ICTs Use in Apple Supply Chain

Value chain for apple is being in operation in HP and Uttaranchal states implemented
jointly by SHGW, FFT, JVC and an NGO. Essentially it is a tripartite partnership
between Social Investors (SHGW), Corporate Partner (FFT) and Farmer Trusts (JVC)
facilitated by NGO (SJS) which also functions on behalf of SHGW. The consortias
approach is to empower small & marginal farmers through “SOCIAL VENTURING” in
Agri- Value Chain and facilitating information flow for COLLECTIVE ACTION. In the
partnership model, the (social) investor, the social conscious entrepreneurs and the
farmers become mutual dependant business partners.

The Context

• Marginalized and small farmers tend to get caught in the powerful grip of middlemen,
informal lenders and other intermediaries.
• Private sector hesitant of giving ownership of the value chain to the farmers (Social
venturing lacking).
• Loan and grant schemes seem patchy rather than structural solutions and therefore do
not have the desired effects.
• Investments are usually grant based (as they are not made on the basis of healthy
business feasibility planning) and therefore end up creating dependency upon external
support.

The Approach

The innovative approach aims to set up joint venture companies of farmers by organizing
farmers for establishing fair and feasible business entities through techno-managerial and
institutional capacity enhancement.

Guiding Principles

• Farmer Organization led socio-economic development (Creating Social

Organizations with Business Rigour)
• Corporate Social Responsibility through Responsible Businesses Practice and Fair
Trade
• Sustainable and Wise investments based on Feasible Business Planning,
• Invest in profitable agro-business ventures
• Loan, no free money
• Continued guidance for capacity by professionals
• Invest, but also plough back profits
• Collective action to save time, risk & costs
• Improve bargaining position
• Substitute intermediaries by farmer owned businesses
• Overcome difficulties of farmers in handling & logistics.

The Partners

1. SHGW: Strichting Het Groweme Woult-Green Forest Foundation, Netherlands is a

foundation which fund development projects in many developing countries. It funded
about 80 companies to the tune of 100 million $ in Tanzania and about Rs.1500 lakhs in
India. The foundation provides fund for infrastructure and back strapping.

The project is to organize farmers into a joint venture company and provide with a cold
chain to store the produce, organize transport, market and plan the entire process to make
it efficient and beneficial to farmers.
2. FFT-Fresh Fruit Technology: is the company to provide the infrastructure-cold storage
and transport. FFT as a corporate partner provide the technology needed. FFT is
primarily an equipment manufacturer from Netherlands and provides cold storage
technology for apple.

3. JVCs (Farmers Joint Venture Cos): NGO motivates farmers to establish joint
venture company by organizing farmers as a group and link them with an industry partner
for the technology. It mobilizes farmers to form JVC with focus on business. In 2007, it
started with 4 JVCs-2 each in HP and Uttaranchal. Two more are added in 2008. Now,
there are 7 trusts and 7 JVCs-5 in Uttaranchal and two in HP-covering about 3000
farmers from 140 villages. They produce about 500-800 tons apple/year. They export
about 20% of their produce. The farmers, though members of JVC, have free choice
either to sell direct to market or through JVC. JVC does sorting, grading, packing, storing
and marketing of the produce.

4. NGO (SJS): The NGO which has about 40 employees is the brain behind the entire
system. SJS motto is fostering farmer organizations with business rigour. They have
conceived, planned, mobilized funds and established an efficient supply chain with
farmers as business partners. NGO undertakes social study like social returns evaluation
to the foundation. SJS help farmers for management practice for their orchards and also
arranges for tests to the farmers to decide optimum harvesting time. The tests are
supported by Wanginen University, Netherlands. Thus SJS, provides planning and
coordination mechanisms besides linkages between partners. Thus NGO is the key supply
chain coordinator. As its motto is to establish good agribusiness in service of farmers
they have no financial stake in the entire business. However, NGO function as guardian
of the foundation and channels its investments and re-investments that accrue from year-
to-year profit from the business investments. Foundation has 50% share in the net profits
and NGO supports the foundation on further investments – either in the same venture or
new development projects else where in the country. It is now planning to add another
100 MT capacity cold storage this year.
SJS arranges help for grading of Apples in three grades, namely A, B, C. Distribution of
A, B & C apples from an orchard is A:B:C= 50:35:15. Typical f armers’ selling price in
2010 for the three grades is: A=Rs. 24/Kg; B= Rs. 19/Kg; C=Rs 5-11/Kg.

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Technology : Apple has to be precooled within 24 hrs after harvesting for long term
storage or else it starts releasing ethylene and cannot be used for long term storage. At the
cold storage, apple is first precooled and then kept in controlled atmosphere, maintained
at 1% oxygen respiration. The cold chain can keep apple for 10 months in controlled
atmosphere. Though man controlled atmosphere units in the country failed due to lack of
supply chain coordination, the joint venture company met success due to association of
various actors in making the chain efficient.

Transport of apples is done at two levels. After harvesting, it is moved to the nearest hub
by mule or donkey and from hub to cold storage by truck. The FET/JVC has its own
trucks that can move the produce to the storage within 1-16 hours after harvest.

The produce is tested for sugar in the juice, iodine test for starch level and pressure test
for firmness.

Business logic : The farmers were getting Rs.10-20 per kg as conventional marketing. In
absence of organized effort, during season, there use to be glut in the market and prices
were/are invariably low. The NGO conceptualized simple business logic of exploiting
season to off-season sale to reap 100% additional price realization through planned
harvesting, quick transport and storage. Farmers were convinced that 50% of the profits
in JVC are ploughed back to them. The other 50% profits that belong to the investment
foundation was also kept back in the country for further strengthening of business for
investment in infrastructure or expansion of business.

Process:

Membership to farmer bodies is open to small and marginal farmers, and they participate
through their trusts. The Farmer organizations are to be autonomous and independent
bodies. JVC organizes capacity Building through trainings and information to improve
quality yield.

Based on the data from Farm research on input use provided by the agricultural officials
located in 6 of the 7 JUCs covering 140 villages, NGO team prepares crop forecasting on
dynamic basis, estimates crop size, business planning, logistic arrangements such
provides crates, animals (mule/donkeys) to carry produce form farm to the hub and
transport to storage unit. NGO mobilized farmers in HP and Uttaranchal to form joint
venture company. The net profits after marketing are shared 50% by JVC to farmers and
other 50% to investors. Trading is immediately followed by payment to the farmers

For establishing a new business or expansion of current business, the NGO follows
systematic approach as detailed below.

Selection: Selection of commodity, social aspects and marketing.

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Feasibility: From utilisaton and viability of the business depending as investment, scale
of operation, net returns and social gains.

Fundng: For infrastructure and operational aspects, either from banks, govt. or
foundations.

Engineering : Site valuation, power requirement, transport arrangements, storage, human

capacities development, planning, etc.

Construction: putting the technology in place.

Operations: putting the business into practice, coordinating with various actors/agencies
across the chain.

Transport : planning and mobilizing farmers for harvesting as per the plan, animals to
carry produce to hub and road transport for transport to storage unit.

Management: The success of entire business is through good management practices

beginning from farm level, transport, storage and marketing. JVC provides backstrapping
in the form of linkages, technology training, planning and coordination. JVC plans
harvesting schedules and inform its field staff through phone/mobile, who in turn
coordinate with farmers and transport. The entire process is done for optimum capacity
utilization.

The farmer members of the JVC meet at least twice a year and share their experiences in
meetings. In one of the meetings they elect the committee to manage their JVC.

Linkage: NGO coordinates with the seven JVCs. It facilitates training of farmers and
training of trainers at GBPUAT. It also links with markets and various govt. departments.

ICTs use: The success of business to great extent lies in effective use of ICTs in various
business processes. NGO has collected/continuously collects various information
pertaining to farmers/farm operations and maintains database at its main office. It gives
the information for crop management interventions, planning harvest and transport
operations and marketing. The information is stored at its central office. JVC has field
staff to collect data from its farmer members. The NGO communicates with field staff
using phone/mobile/email, who in turn communicate with farmers either direct or by
mobile. Similarly, the other way on any issue of farmers.

It application software developed using open source softwares, i.e. Java (2E, Core java,
JSP, JavaScript, Java bin) and My SQL. The software, Quick Scan Tool, developed now
has a database of around 2500 farmers including their farm holdings and their capacity to
produce apples. The software has the capacity to calculate the total farm product
availability based on regions, villages, farmers and periods. It classifies data on different
grades of apples and their quantities available. Based on the market price of the present
date it can calculate the total market value of the apples available in particular period,

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region, and village and to the farmer. The software helps for financial planning for apple
procurement and distribution. The software has enhanced the profit of SJS and ultimately
farmers are gaining from the outcome of the profit.

The market prices and availability of apples from the farmers are communicated over
mobile phone and landlines. As most of the farmers do not possess mobile phone
(because of signal unavailability in their villages), the farmers communicate with SJS
through their leader in the village.

Fig.: ICT model of Apple Project

ICT Supported Information Flows

Off Season Information Management

• Farmer database is maintained to keep farm level records of Production
Estimation.
• Apple Production and Estimated Procurement Forecasting is done for Business
Planning.

Seasonal/ Logistical Information Management

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 • Weekly Apple procurement Plan to regulate operations and process flow during
the season.
• Logistic arrangement for Service Management - Storage and Transportation.

Financial Information Management

• Purchase of Apples from the Farmer and Billing for immediate payments..
• Actual Return Analysis for premium distribution.
• Analysis of Farmer Contribution at year end for Ownership Transfer.

Impact
• Concern for the community
through measurement of the
social returns on investments.
• The JVCs have internalized
business planning and
forecasting based on market
information on purchase
(procurement) and sales
pricing.
• Farmers and their families
are better off now due to their
enhanced earning due to the
JVC hand holding support.
• Farmers are now aware of
good practices for producing
quality goods that could be
exported.
A success story
Sri Jagmohan Singh Kaida is a success story. Mr Kaida
is native of Purol and is also of President of the Purola
Network Shaeb Sangrahan Bipanan Ebong Kalyan
Trust. He lives in joint family having 17 members. He
completed high school and all his children are going to
school. His cultivates Rice, Wheat, Peas, Potato,
Tomato, and Apple. He has 2.5 ha land under Apple
Cultivation with 600-700 apple plants and total
production annually 200-250 boxes (20 kg/box). Few
years back, his family use to make about Rs. 30,000
from apple. JVC changed the farmers in terms of what
to do like growing, practices, marketing, lending and
inputs use. With the formation of JVC it now increased
to Rs 50,000. Not only profits, they are using many new
techniques now. The new riches have changed the
Farmer’s Life Styles too. They now possesses mobile
phone, Cable TV, and their Children are pursuing higher
education in Haridwar, Dheradun.
There are many more like Kaida in these villages.

Lessons Learnt
• Effective use of ICTs is key to the success of NGOs in integrating various actors in
the chain and making the material and information flow smooth.
• Farmers produce company instead of conventional cooperative brought business like
approach in small and marginal farmers.

Future Road Map

The project has tremendous potential and it can be made even more profitable to the
farmers by introducing traceability. The mobiles coupled with cloud computing concepts
can be tried to achieve this.