A thirty minute ride on a three wheeler in Bhubaneshwar transports you to another world. Open spaces, greenery, dulcet sounds of birds and the fresh air make it seem like another world. The edifice was the epicenter of the ‘Battle of Kalinga’ and crossing the bridge over the Daya river got me thinking deep into another battle: ‘turning around’ four ‘Producer Companies’.
The goal of this mission is to provide strong evidence that ‘producer-owned companies’ are a viable business structure and if these companies are managed well, they will have the credit worthiness to secure and repay debt capital.
It is a bane of the transactions or trade custom that producers get a minuscule portion of the final value a customer pays. The producers are thus left in the labyrinth of poverty, which leaves them with just enough to survive ‘a quagmire of a poverty trap’. The logic of producers coming together was to get into a position of ascendency and collectivization. This would allow the members access to investments, technology, inputs and markets and move up the value chain.
However, the vast majority of these FPOs (a term that includes both co-operatives and producer companies) continues to struggle to establish viable and sustainable business models and achieve significant revenues and returns to their members. This is primarily due to a lack of business planning, poor management and faulty organizational structures and processes. CIIE has been entrusted with the assignment to help the four selected FPO’s develop these in their repertoire. The aim is to provide evidence for the hypothesis that Producer Organizations are viable business structures.
Although it might look like a one-time turnaround stint but it offers more than a standalone assignment to CIIE. For centuries, agriculture has been the backbone of the Indian economy. More than half of the Indian population is dependent on the agriculture sector, directly or indirectly. Agri-business is a growing sector and it is expected that this current project will help us build some internal expertise in Agri-businesses sector. In addition, the learnings will be of immense bulwark for implementing CIIE’s unique strategic interventions in the agri-business sector which will not only benefit investors but also producers.
VP – Social Impact