ICRISAT Archival Report 2006 - The seedlings of success in the ...

Clearly it will take some more seasons to judge the strength of the research-farmer-industry coalition. But if that
proves sustainable, being generic in nature this ‘coalition approach’ can suitably be adapted to other crops and
in other places, where market linkage is constraining crop production.
Collaborating Institutions and Scientists:
ILRI
: Michael Blummel
ANGRAU
: A Rajasekher Reddy
ICRISAT
: P Parthasarathy Rao, BVS Reddy, CLL Gowda, K Gurava Reddy
Feed Industry
: CLN Rao
Farmers Federation : P Chengal Reddy
Poultry Federation : Ch. Janardhana Rao
Linking small scale sorghum and pearl millet producers to processors through innovative market linkage
models (Asia)
Purpose: The CFC project titled “Enhanced utilization of sorghum and pearl millet grains in the poultry feed
industry to improve livelihoods of small-scale farmers in Asia” aims at improving the livelihood of farmers of
coarse cereals in designated clusters of villages in Maharasthra and Andhra Pradesh states of India besides
having its operations in China and Thailand by increasing their farm income by 15% in three years. The role of
savings in marketing costs and increase in farm incomes has been considered to be important besides increasing
productivity for enhanced income of farmers.
Background: Presently the farmers in the project area are following the traditional supply chain for sale of
sorghum and pearl millet where the produce moves through a series of intermediaries who add cost at each
successive step in the chain. The chain has incorporated many deficiencies and has become inefficient in course
of time. Several innovations in supply chain of industrial products such as maize, cotton and barley are the result
of either farmers uniting themselves as co-operative unions to empower themselves or corporate intervention for
procuring their raw materials. There are many benefits for farmers as well as corporate sector in supply chain
innovations. The farmer gets assured price, technical guidance and improved access to inputs and credit while
the corporate sector gets assured supply of superior quality raw material.
Results: Drawing insights from various supply chain innovations and the features associated with marketing of
sorghum and pearl millet for poultry feed, “bulk marketing” has been suggested as the best supply chain
modification to be implemented in project areas for promoting sorghum and pearl millet for poultry feed.
Besides increasing the bargaining capacity of farmers the advantages of bulk storage and marketing arise from
seasonal increase in prices of coarse cereals as well as ability to cater to other industrial sectors (alcohol,
breweries, starch etc.) now dominated by alternative cereals. Hence effective storage management along with
market intelligence to make sales decisions will be an important component of bulk marketing.
Bulk marketing refers to the process of selling bulked produce directly to the bulk buyer (processor) in order to
minimize transaction cost and realize mutually beneficial price (for both the buyer and the seller). Under the
conventional agricultural supply chain farmers sell their produce in the markets through commission agents.
Product gets exchanged between many hands before reaching the final consumer.
The modified supply chain generated from the bulk marketing eliminates the drawbacks of the conventional
supply chain and makes the market perfect for both the farmers and the buyer. The supply chain generated out
of bulk marketing eliminates many conventional middlemen by directly linking the farmers with the processors
or the bulk buyers. Since the farmers get united, their requirement of inputs is also in bulk and they get linked
with the input dealer. This ensures supply of quality inputs at reasonable prices. The input dealers also save the
money spent on distribution and publicity. This benefit of reduced costs is passed on to the farmers. Bulking of
produce creates collateral security for the farmers’ produce against which the banks can extend loans. This
prevents exploitation of the moneylenders. The source of information also gets enhanced, as the farmers are able
to get the first hand information on market prices and quality of produce from the ultimate buyers.
This enhanced supply chain provides tremendous scope for linking the buyers with the farmers. As bulk
marketing ensures assured supply of quality produce at reasonable rates, buyers come in direct contact with the
farmers and give their quality requirements for the produce which the farmers tries to maintain. As the
involvement of middlemen is eliminated the transaction costs are cut down paving way for better profits to the
buyers. The benefits of bulk marketing would directly come to farmers and result in enhancing their income,
thereby fulfilling the goal of increasing income of small-scale sorghum and pearl millet farmers. It is suggested
that the local arhatiyas (commission agents) and the brokers should be made a part of the modified chain in the
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