Farmers turn market savvy (Or do they?)

A long look at a small vegetable. Growing gherkins for Western palates has brought in good money for some farmers in Karnataka. But, buried in the soil are more issues to be tackled than meets the eye. Keya Acharya does some digging around.
It is a small, slim vegetable, about
two inches long, not palatable with
Indian diets but important enough to have journalists from Switzerland come to Karnataka’s gherkin-growing fields and take a look at them.
Why Switzerland? Because the first foreign company to deal with importing gherkins for pickling from Karnataka (and also India) was Reitzel, a food products multinational with several global branches. Reitzel first bought raw produce from Global Green of the Thapar group, but now have their own processing factory. There are over 40 Indian and foreign exporting firms in Karnataka, their main markets being the US, Russia, France, Germany, Australia, Spain and South Korea.
Reitzel’s main supplier is Green Agro Pack, a Rs 20-crore turnover agri-company whose director, Devaiah was India’s pioneer in gherkin-farming. His current company has grown from contracting approximately 2000 farmers to grow gherkins in 1994 to over 10,000 farmers on its payrolls today, working in an ‘agricultural extension’ network with 75-80 trained local personnel who deal directly with the farmers on technical inputs and monitoring of crops. Devaiah’s method has now become standard industry practice.
Zonal field offices keep cultivation-file histories on each farmer, making it easy to track both productivity and problems. Soil inputs of chemicals and fertilisers are given as advance loans against final payments. Both sides seem happy enough. “Our strongpoint is in the way we network with the farmers,” says Marketing Manager MK Somanna.
Gherkins are a quick ‘cash crop’, ready within 70 days, but needing plucking and processing in vinegar or brine within 24 hours, making its entire chain labour-intensive. With labour being expensive in Europe and the US, foreign firms are now finding southern Indian conditions of equable climate and cheap labour an attractive proposition. Although they form just three per cent of India’s agricultural acreage, Karnataka has the largest acreage at 39,178 acres, involving 41,606 farmers exporting 90 per cent of produce.
Contract farming
Gherkin farmers belong to the country’s ‘contract farming’ system, wherein the farmer is hired to grow produce exclusively for the hirer. Though contract farming is still controversial because of exploitative contracts, pre-fixed rates for gherkins together with the advance loans on soil inputs are an attractive alternative to farmers in distress from a poor prevailing agricultural marketing system.
“Trying to change Karnataka’s predominantly small-holding agricultural society into ‘big industry’ would be disengaging the farmer from his land. Contract farming is thus the best solution,” says Devaiah.
“We get more money from this crop than from ragi,” say Siddesh and his mother Pushpavati, at Kattehalli, near Davangere, growing gherkins on one acre and employing four hands during the picking season. The family’s holdings of eight acres make them ‘big’ farmers in their village, able to grow staples on their remaining acreage, though firms like Green Agro Pack usually contract a half acre per season from smallholder farmers owning one to three acres, which leaves them enough to grow food crops.
But, gherkins are both water and chemical-intensive, needing an average two inches of water per acre every week. With reports coming in from various areas of Karnataka of the high usage of groundwater and heavy chemical inputs, questions arise as to what is being done to safeguard soil and water in the long-term interests of both the farmer and the State’s agriculture. Kolar district, with its steep decline of groundwater tables in the last two decades through indiscriminate sinking of borewells for water-intensive, cash-crop cultivation that neglects local cereals, is a case in point.
The gherkin industry is defensive. “The rules of nature are the same for all agriculture. You violate the soil and you will get the same problems for all crops,” says Mr GVG Rao, president of the Indian Gherkin Exporters’ Association, while Green Agro Pack showed us in-house water-conservation measures in its processing plants. The government however, has nothing in place to stipulate some form of conservation, such as building check dams or bunds in cultivation zones, or even compulsory in-plant water-conservation measures in place for industry to follow.
Farmers’ rights
The Karnataka Pradesh Krishik Samaj, India’s oldest and largest farmers’ organisation, is more worried about farmers’ rights in the entire system. “The farmer has no way of knowing the final product price so he can fix a relative price for his gherkins,” says Association president, Nagaraj, a farmer from Kolar district. There is also no protection for the farmer in the external networking system that his gherkins are subject to. In 2003, for instance, failures in the transportation system led to Kolar farmers being stranded with their produce, since the crop is of no use unless processed within 24 hours, leading to huge losses and farmers’ strikes. “It is for this reason that farmers need a guarantee per acre, like a security deposit,” says Nagaraj. The government’s crop insurance scheme however remains an impracticable theory on paper.
“We want transparency,” says Nagaraj. “The government makes public the rates of produce; why can’t the multinational?” he asks.
Producer-firms such as Green Agro Pack say profit margins are as low as 5 per cent, with operational stability coming through bulk volumes. GVG Rao says profits in gherkins comes mainly through value–additions. No company is willing to proffer figures on the amount, though. Should the government then be called on to stipulate transparency in industry operations?
Gherkin consultant Balachandran from Mysore thinks it is the responsibility of the government to lay down rules of operations, including corporate social responsibilities like long-term ecological measures and protection of farmers’ interests.
“The margins in the producer are too low to support social measures. Foreign direct investment by big multinationals can and should be required to invest in social measures in areas they work in. It is also the responsibility of the exporting company to work for this,” feels Balachandran.
Development benefits
Reitzel is the first and only MNC so far that is involved in development benefits for the areas it works in. This year it will set up the Reitzel Foundation with Euro 50,000 (approximately 26 lakhs) to pay for a school and a creche or hospital in 2-3 villages. Reitzel is also collaborating with a Swiss garment firm, Switcher, on an ethical code of operations which would improve farmers’ working conditions. It aims at obtaining a Fair Trade certification for its produce. The company’s GM, Bernard Poupon, is involved in social welfare in Switzerland besides being president of Handicap International, an NGO that helps child landmine victims. Poupon is lauded in Indian gherkin circles as being genuinely interested in poverty alleviation.
But companies cannot be called on alone to work in developing their workers’ villages without government help, feels Dr N Nagaraj, Agricultural economics professor at UAS, Bangalore. Let the government actually implement infrastructural measures for industry and then ask corporates to share their profits. This should be a joint responsibility, he says with conviction.
(Written in collaboration with Laurent Dufour)