Fields Inc: Boardroom moves into boondocks

8216;8216;It will reduce the push towards cities, encourage diversification of agriculture and create non-farm employment in rural areas,8217;8217; says economist Bibek Debroy, endorsing the basic concept of rural hubs but suggesting minor changes in the Chinese model.

Planning Commission vice-chairman Montek Singh Ahluwalia and Minister for Panchayati Raj Mani Shankar Aiyar are among the other supporters of the concept. While Ahluwalia has declared that four per cent growth in agriculture was essential for the country to grow at eight per cent, Aiyar has long sought economic empowerment of panchayats.

In the Indian context, a 8216;rural hub8217; would translate into a panchayat or a cluster of villages specialising and excelling in a particular product. The thrust areas have been identified as agriculture, poultry, bamboo products, khadi and village industries, handicrafts and rural fashion.

8216;8216;The challenge is to convert low input/low output agriculture into a high input/high output commercial activity,8217;8217; says Gokul Patnaik, head of Global Agri Systems and chief of the agriculture focus group set up by the Panchayati Raj ministry. 8216;8216;So far, agriculture has only been a way of life.8217;8217;

Patnaik has a menu of agriculture-related options that panchayats can choose to specialise in8212;depending, of course, on local climate, history, culture and tradition8212;including tree crops like jatropha and eucalyptus, food additives, medicinal and aromatic plants, high-value horticulture, floriculture and processed products. Also in the picture are greenhouse plantations, cold chains and specialised mandis.

8216;8216;Marketing is the key to the whole exercise,8217;8217; says Patnaik. 8216;8216;If the panchayats do not have the expertise, they should hire professionals or tie up with a suitable private partner.8217;8217;

While there is some certainty about the focus areas, the business model to be followed is yet to be decided. In China, direct participation by the commune or brigade is encouraged, and revenue is retained for expansion of local infrastructure. Within India, there are many such individual success stories8212;power distribution in Nagaland, van panchayat in Uttaranchal for instance8212;as well as the Amul cooperative model.

According to Patnaik, however, the model that will work best in the rural hub concept is the producer-company, which incorporates the best cooperative principles with a private limited company structure.

Producers as well as producer institutions can be members of producer-companies, with benefits and voting rights being decided on the basis of past participation. There is legal sanction for 8216;8216;withheld price8217;8217;8212;under which producers get a basic price for their produce, and profits are distributed at the end of the season8212;so there is no income tax on profits.

8216;8216;Producer-companies are different from cooperatives, which function on the principle of one man-one vote,8217;8217; points out Patnaik. 8216;8216;Here, the person who does the maximum work has the most say.8217;8217;

The Zila Parishad will be the mentor for these producer-companies, which will have professional teams looking after procurement, marketing and consumer outreach. A board of directors will provide start-up and operational technical support and will also formulate policy and arbitrate between stake-holders.

While all state governments have been asked to prepare feasibility reports for a few pilot projects8212;the first few are expected to be submitted soon8212;clusters with easier access to markets may be selected for the first phase. Leading PSU and private sector companies with some stake in agriculture have also been asked to participate in the effort.