BIG BASKET

Problem Statement

As big basket wants to expand its business alongside with improving farmers livelihood. There are some
major barriers which needs to be addressed to achieve the company’s objectives. One of the major
barriers is the changing the demand of the product due to changing trends and consumer preferences.
Consumer is now inclined towards healthier, convenient and highly differentiated food. But due to low
agricultural productivity, poor access to technology and lack of training to farmers these demand
opportunities are underutilized. Farmers are not aware about modern ways of farming like organic
farming, value addition in product etc. Another major concern is the inefficiency of the middlemen due to
which the quality of product is declining as well as many cases of farmer exploitation are arising. Most of
the agricultural operations in larger parts are carried on by human hand using simple and conventional
tools and implements like wooden plough. Little or no use of machines is made in ploughing, sowing,
irrigating, thinning and pruning, weeding, harvesting threshing and transporting the crops. This is specially
the case with small and marginal farmers who are short of capital. It results in huge wastage of human
labor and in low yields per capita labor productivity. There is urgent need to mechanize the agricultural
operations so that wastage of labor force is avoided and farming is made convenient and efficient.
A weak Sales network and a poor customer service are one of the strongest barriers to bring farmers and
customers onboard.

SOLUTION

Farming is not a bad business to be in - people will always need to eat. But farmers are at an inevitable
disadvantage as they need to find a market for their produce and one that will pay a good margin, so they
can maintain and grow their business. The major objectives of big basket are to help farmers to double
their income along with increasing awareness and bringing more farmer community on board and rekindle
the forgotten relationship between the makers and eaters of real food. The major hurdle in achieving this
is optimizing distribution channel. Also, another issue of concern is how to increase farmers connect with
organization and bring more farmers on community board. To address these issues, we are proposing a
model which would lead to Efficient integration of producers, suppliers and customers through revamping
the supply chain by moving towards having its entire supply chain capability driven by demand and the
demand forecast that considered suppliers’ capacity capabilities. (Exhibit 1)

This model involves segregation of farmers into organized and unorganized farmers. Collaborating
cooperative societies of organized farmers which would not only regulate the quantity and the quality of
the produce but also initiate value addition on behalf of big basket. The unorganized farmers need to be
included in the production process, further including female farmers in the process of value addition with
proper training and guidance. The idea of contract farming would serve best in this situation. This would
not only help connecting small and marginal farmers but also help institutionalize them by forming big
basket societies.
IMPLEMENTATION

Stage 1

Big basket needs to build systems that connect them in real-time to both suppliers and customers, thus
enabling the development of tighter relationships with both parties. They have to feed information from
customers back to suppliers and get a clear forecast of customer demand. And internally, they have to
improve the long-term demand visibility through constant collaboration between supply chain leaders
and the sales and marketing departments. Involving a small research team to conduct regular area wise
consumer focused market research to analyze and understand the requirements of the area and supplying
the information to the farmers through the channel who in turn would be producing the required quantity.
Research would be conducted regionally based on the specialization of crops grown and finally would
facilitate in forecasting the demand of a wide variety of crops. After that the supply can be classified into
two segments. The first segment deals with those produce that can obtained from organized farmers
which mainly involves large farmers who are capable of using the modern techniques of production. It has
generally been observed that these large farmers produce a wide variety of crops and vegetables which
they sell to various contractors or middle men who then sell that produce to bigger markets. Our first aim
is to intervene at this stage and give these farmers enough incentives so that they not only sell their
produce to us but also keep their produce at a better quality. Farmer societies can assist us in this regard
and thus our main focus should be regarding assimilating them in the process. This will reduce the
influence of middlemen and thus enhance the efficiency of the system.

The second segment would focus on produce of the small and marginal farmers. Contract farming would
help mobilize produce of these farmers. There are five models of contract farming namely - centralized
model, nucleus-estate model, tripartite model, intermediator model and informal model. We will do
region wise study before settling for a particular model and the suitable model might vary produce wise.
Our objective is not to substitute the middlemen but to realign the incentives in such a way that the
middlemen actually becomes part of the process of assisting our system. We would function mainly
through the creation of small big basket societies which would support the farmers in various overheads
like finance, pesticides, fertilizers etc. Basically, the big basket society would focus on raising the
capabilities of these farmers and thereby improve the quality of the produce. For this we require two
types of intermediator. The first one will be permanently employed by us and will help in including more
and more farmers in the big basket societies through various awareness programs. We will first provide
market research data to the second type would be more directly involved in the production techniques of
the farmers and hence would also enjoy sufficient independence.

The first intermediator will be given various districts based on the market research. Their job will be to
identify and segregate the farmers based on their scale of production and produce. He would ensure that
the big basket societies functions like a self-help group and the farmers interests are looked after. For
example, if he is looking after Anand district, he would first identify farmers growing wheat, banana and
vegetables and then segregate them based on small marginalized and large-scale farmers. Moreover, he
would be responsible for establishing and running various big basket societies in all the villages in the
district. He would have to look after the interest of the farmers and would have to give the farmers enough
incentives so that they sell the produce in the societies.

The second intermediator would be the existing middlemen in the village system. In certain district the
first intermediator or the big basket societies will not be able to completely subside the existing
middlemen. So, for our model to work it is necessary to include those middlemen by giving them certain
incentives. What we can do is, we can subcontract responsibilities to those middlemen and split the arising
profits between the farmers and the middlemen. This will reduce the incidence of esxploitation of the
farmers and the middlemen will also give proper impetus to the farmers to raise production.

The next major barrier is complexity and variability of consumer demand. Our structure would involve
creation of big basket societies comprising of 3-4 nearby villages. The produce of these societies would be
sent to a district center where the produce would be segregated and processed according to quality. From
these district centers, the finished and semi-finished products would be obtained which would either be
sent to distribution centers or the main offices for further processing. Our model would mainly promote
contract farming with integrated role of middle men called intermediator. Contract farming would also
create employment for various females leading to their upliftment and thus the existing self-help groups
will help in its mobilization.

In urban areas especially metro cities, there has been trend of rising demand for organic vegetables and
other value-added products which are grown with minimal use of chemicals. The consumers are willing
to pay high amounts. Thus, certain farms near the cities can be trained and sub contracted to produce
crops that will serve this cash rich niche market. The location of the farms near the cities will reduce
transportation costs and also the delivery time.

Proposal for contract farming

The farmers will be approached by the big basket research teams with help of first intermediator. Their
the farmers will be made aware about contract farming and our model. We would provide the farmers
guarantee regarding a minimum support price in case of crop failure or other factors like draught famine
etc. The farmers will also be assured that their entire produce would be purchased by us. Providing an
MSP would be a liability on the part if the big basket. So, to mitigate it the farmers will also be specified
a maximum purchasing price wherein even in case of heavy price inflation we will obtain the produce at
the maximum purchasing price. So, this will be done in a crop specific manner according to the market
scenario or condition of the region.