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Our direct procurement enables farmers to get better prices: Marico

Marico Limited, a leading company with coconut oil brands - Parachute and Nihar Naturals - is empowering farmers through its massive procurement and outreach programmes. The company procures 10 percent of total coconut produced in India and buys it directly from farmers through its collection centres. JITENDRA MAHAJAN, Chief Supply Chain Officer, at Marico talks to MOHD MUSTAQUIM about procurement and its outreach programmes


Jitendra Mahajan
Chief Supply Chain Officer, Marico Ltd
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Marico Limited, a leading company with coconut oil brands - Parachute and Nihar Naturals - is empowering farmers through its massive procurement and outreach programmes. The company procures 10 percent of total coconut produced in India and buys it directly from farmers through its collection centres. JITENDRA MAHAJAN, Chief Supply Chain Officer, at Marico talks to MOHD MUSTAQUIM about procurement and its outreach programmes

 

Even though India is the third largest coconut producer in the world, there have been challenges for Copra farmers in getting right market access. In this scenario, how would direct procurement be helpful for them?
Though India is the third largest coconut producer in the world, most of the farmers are marginal and farm holdings are relatively smaller. More than one million farmers are directly involved in coconut cultivation. Direct procurement enables such marginal farmers to access fair and transparent prices at their doorstep. They also become aware of the expected quality norms and taking a cue go back and improve their produce so that they realize better price in their next visit.

Does APMC Act create any challenge in direct procurement model? If yes, how do you tackle them?
APMC act is very much applicable for agriculture produce and Copra is no exception. For direct procurement we ensure compliance with respect to APMC Act and pay necessary cess / levies as required. More than the cost, APMC rules do obstruct free movement of goods from farmer to consumer and also add lots of administrative hassles across the value chain.

Kindly shed some light on your innovations in Copra procurement, directly from farmers.
A decade back, when Marico started collection centers for direct procurement, we established scientific and transparent methods of quality measurement with pricing fairly linked actual quality received. This gives farmers confidence that they are getting right price for their produce.
From 2012, we started our loyalty programme ‘KERA RATNA’. In this, we provided non-monetary incentives to farmers on demonstrating loyalty in supplies to our collection centers. On each supplies and targets set out, the farmer gets loyalty points which could be redeemed at the end of the financial year through pre declared rewards. Subsequently, the non-monetary incentives are converted into monetary benefits wherein the farmer gets rewarded every quarter once he fulfills the supplies for which targets are set.

We have extensively used IT and telecom platforms for effective communication with farmers. Daily buying prices are visible through electronic display board placed at each collection centre. Online computerized bills are given to farmer on each transaction mentioning the quantity, quality and price. After each transaction SMS is sent to the farmer about details of transaction so as to ensure transparency even when he sends material through his help.

How many Copra Collection Centres do you run and in what geographical areas? And how much Copra is procured from there?
Over past decade, we have expanded our collection center base to about 24, located in Tamil Nadu and Kerala. We have consistently increased share of buying from these centers with more Copra being procured through this route currently than traditional route. We currently source from more than 1,500 farmers directly through collection centres.

How has the programme benefited the farmers? Has it been encouraging for them to produce more?
Farmers traditionally depended on terminal markets in order to sell their produce which may involve transporting produce for anywhere between 50-150 km from their farms. Further, most of the information like buyer interests, prevalent prices would be known to him only after taking his produce to these markets. Whereas, our centers in Kerala and Tamil Naidu being closer to plantation areas, help farmers to bring their produce to a nearest selling point by avoiding huge transportation and other allied costs. Further, he is assured of right price and transparency in quality testing, weight estimation and inspection process. Since buying requirement being throughout the year for Marico, he can rest assured of definitive buyer as long as he has produce to sell.

How is the pricing policy and how do farmers get paid?
Marico believes in fair pricing and also keeps price fixed for the day and does not vary price based on market sentiments within the day. Across Tamil Nadu and Kerala, Marico buys from farmers at its various collection centers at a fair price and Marico bears all the cost of transportation to its factories and all required taxes and levies. Farmers also get instant payment on delivery of Copra at centers.

How do you maintain the transparency in the entire process?
The daily buying price is displayed in the Digital Rate Display Board which is effectively controlled by Central Procurement Team of Marico to ensure transparency in rate communication. The quality and quantity of the produce is measured instantly in calibrated standard instruments. We take efforts in sustaining and enhancing transparency in the process continuously as retaining farmer trust is most important for making these initiatives sustainable for both the parties.

Do you also run any farmer training programme for applying best practices in coconut growing?
It is our endeavour to disseminate best practices to large farmer base on ongoing basis in order to improve coconut production in the country as well as to retain remunerative status of coconut farms. We have dedicated team of agriculture experts and field personnel who relentlessly work towards this cause. In past 18 months, the team conducted successful farmer trainings which includes best practice awareness, learning from success stories and imparting knowledge on new development. This initiative has benefited more than 4,000 farmers in Tamil Nadu and Kerala as on date.

Apart from conducting generic training programmes, we also run specific programmes to demonstrate benefits of practicing these learnings through our productivity programme. Farmers are enrolled on a voluntary basis under this programme who seek scientific help on enhancing farm productivity. Our team then visits these farms on regular intervals, and offer solutions to various problems like diseases, pest attacks, nutrient deficiencies, hybrid selection etc. These registered farms are monitored for success as these would be case studies which others in vicinity can learn from .Today, our experts are managing more than 180 farms registered with us and are showing early signs of productivity improvement.

Please throw some light on your Cluster Farming Programme?
Marico helps farmers to form clusters, conduct meetings and distribute the agri-inputs received as part of cluster activities which was promoted by Coconut Development Board in 2008. Our Copra collection centers in Malappuram district partnered actively with the Coconut Development Board to rollout and execution of the programme in which the center uses its reach to farmers to form clusters to avail the benefit from Government.

The cluster programme has come as a big revival for coconut farmers in the area. The scientific farming practiced by a group of farmers started showing big improvement in coconut crop. Furthermore, planting intercrop basis soil condition resulted in additional income from the same farms. Collective initiatives in getting labour force, technical hands in using pesticides etc., has given a new boost to the coconut farming in the area. Till date, Marico has helped more than 7,000 farmers by mobilising and channelising the cluster activities for delivering targeted productivity improvements.

Would you extend the Copra Procurement Programme to more farmers in the future?
We have scaled up our sustainable sourcing programme over past decade and reached reasonable threshold which helps us meet our requirement on ongoing basis. Scale of operations would continue to grow to support our aggressive business growth planned for
future.  

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