Reuters Market Light (RML) at the of the tunnel

After having clocked 21 hours of travel time over a cumulative distance of 623 KMs through 3 villages In Maharashtra, I was happy to be back to the capital of the state and my home base, Mumbai. I caught a 3 day break and was ready to plan the next leg of my trip that would cover Bangalore and Chennai in the south of India. Before I got on the 18 hour bus ride from Mumbai to Bangalore (no train tickets for this busy route unless you book 90 days in advance), with guidance from Harsh Vivek, Associate Operations Officer, IFC South Asia, I had managed to set up a discussion over coffee with Premprakash Saboo, the CFO of Reuters Market Light (RML).

Here are some observations from my meeting with Prem.

RML started off from an MBA project paper which gained substantial interest for Thomson Reuters to probe further into developing a prototype in Maharashtra. Thomson Reuters, a global leader in providing financial market data took the bold step of entering an unexplored and untapped market of providing intelligent, actionable and customized farming data via SMS. Since its launch in October 2007 RML has now become a pioneer in this market.

In conversation with Prempalash Saboo, CFO RML

An accountant by qualification, Mr. Saboo made his way through blue chips like Pepsico and Hewlett Packard to find his way to RML as the Chief Financial Officer. The drive and passion to be involved in a high impact business like RML prompted Prem to become part of a relatively new product and market. The rest is history.

Launched in Maharashtra in October 2007 as a business by Sharad Pawar, Union Minister of Agriculture, Government of India, RML has gone from serving few thousand farmers in Maharashtra to 1 million farmers in over 13 states covering 20,000 villages and 250 crops. These numbers continue to increase at an enormous pace.

The core business

RML is the first highly personalized, professional information service for farmers. The decision-enabling content is delivered:

• As per the individual preferences of crops, markets, and location of each farmer
• Through SMS
• In his local language
• Aligned tightly with his daily work schedule
• In a mix of relevant local and international content
• As per the stage of his individual crop cycle
• In a highly simple user-experience for the farmer
• Across all handsets and telecom operators
• Can be easily purchased at an affordable price over the counter in a variety of rural outlets

The cost

RML has been very sensitive to the needs of the farmer and has priced the service at Rs.60 per month which works out to Rs.2 per day and can be compared to the cost of a daily newspaper or a cup of tea.

Impact

It took 4 years for RML to reach 1 million farmers and expand its reach and the impact it has had on the livelihood of farmers subscribed to this service is unbelievable.

Jaswinder Singh, Punjab

I cultivate potatoes and Basmati in my fields and use RML service. After harvesting my potato crop, a local trader wanted to purchase my potatoes at the rate of Rs. 365 per bag. But since I knew the market rates of potatoes sent by RML on my mobile, I sold them at the rate of Rs. 427 per bag. With this I got good rate for 2,500 bags of my potatoes and made a got a profit of Rs. 1,55,000

Ramchandra-Bhutekar, Maharashtra

I wanted to sell my maize produce when the market rate was Rs. 800. RML SMS informed me about the bird flu incidence in West Bengal. Based on this I sold my produce immediately and made a profit of nearly Rs.30,000

Raj Kishore Choudhary, Madhya Pradesh

I cannot resist myself visiting this office as RML messages, more particularly News and Weather Updates helped me earn profit to the tune of Rs.100,000. RML has contributed to my social esteem immensely as I am now considered to be a leader of small group of progressive farmers in my village. They come to me for suggestions and advice on agriculture—subsidies by the government, availability of fertilizers, market intelligence, weather forecast, etc. while earlier I was a laughing stock in the village for referring to RML SMSes.

Fanaji Solanki, Gujarat

After starting RML service, I’ve received information on Potato and Mustard seed. I’ve particularly benefited a lot from the crop advisory sent in March for Potato. I received the message on how to control wilt in potato and through that message I saved my crop from wilt. I’m thankful to RML for saving my crop.

Scale

RML has been a pioneer by creating not only a new product but also changing the status quo in farming to create a new market of providing actionable, relevant, reliable and high impact information to farmers at their fingertips at prices comparable to daily cost of a cup of tea or a newspaper. If you do a quick calculation you find that at current subscriber base of 1million farmers and a monthly subscription fee of Rs 60. You get an annual turnover of $14.4 million ($1 = Rs.50).

There are 120 million farmers in India which means the current turnover reflects 0.83% of the total available market. Given this market size RML has the potential of reaching annual sales of $1.73 billion, which is impressive given that there are other untapped market opportunities like providing market information directly to wholesalers, retailers and consumers. 

RML has launched innovative products like RML Direct Card, much like a prepaid scratch card, which enables the subscriber to easily register and start using the service within hours. RML has also tied up with State Bank of India (the largest bank in the nation) and Airtel (India’s largest telecom service operator).

RML has been widely featured in leading media including the Economist, BBC, and Wall Street Journal and is used as a case study in several leading academic institutes including London Business School, Cambridge University and Harvard Business Review.

RML has the potential to become synonymous with all things farming in the years to come, provided it can deliver all it promises and so far it has. For a nation which still has 70% of its population in villages there is finally a bright light at the end of the tunnel and we have Reuters Market Light to thank for.

The business of farming

Every time I think about rural India, the first thing comes to mind is the acres of farmland and the vast areas of wheat, rice, mustard, corn that grow there. My impression of traditional farming was that it’s very ineffective, non-scientific and dated and hence in many cases unprofitable and to make it profitable you need to adopt a more strategic business-like approach towards farming. In my mind all one needs is a decent size farmland, water supply, access to financing and markets and you are a profitable farmer.

Entrance to Sriram's beautiful farm

However the reality was far from it, it was this reason that I wanted to spend time with a farmer who is farming fulltime to understand the risks and rewards of farming. I was recently introduced to Sriram Parthasarthy – an ex financier who was the India head of a bank that relocated overseas and Sriram wasn’t keen on leaving India and decided to lease 20 acres of farmland near a village called Ranjangaon Mashid near Ahmednagar, Maharashtra. The trip from Hivre Bazaar to Ranjangaon Mashid involved a bike ride to Ahmednagar and a shared Tata Sumo to Supa where Sriram picked me up and we took the long winding dirt road to his farm just outside Ranjangaon Mashid.

I was very curious to know how someone goes from financier to farmer because the change in lifestyle is massive. I will share some of the obvious questions I had for Sriram and the answers to those questions

Sriram Parthasarthy on his daily assessment walk through his farm

Me: Why farming

Sriram: I didn’t want to leave India and wanted to be an entrepreneur and was choosing between education and farming. Farming turned to be not as capital intensive as education and hence farming

Me: How do the local farm laborers  react when you don’t look like them and you don’t speak their language?

Picking out baby corn with the farm laborers

Sriram: They were a bit amused initially but it wasn't a deal breaker because at the end of the day you are providing a source of income to the farm laborers and that’s what matters. Language is not a big problem as most farm laborers speak Hindi and you eventually end up learning the language over time anyway

Onion on drip irrigation

Me: How do you grow and what do you grow?

Sriram: You see what’s growing in the area depending on fertility, water availability and market demand. This is my first year and I am growing onion (Ahmednagar is one of the largest producers of onion), cauliflower, baby corn and corn. The local expertise of farm laborers is critical, as these laborers have been farming all their lives. You feel humbled coming from a corporate environment to the farm where you know nothing and you learn everything from people around you and through a lot of trial and error.

Me: How do you sacrifice a life of all the worldly comforts and luxuries to go and live on a farm with only the basics (stress on the extremely minimalistic basics). How do you come to terms with staying away from friends and family and stay in a remote location where you don’t know anyone?

Sriram: I think that’s the critical piece of any business. Lots of sacrifice and lots of passion and in many cases the passion makes you forget about the sacrifice. I spend 4 days in a week on the farm and the remaining days in Mumbai with my wife and 2 kids, I travel every week around 350 KMs back and forth. I don’t waste time on cooking and have the same 3 home cooked meals everyday when I am on the farm.

One of the farm laborers loading baby corn to be sold to a food processor

Me: How profitable is farming

Sriram: I don’t know, I started one and half years ago. You have to stick it out in any business for 3 years to understand if you are making any profit. Right now I am just learning and I hope to do better this year from the lessons learnt from last year. You learn through trial and error, much like most businesses. Onions were selling at Rs.40/kg in 2010 and in 2011 the prices dropped to Rs.2/Kg and prices of certain essential crops are set by the Government, onion being one of them and it is  very difficult to predict future government policy on prices.

The wear and tear to my slipper from just a 15 minute walk around Sriram's farm

My main purpose behind meeting Sriram was to break my own rose-tinted view of farming and business in general. Doing a case study with porters 5 forces, SWOT analysis, and product life cycle is a very neat exercise during the MBA, but in real life the situation is very different – the core skill needed is to be able to adapt quickly. When I was with Sriram on the farm, the motor of one of the 3 wells that he uses for irrigation broke down, so he had an electrician who drove down 200KMs to deliver a new motor install it. This motor was extremely heavy and with the help of 2 farm laborers, Sriram and a little bit of me he managed to pull out the damaged motor and replace it with a new motor. The electrician completed the wiring and since there was no electricity he would wait till nightfall when electricity comes on to figure out if the installation is OK and if it’s not then the process starts again the next day. Eating the same 3 meals a day for 4 days in a week for over a year to spend less time cooking and more time working on the farm is something that I didn’t expect. Being away from you family, missing your kids soccer game, living in a place where you are the only human amongst other aliens or the only alien amongst other humans, giving up the comforts of the corporate world to live a minimalistic life in a remote village are just some of the sacrifices that an entrepreneur like Sriram has to come to terms with.

Kids of the farm laborers with their Jai Hind on

But then walking through the 20 acres of farmland watching baby corn, corn, onion and cauliflower flourish right from germination must be a very satisfying feeling. It is this satisfaction that every entrepreneur has and it is this satisfaction that I am after. 

Going from an idea to executing it must make it worth the effort! 

Hivre Bazaar - The proof is in replication

When I spoke to Manish Kumar, co-founder of www.farmsnfarmers.org (a nonprofit organization that aims at marketing farmers crops direct to wholesalers) and told him that I am planning to go to Anna Hazare’s village Ralegan Siddhi to understand the self-sustaining Adarsh gao (ideal village) model, he urged me to also visit Hivre Bazaar. Hivre Bazaar had taken the Ralegan model of sustainability and replicated it with even greater success.

Ravindra Gajre - my ride from Ralegan to Hivre Bazaar

So I decided to stop at Hivre Bazaar and check it out for myself. Hivre Bazaar is located 50 KMs from Ralegan, however public transport from Ralegan to Hivre Bazaar wasn’t easy to find. Luckily one of the locals Ravindra Gajre who showed me around Ralegan on a bike offered to give me a lift to Hivre Bazaar.

As mentioned in the previous post in the words of Anna every village can become a model village like Ralegan Siddhi but there are 3 prerequisites:

1. A strong leadership
2. Strong moral character
3. Lots of sacrifice

The Sarpanch (elected village head) of Hivre Bazaar, Popatrao Pawar satisfies all the prerequisites. While I waited for Mr. Pawar to arrive at the local gram sabha (the village governing head quarter) I took the time to explore the village. I couldn’t find a single shack, every house was well constructed and even the low income households although smaller in size were still well built. 

Communal marriage hall in Hivre Bazaar

One of the locals Mohan Chhatre took great pride in showing me an area of approximately 1 acre (43,000 square feet) under construction and informed that the village was building a venue for mass weddings. Villages in India are rife with the caste and dowry system, a strong reason for female foeticide which explains why the male to female ration in India is skew and currently stands at 917 females for every 1000 males. These mass communal marriages are attended by the entire village, villagers cook and serve the meals and no dowry is exchanged. Mass communal weddings are also practiced in Ralegan.  

Hivre Bazaar became an ideal village in 1995 with the help of funding from Maharashtra government which had plans to transform another 300 villages, however the success of Ralegan and Hivre Bazaar and the rising stature of Anna Hazare made the government insecure and subsequent funding was stopped.

Hivre Bazaar practices a similar value based approach to progress as Ralegan

1. Nashabandi (ban on addiction),
2. Nasbandi (sterilisation),
3. Kurhadbandi (ban on felling trees) and
4. Charaibandi (ban on grazing) and, additionally,
5. Shramdaan (voluntary labour)
6. Lotabandi (ban on open defecation). In fact almost every household has its own enclosed toilet and only someone who has been to India would realize the value of this achievement.

 While the transformation of Anna’s Ralegan began with the building of a temple, the transformation

of Popatrao Pawar’s Hivre Bazaar started with building the local school through shramdaan (voluntary labour). Soon people were harvesting rain water, building check dams, using drip irrigation to save water and in 2007 Hivre Bazaar won the first national water award. The average per capita income is now one of the highest in rural India and there are even instances of reverse migration, where people who once left for cities in search of higher income have returned to Hivre Bazaar and are better off financially and emotionally. The village has planted 1 million trees with the help of school kids.

After taking a brief tour of the village I returned to the gram sabha building, a beautiful building

Gram Sabha built with voluntary labour and government funding

constructed through voluntary labour and saw a group of people who were touring from other villages to meet with Mr. Pawar and hopefully take some of the lessons from Hivre Bazaar to their village. Such tours are called visits. I took lunch with the volunteer members of the gram sabha who spend some time everyday discussing matters of the village, talk to people who come on visits and handle the admin work of the gram sabha – all this for no pay because they take a lot of pride in the work they do for their own village.

Buffet with the gram sabha volunteers

I ate what the gram sabha folk told me was the local buffet where people open their lunch and share each others food. I found a new way of eating onion here (Ahmednagar is the onion belt of Maharashtra or for that matter India), which basically involves placing a whole onion on the floor and slamming it with your palm so it breaks open in to a few pieces – very satisfying.

 

Hivre Bazaar sarpanch  - Popatro Pawar

Soon after lunch Popatrao Pawar arrived and started addressing the people who came on the visit in the local language Marathi, he did check with me if I understood and I said I did - almost 80% at his pace. Mr. Pawar is young, educated, fit  and full of energy, he has an aura which is hard to miss. He spoke the same language as Anna and had the same ideas as Anna, it was almost as he was the younger version of Anna. I told him I was visiting from South Africa to observe how one village could transform itself from poverty to prosperity in a span of 10 years. 

Popatrao Powar and villagers from the neighbouring districts

 

He said that he wanted to do something for his village and hence he decided to run for Sarpanch instead of going to work for a corporate and is inspired by Anna and does meet him from time to time. Mr. Pawar is an M.Com Graduate of Ahmednagar University and played cricket at the state level.

 

After meeting with Mr. Pawar I was glad that we have selfless leaders like him who are relentlessly trying to create ways for a better quality life in rural India. I am glad the India envisioned by Gandhi is being realized by modern leaders like Anna Hazare and Popatrao Pawar.

Ralegan Siddhi – an alien country

“We need to be the change we wish to see in the world”

Mahatma Gandhi

Global revolutionary (2 October 1869 – 30 January 1948)

I first heard Barack Obama’s rendition of the above quote from Mahatma Gandhi in the winning speech he gave at Chicago, Illinois, November 5 2008. Ever since this particular quote has stuck with me and as I am opening my vision beyond what’s immediately in front of me, the meaning of what Gandhi was trying to say is beginning to make sense.

 

Ralegan Siddhi is India’s first and only one of a handful of ideal sustainable villages (Adarsh Gaon) in India. What sparked my interest in Ralegan was the 35 years of work put in by Anna Hazare (social revolutionary) in transforming Ralegan from one of the poorest villages (1975) in India to one of the richest (1995). 

In the war of 1965, Anna was the lone survivor in the military bus he was driving. He couldn’t understand why he didn’t die with everyone else in the bus and even contemplated suicide as he couldn’t understand the purpose of life. He read a book by Swami Vivekananda “Call to the youth for nation building” which describes the purpose of life to be in the service of others. Ever since Anna’s life has been dedicated in the service of others. The amount of literature on Anna is limitless, but here are a few of my observations on Anna Hazare’s Ralegan Siddhi.

Shramdaan (Voluntary labor)

Yadavbaba temple

Anna realized very early on that in order to create a sustainable society where people are invested in their future, the citizens need to be involved in the developmental process. Leading by example he invested his pension money into renovating the broken down Yadavbaba temple, where he still sleeps at night. Once the temple was built the villagers started seeing hope and every project in the village in the last 35 years has been built using the villagers shramdaan. 

Labor is one of the biggest inputs in building infrastructure and shramdaan helps reduce project costs substantially. In fact over the last 35 years the villagers have created assets worth over Rs. 1 crore (approximately USD 200,000) with the help of shramdaan.

 

400,000 trees have been planted by school kids and these school kids clean up the entire village every day. The headmaster of the high school told me that the first thing the kids do when they get to school is clean the entire school and only then do they start studying. I couldn’t stop being amazed at how proud and happy the kids were in maintaining the cleanliness of the village. Here is a scene from the primary school at the back of Yadavbaba temple.

 

Boarding

Anna introduced a water storage and water management system and transformed the village from a agriculture deficit to a surplus village. With government funding Ralegan now runs a national watershed development training center, which provides training on water management and can house up to a 100 people a day. The program costs Rs. 500 per day (including meals, stay and the training) and runs for 15 days. Casual visitors are welcome to stay here for Rs.100 per day.

Vegetation

The difference in the level of vegetation outside and inside of Ralegan is striking. Credit goes to Anna for leading the way, in 1975 there was almost no farming to speak of and there were 40 liquor dens in the village – Ralegan supplied alcohol to the 5 neighboring villages. Anna realized that alcohol was also the only remaining source of livelihood for many and alcohol manufacturing would only stop if they are provided with an alternative. Using watershed planning he began building a sustainable future with the villagers help – he helped construct a very systematic and sophisticated network of wells, canals, check dams, contour trenching. Instead of building individual wells, he urged farmers to build cooperative wells to irrigate multiple farms thus achieving economies of scale and creating infrastructure that can be shared across farms. All these networks of water are connected through underground pipelines which run through the village and are powered by motors. He has created 200 acres of grassland exclusively for feeding cattle, as feeding cattle on farms makes the soil loose and reduces fertility.

Dairy farming

In 1975 when Anna moved to Ralegan the village barely produced 200 litres of milk a day and now the same village sells 2,250 litres of milk a day through a dairy cooperative called “Shri Sant Yadavbaba Dudh Utpadak Sahakari Sanstha”. The uniqueness of this cooperative is the efficient use of technology in delivering the right price and the right quality. The cooperative has a system which has assigned a unique code to each dairy farmer, an electronic weighing scale and a dedicated staff to test the fat content of the milk – the higher the fat content the higher is the price paid per litre of milk. No cash changes hands, the local bank maintains a saving account for each dairy farmer and every month the income earned is deposited into the bank. As you see here 4.7 is the volume of milk, 04.0% is the fat content and 014 is the code of the dairy farmer. This transformation in milk production was a result of Anna encouraging villagers to sell low-yield cattle and buy high-yield breeds of cows and buffaloes. The current breed has been improved through artificial insemination and the presence of a vet makes dairy farming a very lucrative alternative source of income.

A high school for children with a record of failure and anti-social behavior

Anna believes that anyone can educate students with a willingness to learn, but to see real change one must educate and reform children that no one wants to educate. With this in mind Sant Nilobaray Vidyala was started – a school built through voluntary labor and donations. The school puts extra emphasis on sports and additional tutoring is provided to struggling students. The pass rate of the school in standard 10 and high school exams is close to 100% and at the inter village sports competitions more than 50% of the awards are won by kids from Ralegan.

Value based approach to progress

Anna proposed a 5 principles based approach for a sustainable village.

1. Nashabandi (ban on addiction)
2. Nasbandi (sterilisation)
3. Kurhadbandi (ban on felling trees) 
4. Charaibandi (ban on grazing) and,
5. Shramdaan (voluntary labor)

Gandhi’s vision for self sustainable India was through development of villages, he believed if India has to progress it has to happen through its villages. Anna made this vision a possibility through transforming Ralegan Siddhi from extreme poverty to self sustaining economic freedom. The government of India has spent billions in rural development in the last 60 years through its many 5 year development programs, but the impact on the rural population is dismal. All the decisions about rural development are made from the central government – this top down decision making is a fatal error and leads to gross wastage of public resources and in many instances budgets are underused as the rural population isn’t even aware of the resources made available to them. Any decision about rural development needs to adopt a bottom up, need based analysis approach. A village in southern India doesn’t have the same problems as one in northern India, so how can rural budgets and plans be made centrally?

The obvious question is if Anna Hazare could change 1 village, what about the remaining 638,000 odd villages in India. According to Anna every village can become a model like Ralegan Siddhi and Hivre Bazaar, but there are 3 prerequisites:

1. A strong leadership
2. Strong moral character
3. Lots of sacrifice

It took Anna Hazare 20 years to transform Ralegan and any such change takes time and perseverance. Hopefully we can see some more leaders coming forward and taking the initiative to start their own gram revolution.