👨‍🌾 Buy Now Pay Later Scheme for Farmers?

A Bengaluru based firm is trying to increase farmers' income by becoming a provider, a buyer, an employer and a marketplace for them.

“Paav utne hi failane chahiye, jitni lambi chaddar ho."

This well-known Hindi idiom (which means spend within your means) has a special place in Indian parents' hearts.

Every kid has heard it at least once.

But for 62.6 million Indian farmers spending within their means is simply not an option.

Because they earn around Rs. 10,218 on an average per month.

But why do farmers earn so little?

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💸 Decoding Farmers' Income

There are several reasons this income is so low despite Minimum Support Price (the minimum amount of money a farmer gets for a crop) and farm subsidies.

One major reason is the fluctuating prices of crops. Yes, despite MSP (which is only applicable in case of certain crops) the prices of crops keep fluctuating based on demand and supply.

For instance, if fewer farmers grew onions this season, the price of the crop will be high.

This will encourage more farmers to grow onions. Which increases supply and decreases the prices, causing farmers' income to decline.

Plus, thanks to climate change, more and more crops are failing and farmers can't do anything about it.

And even if they don't get enough money from their last crop, farmers have to continue farming. So, they have to borrow money to buy seeds and fertilizers.

This is why the average debt of an agricultural household in India is Rs. 74,121. And because farmers' income is not rising, they are forever trapped in a vicious debt cycle.

So, what can we do to solve this problem?

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💡An Innovative Solution

A Bengaluru-based firm may have found the answer to this question.

Alswamitra Botanicals has launched an initiative in the southern part of the country to help farmers, especially tribal farmers and women.

Its solution is simple: Give high-quality seeds for indigenous plants to farmers for free.

The farmers can use these seeds to grow crops that require less water, give better yield, and have a higher nutritional content.

For instance, it is currently helping tribal farmers grow turmeric that has a very high nutritional value, so much so that companies are ready to pay extra money for it.

After growing the crops farmers can either pay the company back for the seeds (there is no fixed value, farmers can pay whatever they want) or give back new seeds harvested from the crop.

This innovative buy-now-pay-later scheme kills two birds with one stone: 

• Farmers no longer have to take heavy loans.

• Plus, they get high yields and better prices for their crops.

But wait, how does Alswamitra ensure high quality seeds for farmers?

The company has tied up with a non-profit seed bank (yes, it is exactly what it sounds like) NGO Sahaj Seed, which has lakhs of high quality seeds. It has 29,000 varieties of rice seeds alone. 

However, there's a catch.

If farmers want these free seeds they need to form a farmer producers organization. It is basically like a union for farmers.

But why make this mandatory?

For the farmers' benefit of course.

You see, most farmers in India own less than two hectares of land. Which means they produce a measly amount of crops, which gives them very little money and even lesser bargaining power. 

They simply have to accept whatever prices buyers give them for crops and whatever loans lenders give them for seeds.

But if they form a union, this could change.

They could have a higher bargaining power and refuse to give crops at a low price.

So, you see, the company (which is run on a pro-bono basis by a few corporate employees) is trying to leave no stone unturned to empower farmers.

But what if farmers still don't manage to get the right amount for their produce because middlemen eat away all the cream?

That's the question that bothered Alswamitra.

And the company has also found the answer to this now.

It has launched a new brand called Grain Forests that allows farmers to directly sell their produce, eliminating the middlemen completely.

What's more, the brand buys their produce at a 25% higher price than the market rate.

How can it afford to do so?

Because products made from its organic crops sell for higher prices in the market.

While a normal turmeric powder from FMCG companies like Tata Sampann, MDH, Everest cost an individual around ₹120 for 500gm of powder, Grain Forests sells the same for approximately Rs. 235.

But it doesn't take away most of the profit for itself: it gives 40% back to the tribal community, which is also involved in the packaging of these products.

So, Grain Forests has become a marketplace, employment unit and welfare generator for these farmers and tribals.

If more companies and collectives like this emerged, we could truly make a difference in farmers' lives and help them substantially increase their income.

The government should also focus on such initiatives and help them grow from regional to national.

If you know about any more such initiatives, let us know in the comments.

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⚡ In a line: A Bengaluru based firm is trying to better farmers' lives by giving them free seeds, a marketplace and higher profits.

💡 Quick question: Should the government also launch such free seed initiatives?

P.S. This piece was researched and co-written by our intern Shivam Agrawal.

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