Welingkar Institute of Management Development and Research,
Mumbai.
PGDM - Business Design 2011-2013
Date – 7th March, 2012
Devnadi Valley Agricultural Producers Company Ltd.
(Pratik Changede, Gaurang Chotalia, Varoon Damodaran, Sumit Gakhar, Malay Srivastava,
Vishal Patil)
Abstract
This Research paper presents a case of a Producer Company that addresses the problems faced by the
farmers in agriculture. A Producer Company named – ‘Devnadi Valley Agricultural Producer
Company Ltd.’ was studied to understand and analyze the business model. A comprehensive
interaction was carried out with the major stakeholders of the company to find the actual problems
faced by company and farmers. This paper makes an attempt to suggest improvements to enhance the
efficiency of the Producer Company. The paper also highlights the benefits farmers derive by
becoming the member of the company.
Keywords: Devnadi Agri Mall, Agriculture, Producer Company, Innovative Agri business model,
1. Introduction
India is predominantly an agricultural country with more than 50% population dependent on
agriculture. However the contribution of agriculture to India’s GDP is only 15.2% (FY 2010).
Between 1999 and 2011 the distribution of Certified/Quality seeds has increased at CAGR of 12.2%
from 87.98 to 277.34 lakh qtls in 2011. In the same period consumption of Chemical fertilizers
increased at CAGR of 4% from 180.69 to 281.22 lakh tonnes (144.44 kg/hectare). [1]
For 12th Five Year Plan (2102-2017) NABARD submitted a document on “Issues and Problems of
Farmers in India” [2]. Some of the key issues and problems are  Getting adequate quantity of the certified seeds, fertilisers and pesticides (henceforth referred
as ‘inputs’) is a persisting problem. Agriculture department is not able to meet the demand of
inputs fully. Further, the inputs available from private suppliers in the local market often lack
guaranteed quality.
 Quality of inputs being supplied by various agencies including the ‘Society of Certified Seeds
and Fertilizers’ were often in short supply during the period when the farmers required it the
most leaving them exploited by the private traders.
 At the time of scarcity of inputs the farmers need to purchase them at high prices.
 There is a huge difference in the retail price and farm gate price.
 Lack of necessary infrastructure required for carrying out transactions in a transparent manner
at market-yards.
 Due to inadequate marketing arrangements, farmers generally sell their produce to the
middlemen at very low prices.
 Marketing of crops is mostly through middlemen / commission agents.
 Soil testing facilities are not locally available.
 Number of rural marketing places is not adequate.
A NABARD Report on farmers Suicide states that 80 % of farmland holding are with small and
marginal farmers owing land up to 5 acres. The distressed economy of small scale crop cultivation is
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further accentuated by lack of knowledge, scientific application of crop management, diversification
practices, inappropriate system such as non-availability of quality input material on time, inadequate
irrigation facility, non-remunerative prices, and dominance of middlemen in Agricultural Marketing
Structure. [3]
Through our secondary research we found out that the above mentioned problems are faced by the
farmers and Agri Mall concept has to a larger extent tried to address their problems and this motivated
us to study one such Agri Mall – Devnadi Agri Mall (the company name is – ‘Devnadi Valley
Agricultural Producers Company Ltd. [4]’
2. Research Questions



Understanding the Business model of a Producer company.
How Agri mall benefits the farmers?
How to improve operations of Devnadi Agri Mall?
Objectives
 Find problems and issues faced by farmers.
 Expectations of farmers from Devnadi Agri Mall.
 To find bottlenecks in operating Agri Mall and stream lining the same.
Limitations
Due to the time constrain our researches could not cover the following areas:
 We were not able to interact with the manufacturers of agricultural inputs and competitors i.e.
local traders and distributors of Agri Mall.
 Out of 10 directors of the company we interviewed only 2 of them.
3. Theory and Definition
The Agricultural sector requires significant investment in the area of production, distribution,
marketing, promotion, sales, capacity building and infrastructure. Also, professional team is needed to
achieve success. A cooperative movement is required, but such cooperative movement has not seen
much success.
An expert committee led by noted economist, Y. K. Alagh, was given the mandate to frame a
legislation that would have the benefit of the unique elements of a cooperative business along with a
regulatory framework and flexibility similar to that of a company. The act was intended to allow
primary producers to band together under a cooperative structure, but still access the benefits of being
registered as a company. The concept of Producer Company was introduced in 2002 by incorporating
a new Part IXA into the Companies Act based on the recommendations of the above Committee [5].
The Producer Company is registered and governed by Rules and Regulations’ as mentioned under
Companies Act, 1956. The definitions and interpretations are defined in the Act.
To better understand the concept of a Producer Company let’s look at - Kalanjiam Milk Producer
Company Limited (KMPCL) promoted by DHAN which is a unique business initiative owned and
managed by milkmen themselves. Registered as a producer company, KMPCL is a conglomeration of
milk producers from nearly 100 villages in Cuddalore district, Tamilnadu The company runs a highend dairy processing unit in Ayekuppam village in Kullanchavadi, Tamilnadu which packs and sells
milk collected from villagers who form the primary producer groups. The milk sold under the brand
name ‘Anandam’ has proved to be a promising source of happiness: not only for the end consumers
but also for the villagers who supply milk to the dairy every day. Unlike a commercial dairy unit,
KMPCL is a producer company with the milk producers themselves as the shareholders. The fivemember board that constitutes the governance body is elected from and by the members of primary
milk producer groups (PPGs).
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A typical organizational structure of a Producer Company is as shown below [6] -
4. Methods
The objective of our project at ‘Devnadi Agri Mall’ was to identify the need gaps in the business and
provide suggestions to the company to enhance the operations.
We adopted the following interactive methods to carry out our research project as we were bound by
time constraint 
Interviews of Directors of the company, members of the company, and non-member farmers
of nearby Villages
We interviewed the directors of the company and gathered information regarding the
company and the problems faced by the company in its growth, number of members and their
expectations from the company.

Observations
We visited the farms and observed how the farmers sow seeds, make use of fertilizers, and
spray pesticides.

Focus groups
A focus group was organised in Sonnari village by us. 10 farmers were present. We had an
interaction with the farmers. The farmers discussed the problems that they were facing in the
carrying out agricultural activities. We asked them about ‘Devnadi Agri Mall’ and their
expectations from the company.

Visited Local Government office
We visited the local government office to know the exact number of farmers in the taluka and
their literacy level, and the number of self-help groups.
5. Analyse and discussion
While interviewing and having a focus group with the farmers, following common issues were
highlighted:
1. Shortage of agricultural inputs, leading to black marketing and thus forcing farmers to
purchase at exorbitant prices.
2. Sub-standard quality of agricultural inputs.
3. Difficulty in finding the market for the produce which will give them remunerative prices.
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The concept of Agri Mall is based on bringing maximum benefits to farmers by providing high
quality agricultural inputs at reasonable prices and ensuring adequate supply of the same. The
business model of Agri Mall eliminates the middlemen by directly procuring agricultural inputs from
manufacturer thus, reducing the cost and passing on the benefits to the farmers. The company can also
act as a facilitator by providing additional services like soil and water testing, educating the farmers
on the crop rotation and on type and amount of fertilisers to be used, and acquainting them with latest
technology.
The current business does not have the well-defined organisational structure, and also the role and
scope of the company directors were not well defined. Out of 10 directors only 2 were active
directors. We have suggested the following basic management structure -
6. Ideas and Innovations
Following diagram depicts the ideas suggested by us -
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Crop Cycle Model
Apr - May
Soil Preparation
March - Apr
March
Selling
Sowing
Harvesting
June
Plantation
and Care
July- Aug
Harvesting
Sep
Crop Cycle Model
Dec Feb
Plantation
and Care
Sowing
Selling
Soil
Preparation
Nov
Nov
Model will have following benefits for Company
1.
Helps in maintaining Low Inventory
2.
Helps in Demand forecasting
3.
Maintain database of the farmers
5
Oct
Role of various departments Crop Cycle Wise
Farmer’s Issues
Month
Activity
Requirements of Farmer
Cycle no 1
Apr- Jun
Cycle no 2
Soil
Preparation
Nov
Cycle no 1
Jun
SOWING
Cycle no 2
Nov
Cycle no 1
July-Aug
Cycle no 2
Plantation
And
Care
Dec-Feb
Cycle no 1
Sep
Cycle no 2 Harvesting
Mar
Cycle no 1
Oct
Cycle no 2 Selling
Mar-Apr
Roles
Department Responsibilities
To Distribute and Collect Demand Forms
and Advances (If possible)
Marketing
To take Marketing Campaigns
Organize meeting and Events
Guidance and Training
Machines and Tools
Soil and Water Testing
Problems Faced by Farmers
No proper guidance or
awareness about various Crop
Options
Long time to get reports for Soil
and Water testing
Consulting and Training
Operation
Soil and water testing facility
Requirement of Farmers
Seeds, Fertilizers
Tools and Others Material
Machines, Labour
Problems Faced by Farmers
Quality of Product
Availability
Price
Operation
Prepare Member Inventory Record
Distribution of Material to Farmer
Payment Collection
Procurement Material Procurement from Supplier
Marketing
Requirement of Farmers
Pesticides
Tools and Others Material
Labour
Problems Faced by Farmer
Pest attack, Climatic Conditions
Poor Quality, Price Variation
No Responsibility by Dealer if
Product is of sub-standard
quality
Operation
Demand Analysis
Send Messages about availability
Meet new members
Training and Guidance in Plantation
Periodic Checks
Labour Availability
Procurement Quality Assurance
Marketing
Requirement of Farmers
Tools and Others Material
Machines
Storage Space
Problems Faced by Farmer
Labour Shortage
Lack of Proper Storage Space
Collection Centre
Getting members feedback about products
Training and Guidance
Operation
Help in Collection
Requirement of Farmers
Tools and Others Material
Machines
Storage Space
Problems Faced by Farmer
Labour Shortage
Lack of Proper Storage Space
Collection Centre
6
Operation
Transportation Facility
Providing Labour
Storage
Purchase
Bulk purchase of Crop from farmer
Marketing
Search for New Markets
Bring buyers to Farmers
Direct Selling to Bulk buyers
7. Conclusion
The concept of Agri Mall has paved the way for bridging the gap between farmers and agricultural
input manufacturers. It also acts as a facilitator in increasing the technical knowhow of the farmer.
Large scale replication of such companies will reduce the input cost significantly and the dependency
will also be reduced thus providing better margins to the farmers. It also acts as a one stop-shop to
address all the needs related to agriculture of the farmers.
A comprehensive study can be conducted to evaluate the possibility of the Producer Company
becoming an implementing agency of various government development schemes since; they have
good communication with the farmers who are the members of such Producer Companies.
The company can also help by providing retail space for products made by self-help groups and push
these products through their distribution network.
8. References
[1] http://agricoop.nic.in/Agristatistics.htm
[2] http://12thplan.gov.in/stakeholder_sugg.php
[3]http://www.nabard.org/databank/IARD%20Web/csidfiles/Suicide%20of%20Farmers%20in%20M
aharashtra.pdf )
[4] http://www.yuvamitra.org/devnadi/devnadi.html
[5] http://www.kvic.org.in
[6] http://www.kvic.org.in/update/KRDP/Producer%20Company%20Model.pdf
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