Case Statement:
Farmers in Punjab have been growing Rice which was procured by the government at attractive prices. However, since the ground water level has gone down, you as a consultant, need to suggest other options to farmers to make revenue.
C: Interesting, I would like to understand for long have the farmers faced this issue.? Were the farmers growing only rice and was the entire produce being procured by the government only?
I: For about 2 years now. Some other crops in small amounts like cotton etc. Yes, the government procured the entire produce.
C: Would the farmer be open to non-agriculture avenues to generate revenue?
I: Interesting proposition. We can explore that as well
I: All right, here, I would suggest 2 means to generate revenue, Agri and non-agri. Under Agri, we have the possibility to explore other crop cultivation under the MSP scheme. Here we could look at growing other crops and some herbs to extract APIs. To find a perfect crop, we would have to analyse factors like soil conditions, climate, surrounding flora and fauna etc. The APIs extracted can be sold to pharma companies.
I: Excellent points. Could you elaborate more on this information bit?
C: Steps involved
Decide the crops/herbs to be grown after analysis of factors like water availability, soil conditions etc
Train the farmers on the correct techniques to grow the crops like crop rotation
Provide supporting facilities like cryogenic preservation if required
Bring in both public and private players to procure the produce and get them to have long-term contracts with the farmers
I: What do you mean by the private players?
C: Could be that the pharma companies procure herbs for APIs and players like ITC, HUL etc. to procure the crops from farmers
I: Impressive. Elaborate more on private players and other avenues
C: After signing the contracts, can have platforms like e-Choupal to train them. At the same time, new-age power plants can collect chaff and rice stalks at a contract rate and ensure utilization of the agricultural wastes too.
Further, with the rise of future options, contracts to mitigate market risks of fruits and vegetables can be the way forward for both the companies as well as the farmers. At the same time the above needs to be complemented by investment from private/govt. in backward and forward linkages for the farmers – such as seeds, tractors, etc.
I: We can move to non-agricultural means of income now
C: Can do dairy farming since they already might have some animals on the farm and hence some experience in managing them. Further, in lieu of tanning and wool industries in Punjab, we can also explore farmers having animal husbandry for the above purposes with commercial procurement.
Further, in further diversified efforts, farms can lease land for other purposes and create niche agricultural uses such as greenhouses/nurseries, etc. Also, rich farmers can use their resources to create lending services complementing government efforts to boost agricultural backward linkages.
I: Excellent ideas. For that, what metrics would you look at?
C: Would look at the ROI, considering the input cost and the output/ revenue obtained over the target period by the alternative. Also, NPV/IRR analysis can be considered to analyze when there are multiple & and competing uses of the same land resources. At the same time, we need to check for cashflows in order to
I: Perfect, we can close the case. Thanks for the insights
Background Information:
Client: FPO based out of Punjab and facing the issues of decline crop yield
Target Growth: Doubling Farmer group’s revenue by 2025
Areas to explore: Both agricultural and non-agricultural income
Case tips:
The Ansoff matrix structuring helps to give direction to the problem as it helps to generate ideas for new products and new markets
The Non-agricultural part is tough to structure. Ideal way out is to mention the outcomes using the basic structure.
Talking about risks in the stipulated time and overdelivering on probable solutions- seek brownie points
Ability to come up with multiple approaches quickly and aligning with the interviewer with take his nudges is the key to the case
