Definition of Entrepreneurship in Agriculture

Entrepreneurship in Agriculture

Over 85% of the rural population in India is dependent on agriculture for their livelihood. About 50% of them being poor, most of their earnings are spent on meeting their basic needs, particularly food. With the increasing population over the last five decades, their per capita share of land and water resources has reduced substantially. As a result, rural people are faced with the problem of unemployment. Inspite of agriculture being a major source of livelihood, the productivity as well as profitability in agriculture have been significantly low in the country. While the productivity can be attributed to illiteracy, lack of awareness, poor dissemination of technology, inadequate investment in agricultural inputs and poor communication and information services, lack of profitability is mainly due to inadequate and inefficient infrastructure required for forward and backward integration, poor post harvest and processing facilities and poor connectivity with market, resulting in exploitation by large number of middlemen.

Traditionally, the farmers have been dependent on the Agricultural Extension Agencies of the State Government for information, input supply and marketing services. Over the years, these agencies are not being able to cope up with the growing responsibilities and specific needs of the farmers. To overcome this problem, Farmers’ Cooperatives have been promoted to supply various agricultural inputs and organise the marketing of farm produce. Although, this was an excellent concept, most of these cooperatives could not carry out the work economically and efficiently due to lack of commitment from the elected leaders and unfair trade practices by the competing traders. The farmers, not realising the inability of the extension agencies, are still dependent on the Government and external agencies to help them in managing their agri-business.

Indeed, a major problem of Indian farmers is that, as agriculture is considered as a family tradition, a majority of the farmers continue to practise what their forefathers or their neighbours practised. There is a need for change. Agriculture must be considered as an enterprise, which should have a sound management back-up. As in any other enterprise, there should be proper planning about demand forecast, choice of technology, inventory of resources,.need for external inputs, skill level of the available human resources and their training needs, infrastructure and services needed for carrying out various operations and marketing. This change in the mind set among the farmers and Agricultural Extension Agencies is the primary step for promoting successful entrepreneurship in agriculture.

Need for Entrepreneurship in Agriculture & Allied Sectors

In the absence of local entrepreneurship, the opportunities in agriculture are high jacked by outsiders, particularly the urban businessmen and traders, leading to exploitation and deprivation of employment for the farmers. Considering the growing unemployment in rural areas and slow growth of the agricultural sector, it is necessary to tap the opportunities for promoting entrepreneurship in agriculture, which in turn can address the present problems related to agricultural production and profitability.

Agriculture and allied sectors are considered to be the mainstay of the Indian economy. They are the important source of raw material and demand for many industrial products, particularly fertilizers, pesticides, agricultural implements and a variety of consumer goods. They contribute nearly 22 per cent of Gross Domestic Product (GDP) of India. About 65-70 per cent of the population is dependent on agriculture for their livelihood.

‘Agriculture and allied’ industry is further divided into several segments, namely:- ­horticulture and its allied sectors (including fruits and vegetables, flowers, plantation crops, spices, aromatic and medicinal plants); fisheries sector; animal husbandry and livestock; and sericulture. India’s varied agro-climatic conditions are highly favourable for the growth of large number of horticultural crops, which occupy around 10 per cent of gross cropped area of the country producing 160.75 million tonnes.

India is the second largest producer of fruits and vegetables in the world. It is also second largest producer of flowers after China. It Is also leading producer, consumer and exporter for spices and plantation crops like tea, coffee, etc. While, sericulture is an agro-based cottage industry. India is ranked as the second major raw silk producer in the world.

2006-2007 reached the level of 100.9 million tonnes (provisional), which has placed the country on top in the world in this field.

The Ministry of Agriculture is the main authority in India for regulation and development of activities relating to agriculture, horticulture, fishing, animal husbandry, etc. It is implementing various schemes and policies for the sector through its divisions like ‘Department of Agriculture and Cooperation’ and ‘Department of Animal Husbandry, Dairying and Fisheries’. Further, the Ministry of Food Processing Industries is actively engaged in promotion of entrepreneurial activities in the segments of fish processing as well as fruits and vegetables processing. Besides, commodity boards, like tea board, coffee board, rubber board, medicinal plants board, etc. have been set up to boost the growth of the sectors like tea, coffee, rubber, medicinal plants, respectively.

Types­ of Enterprises

While promoting entrepreneurship, we may consider different types of enterprises in agri-­business.

Farm Level Producers: At the individual family level, each family is to be treated as an enterprise, to optimise the production by making best use of the technology, resources and demand in the market.

Service Providers: For optimising agriculture by every family enterprise, there are different types of services required at the village level. These include the input procurement and distribution, hiring of implements and equipment like tractors, seed drills, sprayers, harvesters, threshers, dryers and technical services such as installation of irrigation facilities, weed control, plant protection, harvesting, threshing, transportation, storage, etc. Similar opportunities exist in the livestock husbandry sector for providing breeding, vaccination, disease diagnostic and treatment services, apart from distribution of cattle feed, mineral mixture, forage seeds, etc.

Input Producers: There are many prosperous enterprises, which require critical inputs. Some such inputs which can be produced by the local entrepreneurs at the village level are biofertilizers, biopesticides, vermicompost, soil amendments, plants of different species of ftuits, vegetables, ornamentals, root media for raising plants in pots, agricultural tools, irrigation accessories, production of cattle feed concentrate, mineral mixture and complete feed. There are good opportunities to support sericulture, fishery and poultry as well, through promotion of critical service facilities in rural areas.

Processing and Marketing of Farm Produce: Efficient management of postproduction­ operations requires higher scale of technology as well as investment. Such enterprises can be handled by People’s Organisations, either in the form of cooperatives, service societies or joint stock companies. The most successful examples are the sugar cooperatives, dairy cooperatives and fruit growers’ cooperatives in many States. However, the success of such ventures is solely dependent on the integrity and competence of the leaders involved. Such ventures need good professional support for managing the activities as a competitive business and to compete well with other players in the market, particularly the retail traders and middlemen.

Problems of Entrepreneurship Development

Entrepreneurship in agriculture is not only an opportunity but also a necessity for improving the production and profitability. However, the rate of success is very low in India, because of the following reasons.

For most of the farmers, agriculture is mainly a means of survival. In the absence of adequate knowledge; resources, technology and connectivity with the market, it is difficult for the illiterate small holders to turn their agriculture into an enterprise.

Before promoting various services by self employed persons, there is a need to create awareness among the farmers, who are the users, about the benefits of these services.

For popularisation of services, the present practise of providing free service by the Government agencies should be discontinued. In fact, many farmers, particularly the politically connected leaders are of the impression that the government is responsible for providing -extension and technical advisory services to the farmers. However, over the years, the credibility has eroded and the services of these agencies are not available to small farmers, particularly those living in remote areas. Nevertheless, the concept of free service makes the farmers reluctant to avail of paid services, offered by the local self-employed technicians.

The self-employed technicians need regular back up services in the form of technical and business information, contact with the marketing agencies, suppliers of critical inputs and equipment and research stations who are involved in the development of modem technologies.

There are several legal restrictions and obstacles, which come in the progress of agri-business, promoted by the People’s Organisations and Cooperatives. Private traders engaged in such business tend to ignore these rules and disturb the fair trade environment.

People’s Organisations often hesitate in taking the risk of making heavy investments and adoption of modem technologies, which in turn affect the profitability. With low profitability and outdated technologies, farmer members lose interest in their own enterprises as well as in that of their leaders.

Strategy for Promotion of Successful Enterprises

Considering the present problems faced by the entrepreneurs engaged in agri-business, it is necessary to create a congenial atmosphere in the field. Some of the important conditions necessary for successful agri-business are presented below:

There should be a unanimous option among government officials and farmers about the need and benefits of promoting self-employed youth or private entrepreneurs to facilitate the farmers to enhance agricultural production and profitability.

The Government should discontinue the practice of providing free services in those sectors where the work has been assigned to private entrepreneurs.

The technical skills and ability of the entrepreneurs should be evaluated to ensure high standards. There should be a monitoring agency to check the quality of the services and the charges collected from the farmers to avoid exploitation.

To popularise the services of the entrepreneurs, the Agricultural Extension Agencies and Farmers Organisations should give wider publicity about the services available to the farmers. Such publicity can enhance the credibility of the services provided by the entrepreneurs.

The Government should encourage the entrepreneurs by introducing various concessions and incentives.

Networks of entrepreneurs may be established to share their experiences. These networks can also establish a close link with Research Institutions and Universities to become acquainted with the latest research findings and seek solutions for their field problems.

BAIF’s Experience in Promoting

Entrepreneurship in Livestock Development

Bharatiya Agro Industries Foundation (BAIF), a non-profit, Public Charitable Trust in 1967 to replicate his experiences in rural development has been promoting livestock husbandry, particularly dairy husbandry as an important activity for sustainable livelihood in rural areas. Promotion of dairy husbandry was preferred over agriculture as the cows are equally well distributed among the small and large land holders. With severe under-employment, small farmers will be able to make best use of livestock to generate gainful self-employment.

BAIF’s strategy has been to utilise the non-descript, low productive cows as seed bed for producing high yielding crossbred cows, which come to milk production at the age of 3 years and yield about 2500 kg milk per lactation. Such cows, which are worth ` 15,000-20,000, generate a net income of ` 5000-7000 per annum. Apart from cash income, these cattle. boost agricultural production, through enhanced production of farmyard manure and supply of bullock power. Presently, this programme is benefiting 15 lakh families in 25000 villages.

Over 65% of these families were below the poverty line while taking part in this programme. Presently, at least 7-8 lakh families, maintaining 2-3 crossbred cows have come out of poverty. Dairy husbandry has become an important supplementary activity in the sugar belts of Western Maharashtra. However, in arid and semi-arid regions of Gujarat and Rajasthan, where agricultural productivity is uncertain due to erratic rains, dairy husbandry has turned out to be the major source of livelihood.

To promote dairy husbandry, BAIF has established mobile livestock breeding and extension services by employing trained paravets. These unemployed local youth, either graduates or college dropouts are trained for 4-6 months in livestock breeding, pregnancy diagnosis, vaccinations, health care, detection of health problems and providing first aid and management of livestock. They were then posted in the field to provide door-to-door services. Creation of awareness and motivation in addressing the problems related to livestock management is also a part of their responsibility apart from proving breeding services, using frozen semen of superior sires. With reliable door-to-door service, which was initially free, farmers developed confidence to expand their herd size and take dairy husbandry as an excellent opportunity for income generation. In Maharashtra, thousands of graduates have settled in their village with dairy farming as their business. It is very common to see young farmers in Western Maharashtra, maintaining 15-20 cows, in well build cattle sheds connected to a biogas plant, with a significant portion of their fields allocated for intensive forage production.

Looking to the profitability, the demand for breeding services has increased in the region. In the absence of sponsorship from the State Government or Fanners’ Cooperatives, farmers were prepared to pay for the breeding services. Hence, many unemployed youth came forward to undertake training in livestock breeding and extension services, at their own cost. BAIF provided them equipment on lease to operate the centres, by collecting service charges for various services provided to the farmers.

These self-employed paravets need regular support, by way of supply of frozen semen, liquid nitrogen, straws, AI guns, vaccines etc. for performing artificial insemination, vaccination and deworming. In addition, many of them have also started supplying cattle feed, mineral mixture, seeds for forage production and other inputs required by the dairy farmers. These paravets generally earn ` 4000-5000 per month, within 2-3 years of establishing their service. In about 8-10 years, they are able to enhance their capabilities and reputation and earn ` 8000-15000 per month. Indeed, many of them are already well respected in the community.

Looking at the success in promoting self employed paravets in Maharashtra, BAIF has promoted a similar activity in Gujarat, Rajasthan and Uttar Pradesh. In fact with the system of collecting service charges, fanners looked at the programme more seriously and demanded better quality services. With initial support for 3-4 years, till the impact of the breeding programme is realised by the local fanners, the livestock development centre, each covering 5-8 villages can be managed by self-employed paravets, throughout the country. This programme can provide self-employment for one lakh youth. With these paravets, fanners will be assured of superior quality breeding and health care services and can supplement their income through livestock management.

For successful replication of this programme, there is a need to organise training for the youth, provide loan for procuring equipment, arrange regular supply of necessary inputs at their headquarters, provide technical back-up and regular monitoring for quality control.

With initial establishment of breeding services, they can also take up vaccination against important diseases, deworming, supply of feeds and other inputs required by dairy farmers.

Milk collection and decentralised processing at the block level or in small towns and installation of milk processing units of 15000-20000 litres capacity will also have good scope. Such dairies can be managed directly by the primary milk cooperative societies, avoiding several intermediate agencies. This will ensure transparency as well as efficiency, thereby benefiting both producers and consumers. In addition, additional employment can be created at the village and block levels. For promoting such mini dairies, there is a need to facilitate agencies, which can provide technology, equipment and various consumables of standard quality including some popular brands to attract the investors. Suitable policy support is also needed to promote such ventures.

Entrepreneurship in Horticulture Sector

Similar success stories have also been recorded by the poultry industry and fruit growers in different parts of the country. BAIF has promoted agri-horti-forestry on degraded lands, primarily to rehabilitate tribal and small farmers. This programme, popularly known as Wadi, fruit crops such as mango, cashew, custard apple, tamarind, etc. are being promoted. BAIF decided to produce grafted plants through the participant families itself The tribal women learnt grafting and nursery management techniques within a few weeks and started raising grafted plants in their backyards. BAIF offered a minimum support price of ` 15, while the tribal women were also allowed to sell in the open market. BAIF also provided inputs at cost and supervised the quality of the plants raised in the nursery. As a result, the tribals in Vansda block are now producing over 10 lakh grafted mangoes every year. Earlier, during the initial years of the wadi programme, BAIF had to procure mango grafts from the coastal region of Maharashtra, which cost more than ` 50 per plant. This transformation could take place because of assured market and technical guidance provided by BAIF.

This programme could also promote several enterprises, such as production of vermicompost, pots for pitcher watering, servicing and maintenance of hand pumps, drip irrigation units, repair of pumpsets, production of housing materials, food processing and trading. These activities could be successfully undertaken by the tribals, because of suitable planning, training, input supply, market linkage and regular monitoring about the quality and prediction of-demand.

Direct selling of agricultural commodities to consumers in urban and semi-urban areas is another important opportunity, not only to develop farmers’ own enterprise, but also to enhance the profitability by meeting the quality standards and value additions. Many participants of the wadi programme as well as other agricultural development programmes, who could sell their food commodities in the local markets as well as in the neighbouring towns, were able to gauge the minds of their customers and accordingly, they could change the quality and presentation of their produce. This also brought about an increase in confidence, apart from better price recovery. Based on the consumers’ demand, the farmers could take up cultivation of different varieties of fruit and vegetable crops.

Such direct marketing can be promoted throughout the country. This can be done by allocating some common places in the towns for weekly markets, where farmers can bring their produce, as is done in Andhra Pradesh through Ryat (farmers’) bazaars. To facilitate easy transportation of farm produce, buses plying to villages should have additional storage space. The commodities sold in market should be exempted from octroi and other taxes.

Apart from such weekly markets, seasonal fairs for agricultural commodities can also be organised during certain fixed periods every year such as before Diwali and Holi festivals or after the harvest of a season, when farmers or their groups can bring their produce in bulk and urban consumers can purchase their annual requirements. Farmers’ participation in such trade fairs can help them to understand their consumers better and improve the quality of their produce in future.

Conclusion

There is a need for efficient support organisations to monitor the activities of small enterprises. Prediction of the future demand, introduction of modem technologies, cost control and business expansion are the important areas, where entrepreneurs need regular support. Suitable legal support may also be required to protect the traders engaged in unfair trade practices.

It is better to promote agro-based enterprises in rural areas, as the local people have the required skills and most of the businesses help the entrepreneurs to ensure food security. The outputs of such business have ready demand even in rural areas and hence the market opportunities are better. With a strong agro-based programme, non-farm activities can also be initiated when the entrepreneurs are more experienced and capable of taking risk and can manage the programme better. Promotion of direct marketing by establishing close interaction between producers and consumers will further enhance the benefits, while encouraging a large number of unemployed rural youth to turn into micro­-entrepreneurs and traders. Sustainable agriculture is an important issue in our country. A balance between people, Planet and Profit is necessary to create a sustainable agriculture. Entrepreneurial qualities are important for farmers to find this balance for his particular situation. The participatory approach seems to be a fruitful method to improve entrepreneurial qualities of farmer.