1. By – N V Ramana, Group CEO, BASIX
LESSONS FROM THE FIELD
By – N V Ramana,
Group CEO, BASIX

2. The Context
Opportunities in agriculture sector at micro level are few.
Limited opportunities in production and manufacturing activities
The fastest growing sector is trading of goods , services and retailing .
Trading of commodities which form basic consumption of the community is the most viable option

3. Constraints on Rural Transformation: Some Insights from the Field
Credit: Savings exceed credit, yet every one is credit-starved
Infrastructure Constraints: e.g. Power, Water
Labour Training and Mobility: Many unemployed but workers unavailable
Commodity/Product Market Information: New segments un-addressed, older ones crowded

4. Agriculture Sector Intervention needs.
Pre Harvest
Agri inputs – quality and mkt linkage
Updated knowledge for better profits
Contractual farming
Future Price options
Crop Risk Mitigation
Agro Sector
Post Harvest
Storage / Ware housing linked to loan
Local Value addition
Linkage to distant markets through Com. Exchange
Aggregation for logistical advantages
Farm to End user – Value chain

5. Evolution of Strategy in BASIX
Customer Needs
2001 onwards
Livelihood Triad
Market Linkages
Value Addition
Productivity Enhancement
Risk Management
(Lives & Livelihoods )
Credit
TASS
Micro-Credit

6. The Livelihood Triad IDS LFS Ag/BDS
Organize producers into their collectives.
Establish functional linkages for inputs,output & know how.
Formalize : the legal status
Help set up enabling systems: operating,HR and information systems
Revive defunct community organizations
LFS
Savings, Credit, short-term as well as long-term
Insurance, for lives and livelihoods
Fund transfers
Commodity derivatives
Financial orchestration ranging from grants to equity for livelihoods
Ag/BDS
Productivity enhancement
Risk mitigation (non-insurance)
Local value addition
Alternate Market Linkages - Input supply, output sales
Remove the cetnral triange

7. Keeping a Dairy Animal is the Single Most Important Livelihood for Rural Poor Women
Services Offered
Productivity Enhancement Services
Feed and Fodder Management
Artificial Insemination
Management of Animals
Clean Milk Prodcution Methods
Extension programmes on better dairying practices
Risk Mitigation
Vaccination
Deworming
Curative Methods ( First Aid and Primary Health Check-ups)
Local Value Addition
Institutionalise the producers and supports them in preparation and marketing of the by-prodcuts obtained from milk
Alternate Market Liknages
Design the Milk routes
Facilitate and collaborate for market linkages with the Dairy firms
Reviving the defunct chilling centres
Facilitate to establish new chilling centres where ever required

8. Steps in Livelihood Promotion
Identifying Key Players and Initiating Collaborative Action
PROCESS
STEPS
Identifying Intervention Points
Understanding the Value Chain of the Selected Activity
Selecting Livelihood Activities Suitable for the Poor
Observing and Understanding the Economy

9. Need for striking right collaborations
We believe in collaborating with players having domain expertise to…………….
Enhance competencies, Increase outreach, Reduce transaction costs and Reduce risk for farmers and stakeholders
Financial Services
Input Supply
Training & Extension
Farmers
Output Market
People’s organization
Research & Technology

10. Collaborative polygon for the Lac sub-sector in Jharkhand, India

11. Collaborative Polygon for Livelihood Promotion in Groundnut Grown by 800,000 farmers in AP
Credit (BASIX + ICICI Bank
with risk sharing)
Training &
Extention
(NGOs)
Input Supply
(Seed Co.)
Producer’s
Organisation
(IGS)
Output Marketing
(Trade, Oilfed)
Research & Technology
(ICRISAT, OTRI)

12. Early Experiments – Working along the Value Chain
BASIX
CREDIT
Ag/BDS
2000 Potato growers
Seed Potato
Buyback Arrangement
Frito Lays India Ltd.

13. Lessons in Micro-Insurance
Offer products
Distribute Insurance
Insurer
BASIX
Rural Customer
Inputs for products
Feedback on needs
The rapid scaling up by BASIX and product replication by the
insurance companies prove both the viability of such a product
and the existence of demand for the same.
Commodity Risk Management Group's advice on the weather
insurance pilot described in the BASIX case study led to
replication effects by other insurance companies that insured
around 18,000 farmers in the following year.

14. LINKAGE OF SMALL FARMERS TO COMMODITY MARKETS

15. CURRENT SCENARIO Issues faced by Small Farmers:
Absence of information on spot prices
Presence of middle men
Inaccurate planning for next year’s cropping ‘cobweb effect’
Un-hedged risks for the produce
Factors dissuading the Lenders from imparting cheap credit:
Absence of reliable price benchmarks
Inadequate accredited warehousing facilities
Inadequate physical logistics
Lack of complete negotiability of warehousing receipts
Lack of legal infrastructure

16. Challenges in providing services in low density and remote economies
Small volume of activity per customer
Geographically disaggregated
Low literacy and awareness of products and services
Needs aggregation of a large number of customers for reducing transaction costs
Need for innovations in products and delivery processes to make access convenient and affordable

17. FIELD EXPECTATIONS FROM COMMODITY EXCHANGES
Price Dissemination Price Discovery
Decision on Cropping Pattern
Negotiation for better prices while selling the produce
Taking knowledgeable decisions regarding the timing of their decisions to sell
Price Hedging
Requirement of an aggregator

18. Challenges…. Future vis-à-vis Options:
Hedging through ‘futures’ is a complicated financial product and a farmer may not understand all the nuances of transanctions on the commodity exchanges.
Introduction of ‘options’ would facilitate farmers’ access to the commodity markets.
Fragmented land size and absence of clear land titles present its own set of challenges in developing any mechanism for option premium reimbursement by Government (Govt. has not taken any decision in this regard so far)
Large transaction lot size is another related issue restricting access of an individual farmer to commodity markets.
Price Dissemination and General Awareness:
Country wide replication of the initiatives taken by FMC, NCDEX and MCX requires substantial investments.
Warehousing facilities
Immense need for quality warehousing facilities and their acceptability by the overall financing system/ commodity markets.

19. THANK YOU