Mulkanoor guiding light of India's cooperative movement
THE first thing to note about the Mulkanoor cooperative is that it is an exception, not the rule. Given the otherwise dismal state of the cooperative movement in India, how many cooperative societies can boast of a turnover in excess of Rs 55 crore? Or have one of its members go on to become the prime minister of the country (P V Narasimha Rao, in this case)? Or not have a single defaulter on the roll of its hundreds of borrowers, with total lending in a year exceeding Rs 20 crore? Or have operations ranging from dairies to a modern rice mill.
Based in Karimnagar district of Andhra Pradesh, the Mulkanoor Cooperative Rural Bank and Marketing Society Ltd is a role model in several ways, and has launched, among other things, many a doctoral thesis. But few people know that Mulkanoor has one of the largest paddy seed growing and selling operations in the country.It consistently places the second biggest request for paddy foundation seeds to the state's Acharya N G Ranga Agriculture University (after the state's seed development corporation). Every year, it lifts 30 tonnes of foundation seeds of 13 paddy varieties, for multiplication into certified seeds for sale to farmers (see box: Know your seeds).
The cooperative gives foundation seeds to select farmers, with whom it has had dealings in the past and who have a reputation for seed production. "A seed-producing farmer needs to be very careful. Assured irrigation and capacity to invest in farm inputs are also essential,' said G Saraiah, agriculture officer with the cooperative society. The society has a list of such farmers within a radius of 50 km. "We organise certified seed production in up to 1,600 hectares (ha) spread across about 60 villages,' Sariah says. For this, the cooperative has three agriculture officers and 10 technical staff, who provide extension services to seed-growing farmers.
It has two seed-processing plants with a capacity to process 64 tonnes of seeds in one day; at peak time, the cooperative also rents processing plants close by. It produces about eight million tonnes of paddy seeds that are sold across the country; from Andhra Pradesh and Karnataka, to Maharashtra and Orissa. The buyers of Mulkanoor's seeds get delivery on their doorstep, with the cooperative meeting transportation charges. "We have a reliable network of seed dealers who buy from us, and they place their indents in advance, based on their estimates of the demand. We have long-standing relations with them. If there are any complaints of seed failures, we replace the seed. But such cases are too few and far between,' said Sudhir Reddy, training coordinator and seed advisor to the cooperative. The yearly turnover of the seeds business is about Rs 8 crore, and the profit in the region of Rs 80 lakh. But all this is restricted to paddy.
Why only one? Reddy said the society had experimented with growing and selling seeds of maize, castor, cotton and vegetables about 10 years ago. "Cotton requires too many inputs and labour. Maize, too, is risky in rainfed areas. As a cooperative, our aim to provide services at affordable rates, with small profits for members. We don't play high-risk games,' said Reddy, who retired as joint director of agriculture in Karimnagar district. The seed market for cotton, he observed, has been entirely cornered by private seed companies and their hybrid seeds. "We need high-quality seeds from public sector research. Government-run agriculture universities have done most of the research and varietal development in self-pollinating crops like paddy,' Reddy stresses. His association with the Mulkanoor cooperative goes back to 1971, when he was deputed here for a five-year term from the state's agriculture department.
"We don't think we are competing with large, transnational seed companies,' said Saraiah, adding, "That's why we avoid hybrid rice.' But it's not that the cooperative's seed business is threatened by private seed companies. When this correspondent asked to meet some of the cooperative's seed growers, Saraiah called up a village that produces seeds both for paddy varieties of the cooperative as well as hybrid rice seeds for the agribusiness company Monsanto. He was confident of his business model's success and relevance to the seed-growing farmer.
The village is Thumanapalli in Huzurabad mandal of Karimnagar district. Y Yatishwar Reddy, a farmer with five acres (2 ha), is the cooperative's main seed grower as well as organiser of seed production in Thumanapalli and neighbouring villages. In his village, 70 farmers produce paddy seeds for the cooperative on 120 ha. The cooperative pays him a commission of Rs 5 for every quintal of seed organised by him; this is because he also provides extension services. He swears by the method called system of rice intensification, which helps him save water and gives better yields.
The making of a seed village
"In our village, 90 per cent of the farmers are seed producers,' says Yatishwar Reddy, going on to explain the reasons: "Most holdings are small, so there is plenty of cheap labour. Water is plentiful, from a canal that is part of the Sriramsagar project in Nizamabad. The farmers here have money to invest in agriculture. And the weather here is just right; the dry conditions of Telengana are perfect for seed production and storage, as moisture degrades seed quality.'
Ravinder Reddy is from the same village and is a seed grower and organiser for Monsanto's hybrid rice seed. He says Monsanto pays more than the cooperative, which is why he prefers the corporation: "I play a high-risk/high-reward game. Since cross-pollination is tricky in growing hybrids, the yield can drop sharply. Besides, the labour costs are very high in growing hybrid seeds as roguing of off-type plants is absolutely essential. But the company pays me a compensation of Rs 20,000 per acre in case the material fails to yield as expected. The compensation itself is as much as the usual income of farmers who grow seeds for the cooperative.'
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| G Saraiah (standing), agriculture officer |
But Yatishwar said Ravinder was overestimating the profits. "The investment required in growing a certified paddy variety is two-thirds what is required for hybrid rice. And the yields of the hybrid varieties are also low. Besides, there are several benefits in opting for the cooperative. Their payments are made on the same day, while the seed companies never pay before 40 days. There is greater certainty in working for the cooperative, and a better safety net. Besides, I can't use the intensification method in growing hybrid rice, which means I can maximised seed production,' he says (see table: Competitive edge). Sudhir Reddy says the farmers who produce for the cooperative also get bonuses and dividends.
Both the farmers have compelling arguments for their choice. But what about the officials who work for the cooperative? "I've worked in the private sector in the past. The salaries are slightly better, but my conscience doesn't permit me to work for seed companies,' says Saraiah, who is quite young. "To work here, one needs to appreciate the principles of cooperation. We are profitable, but profit is not the only motive,' he says. For Sudhir Reddy the decision was simpler. He has come to work at Mulkanoor after his retirement.
The cooperative can carry on in the seed business only because the breeding material it gets from the university is not proprietary. Public services, it shows, need public investment.
Sopan Joshi is National Foundation for India's 2005-06 media fellow, writing on seeds and pesticides in Andhra Pradesh