Devising Inclusive Business Models is vital to foster Sustainable Agriculture and Livelihoods in India

by Dr. Krishnan S. Raghavan, Swetha Kolluri, Rozita Singh, Sivakumar Palaniswamy

November 4, 2021

UNDP Accelerator Lab in India is working together with Spices Board India under the Ministry of Commerce and Industry, Government of India to develop India’s first blockchain platform for promoting export of Indian spices - a sector with an annual export value of USD 3 billion

Indian Spices

One of the protected areas having diverse flora and fauna, the Kalakad Mundanthurai Tiger Reserve (KMTR) in Tirunelveli and Kanyakumari District of Tamil Nadu houses in its dense forest a tribal community Kaanikkaran, popularly known as ‘Kaani’. The tribe cultivates lemon, cashew, jackfruit, tapioca, pepper and harvest minor forest products like Amla, Honey, etc., for their own sustenance.

Although the Kaani is involved in making good quality organic produce, the market price used to be fixed by middlemen. These middlemen buy the produce from Kaani tribes at a very low price and sell it in market with considerable profit margins but never shared the profit with the community.

To address the challenge, the Madurai Agribusiness Incubation Forum (MABIF), which is a joint initiative of NABARD and Tamil Nadu Agricultural University for incubating agri-startups and accelerating their growth in the state, took up the task of designing and promoting business models for Kaani tribes to provide them with direct market access and increase their profit margins. 

Initially, MABIF started teaching marketing strategies, branding and value of organic goods to champions in the Kaani tribal community with the support of Ecodevelopment Committee of KMTR, forming the “Mylar Kaani Kudiyiruppu Eco Development Committee (EDC)”. 

 Furthermore, MABIF created a brand to recognise the kaani tribal products and also trained the community in quality as well as packaging aspects of the produce.  Through MABIF’s efforts in promoting the product through trade fairs such as TANFOOD and through Amazon, Flipkart and other e-Commerce portals, the Kaani products got wide recognition. KMTR’s Eco development plan had also strived hard to get wild organic certification “SCOPE certificate – APEDA” to kaani products.

All these efforts culminated in the miraculous profit margins for Kaani tribes who used to earn INR 200 per Kg of black pepper are now selling it for INR 1200 per Kg through Lemurian Bazaar, an organization that operates as one-stop-shop for tribal produce in procuring, checking quality as well as selling to market through their e-commerce portal.  The Lemurian bazaar directly procures black pepper at the rate of Rs. 800-900/kg from the tribal farmer and sells the same in the market for Rs. 1200/kg. The profit earned from the tribal produce was distributed back to the Mylar Kaanikudieruppu EDC by Lemurian Bazaar. The tribal community is delighted that they are getting fair price for their produce which will strengthen their livelihoods while the officials at the KMTR are equally happy that the tribes are following good agricultural practices and sustainability of forest resources are ensured.

The Kaani tribe story is that of an Inclusive Business Model (IBM) for goods. The G20 defines IBM as one that “provide goods, services, and livelihoods on a commercially viable basis, either at scale or scalable, to people living at the base of the economic pyramid (BOP) making them part of the value chain of companies´ core business as suppliers, distributors, retailers, or customers”.

As G20 Inclusive Business Framework recognise, any business that offers goods, services, and livelihoods on a commercially viable basis, either at scale or scalable to poor and marginal communities is an inclusive business.

The above business model of Kaani tribes focused on goods. There are several other models that focus on services and livelihoods as well. International development organizations such as UNDP are increasingly focusing on implementing IBMs especially in agriculture sector where technology plays a critical role. For instance, UNDP Accelerator Lab in India is working together with Spices Board India under the Ministry of Commerce and Industry, Government of India to develop India’s first blockchain platform for promoting export of Indian spices.

The lack of equality, transparency and accountability has adversely affected the profitability, sustainability, and quality of Indian spice sector which has an annual export value of USD 3 billion.  Hence, enabling traceability of spices and facilitating direct trading between spice farmers and prospective buyers are the key objectives of UNDP-Spices Board’s blockchain platform. The immutability of blockchain system empowers spice farmers by providing transparent information on the entire value chain.  Blockchain also provides the option of “smart contracts” in which the system automatically executes a set of actions when predetermined conditions have been met and verified. These actions could include releasing funds to the farmers by buyers and accepting a consignment of spices when their expectations are met. This effectively eliminates the role of intermediaries and ensure equitable sharing of profits. It is an IBM based on service delivery that shows how technologies such as blockchain could transform agriculture and the lives of small and marginal farmers.

Though the concept of inclusive business is gaining momentum, there are several roadblocks such as the lack of infrastructure, skills and conducive ecosystems to integrate the small and marginal farmers with the value chains.  Policymakers need to prioritise this area and come up with national roadmaps to mainstream IBMs.  Adequate incentives in the form of subsidies, tax breaks and other financial/non-financial mechanisms including coaching services need to be provided for private sector and investor community to develop, test, certify and scale IBMs. 

There is also an urgent need to establish institutional networks that can anchor and support testing, validating and scaling-up of IBMs.  These institutions must provide equal space for civil society organizations and representatives from grassroots communities to effectively participate and contribute in the decision making.  Devising IBMs is important for India to achieve SDG 8 “to promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”.

The authors are Dr. Krishnan S. Raghavan, Swetha Kolluri, Rozita Singh from UNDP India Accelerator Labs with

Sivakumar Palaniswamy, CEO, Madurai Agribusiness Incubation Forum, An initiative of NABARD & Tamil Nadu Agricultural University (TNAU)

This article was originally published in ET Edge Insights