The cost of operations comes to about Rs 50,000 per month, and construction costs about Rs 2.5 crore totally. These centres are entirely Tata-owned.

Can you give us some more details about your training programmes?
Each franchisee conducts a series of training programmes for his cluster of villages; these are large-scale farmers’ meets. We call one woman once a year from each village, and she is also trained. Right now we are enrolling only one member from each village because we want to restrict our scale of activity.

Most training programmes are held twice a year, once in June and once in October-November. The large-scale training programme is more about relationship-building. For shorter training programmes, farmers are bought in a chartered bus for what is a day-long affair. There are about 20 franchisees associated with the Tata kisan parivar. Only 16 are in operation, so 16 training programmes will be held every season. The programmes usually last between 20 to 30 days.

What are the other services that the kendras offer?
Through caretakers, we run canteens where the food is free for farmers. In the Tata kisan parivar we charge an annual fee of Rs 200 when we enrol a member. The farmer is then entitled to life insurance for up to Rs 1 lakh. He is also given training and preferential treatment for all other services. The member is our preferred customer. So far we have settled the insurance claims of 22 members. There was a little resistance to the idea initially, but the farming community has accepted it now. This is largely because we reimburse the farmer’s claim within a month. We are trying to add some more facilities, like buy-back schemes, crop insurance and a credit facility.

Last year, we started a buy-back scheme for food grains, that is, we planned to buy grain from farmers at the market price. But the government insisted that we buy it at the minimum support price (MSP), which was higher than the market price. Our business plan was to tie up with multinational companies such as Cargill, to whom we were planning to sell the grain. But if the MSP is, for example, Rs 6.10 and the market price is Rs 4.50, it does not make economic sense for us. However, we plan to take this up later.

One of the biggest problems in Indian agriculture right now is the absence of information channels and marketing linkages. For instance, the market rate announced in the mandis is very different from the price at which food grains will actually be sold. At the mandi the farmer is heckled and browbeaten by middlemen until he finally sells at a price determined by them. The nexus is very strong, and it’s difficult for farmers to circumvent this. Our effort was to provide an alternative forum for the farmer to sell his produce.

We have also started some crop insurance schemes (we are discussing this with the General Insurance Corporation). We are also thinking of tying up with Tata-AIG for the same purpose. For the credit facility, we had two rounds of discussions with Rabobank and ICICI, but a lot of work remains to be done on this front. Right now, the only credit available is from the franchisee.

We have a resource centre and a franchisee network. All farmers are linked to these franchisees and, because it is linked to the business, intermediaries have no role to play here.

The view from the other side