AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

AGRIPRENEURSHIP:
AN AVENUE FOR UNEMPLOYED YOUTH

Dr Arun Bhadauria
Sr Lecturer & Programme Coordinator, Agribusiness Management

Amity School of Rural & Agricultural Management, Amity University Uttar Pradesh, Lucknow Campus.
arunbhadoria@rediffmail.com; drarunbhadauria@gmail.com

AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Conceptual Framework
Since the inception of New Economic Reforms, adoption of Liberalization, Privatization and Globalization (LPG) and World Trade Organization (WTO) in 1992 95, it is expected that rural area will grow at par with urban area. In the first five years of millennium term Agripreneurship was introduced with lot of emphasis on the participation of rural folk leading to the perfect solution of unemployment and shaky performance of agriculture.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Conceptual Framework
Retailing as a form of Agripreneurship is gaining ground with the development of the organized retailing sector. Before youth could have harnessed the opportunities of establishing an enterprise in the rural areas tapping rural demand, top entrepreneurs such as reliance, TATA, ITC entered into the field. Though, the developmental opportunities are not so meager to enter into market still very few small units are being established.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Opportunities
Recession in the last few quarters have affected every sector leaving rural sector which is the only one survived with surging demand during this period. Several companies are recording profits riding on the rise in rural demand.

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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Sectoral Dynamics as an opportunity

Each economy traditionally comprises three sectors i.e. primary, secondary & tertiary. Tertiary sector is supposed to provide infrastructural support to rest of the two sectors. Secondary sector though work independent produce, manufacture, fabricate, construct and design to facilitate production and other operations for rest of the two sectors. Primary sector in similar terms maintains backward and forward linkages with secondary & tertiary sector.

It is evident from the intricate relationship among various sectors of the economy that no particular sector can work in isolation.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Intra-Country Trade
India is a land of diversity of languages, regional resources and business avenues which makes India comfortable to grow with intra country trade. India cultivates everything and consumes everything. India has market of every product which it produces within the territory or outside. Significant proportion of produce in agricultural sector is traded within the country on inter-state basis e.g.

" potato of western U.P. (Agra, Merrut, Farrukhabad) is sent to Banglore, Guwahati, and exported to Sri Lanka and Dubai (Bhadauria, 05).
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Agriculture & International Trade

India trade with every trade bloc across the world in which India is the significant exporter to NAFTA & EU. The direction of trade statistics is in favour of Indias relations with trade blocs considering need of multiculturalism as a multi-pronged strategy to fare in world trade (Bhadauria, 09). Apart from the jems & jewellary, spices and agro processed food products are considered as significant foreign exchange earner.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Contnd
Forward and backward linkages of Agriculture gives wonderful opportunity to industry to grow, manufacture and consume thereby boosting its export and import trade statistics, which in turn, required giving global economy a big push. Trade dynamics reaches full circle as diversification needs support from other sectors of the economy reciprocating the same for them. Diversified agricultural practices give strength to all segments of the society and result into increase in savings, investment and consumption.
However, this incidentally advocates the need to harness potential of diversification in Agriculture.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Contnd
This also creates dynamic equilibrium through free market type demand & supply forces to every other sector. Diversification need not be taken only for cultivation. It is more concerned with Allied Agriculture which provides commercially suitable business opportunities to lay the foundation of the development of service sector as being practiced in China & Malaysia. IT Sector can grow on the cradle of development of Agriculture, hardly need outsourcing to survive.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Opportunities cited
Agro Forestry Agro Processing & Food Processing Allied activities such as pisciculture, apiculture etc. Commercial farming Trading Carrying & Forwarding agents Agricultural marketing Information Technology Enabled Services (ITES) for agriculture & allied activities1.

An Agripreneurship venture is engaged in food processing activities. Similarly there are number of examples of agripreneurs harnessing the potential of practicing above activities.
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1Alpahar

AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Risk Involved & Fear

youth is succumbed to the mindset of handling the risk of organizing inputs and finance. They would not be coming forward to start enterprise of their own due to never ending challenges of being entrepreneur. Moreover, specific nature of product of this sector such as processed food products, genetically produced product (Mushroom), and other typically nature based products which are heavily dependent on the nature and its vagaries became major factor of disinterest of rural youth to be agripreneur. Getting job and live happily will be a first choice of every single youth.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Emergence of Opportunities
Most crucial factor regarding the agribusiness opportunities is the emergence of these opportunities1. Three factors matter most in the case of emergence of opportunity
first is identification with individual second is accessibility to individual and third is adequate infrastructural support available in the market.

Another factor which is quite significant is confidence and self determination2.

1In

case of Alpahar, agripreneur came to know about this opportunity from society. 2In present case, agripreneurs was forced to take up something to survive while having nothing to invest. First thing came to the mind was to tap the opportunity which can be materialized by the house.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Tapping
Once opportunity is sighted, it requires to be tapped. Three factors are crucial for tapping up of opportunity,
first is conceiving the idea at right time with right approach i.e. opportunity is growing in the market and honest effort will give fruits, second is organizing to tap opportunity i.e. inputs and their servicing needs to be organized as per the nature of opportunity and third is waiting as investment followed by periodical response i.e. revenue in phases waiting for final recovery1.
present case, agripreneurs started with only two workers investing small inconsiderable amount of money (in fact there was no investment at all, only daily household expense). Time was right as area was developing very fast and required processed products largely to feed rising population in that area. Home-made products are liked by every traditional Indian consumer so employing home-made inputs and service worked. In the beginning, even daily expenditure was not recovered, later on as per the taste and likings of the consumer sale increased and revenue increased thereby creating opportunities to expand and diversify.
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1In

AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Expansion
Business opportunity in its character needs to be expand with time.

Business grows, business diversifies, business survives.

Any opportunity is chosen for business should have the capability for expansion and diversification in future1. (See exhibits).
1In

present case, started with pickles, later on expanded to produce several other products such as spices, namkeens, diversified too in existing product range
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

EXHIBIT-I
Pickles Green chilly pickles ,Red chilly pickles, mango pickles, citrus pickles, Luhshun pickles Sweets Basen laddu, aate ke laddu, shaker para, date palm Namkeen- simple and mix Namkeen,Mathri, Papadis ,khastha Spices- Red chilly powder,Dhiniya powder ,Meet masala,Gram masala,Garlick powder
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Beginning
Establishment of any enterprise requires five formalities to be fulfilled. First is input procurement and identification of location. Second is to look for finance, Third to seek expert advice. Fourth is establishing working lines. Fifth is to know about various legal formalities.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Input procurement & Management

The first and foremost important thing in order to establish enterprise is wherefrom to procure inputs? Are they procured at reasonable rates? Are they suitable? In fact, these are need not to be mentioned but for being agripreneur this is first hurdle which must be cleared and surprisingly this led to the frustration of most of the young agripreneurs.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Input procurement & Management

Input requirement of agribusiness enterprise is essentially sourced from within the enterprise which is not prevalent in regular industrial environment. Agripreneur needs to understand type of input required their quantity & quality, actual nature, use, appropriate source and their suitable price1. As agricultural enterprise work in coordination, output of one can be treated as an Input for other. Working on this principle, it is very easy to purchase input from market and prepare them at home using traditional skills.
the present case, Agripreneur in order to avoid any confusion regarding suitability and price decided to procure input after sufficient observation and training. Once observed the working and production techniques, it became very comfortable to locate input with appropriate type and price. Most of the inputs in the beginning were purchased from local markets and rest was prepared in the house. Alongside, Government is taking initiative to motivate youth to establish their own enterprise. In this process, training and other support is available at block level and district level
(Exhibit-2). 8/2/2011 4:00:46 AM Prog Coordinator, Agribusiness 18
1 In

AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

EXHIBIT II
Wheat and other raw material sourced from local wholesale market. Grinding and other activities performed at home using traditional methods. Spices, sugar and other similar products were purchased in wholegrain form and prepared at home. Packaging was done with the help of professionals and machine and other material purchased and fabricated accordingly.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Sourcing the finance

Financial requirements at times are fulfilled by owned and owed funds. Owned funds are used in larger proportion in the beginning, however in later stages they are geared up by regular ploughed back funds and project funds. It is observed that youth are weird of arranging funds from variety of sources. The sort of scarcity of funds with youth should not be taken as inimical to own a business. Organized sector is taking cognizance of issue and deliberating logical credit disbursement and distribution mechanism for prospective agripreneur. Incidentally, banks in the collaboration with big industrial house, state government and NGOs are taking step forward to deal with the issue (See Notes)1.
1In the present case, agripreneur invested owned fund and 25 percent owed fund. Later,

Agripreneur started ploughing back of funds and at present, nothing owned fund is used in business.

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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Notes-I
The proposed package, which is formulated in line with the UPA governments move to double the agricultural and rural credit in three years, envisages de-linking margin money assistance from seeking refinance, reduction in service charge up to 2 per cent to give a fillip to the prospective agripreneurs, extending refinance assistance at 4 per cent and providing subsistence stipend of Rs 2,500 to Rs 3,000 per month to agricultural graduates. NABARD also proposes to co-finance the agri-clinics and agri-centres along with the commercial banks1.
Package for Agripreneurs (2009): The Financial Express, http://www.financialexpress.com/news/nabards-package-for-agripreneurs/111175/2

1NABARDs

Tue,

29

Sep

2009

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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Problems related to finance

The more specific and rooted problem observed are listed as under: Lack of enough money for subsistence. Poor identification and conceiving of ideas to establish an enterprise. Poor initial returns and lack of experience, affordability makes things miserable. The problem of identification, conception and arrangement of finance is related with capacity building among unemployed youth. The innovation which is brazen requirement for agribusiness enterprises is hardly practiced in the absence of financial capacity to look into possible avenues of agribusiness. Approach of agri-clinics and agribusiness centres are established reason to the problem related to financial capacity of unemployed youth
(See Notes).

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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Notes-II

Farming is the single largest private sector economic activity in the country. The growth potential in this key sector is immense in view of the changes taking place in food consumption and there is growing demand for high value processed products. Successes in such endeavors will require innovations and partnerships. Private agribusinesses provide first point market for the farm sector and growth depends principally on private initiatives. A significant portion of agribusiness activity is the result of small and medium enterprises. Such enterprises are necessarily widespread in location to capture opportunities that arise all along the farm to table supply chain.
Key constraints that impede development of new agribusiness projects are access to information and access to credit. Agribusiness entrepreneurs are generally first generations who have business skills but their financial resources are limited2.
http://www.sfackerala.org/jointventure.php 8/2/2011 4:00:46 AM VENTURE CAPITAL: To promote investments in agri-business projects with the participation of banks Keralas Small Farmers Agribusiness Consortium

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Non-performing assets & Financial Recovery

Application of Owned funds is taken as granted from ages by rural entrepreneurs. They seldom think about credit money and if it comes to their mind, local moneylender is the last resort. Meanwhile, the poor level of awareness, information, technical know-how, logistics availability and presence of competitive enterprise create mess of potential business opportunities. The following factors come handy for the financial stability and solvency of the enterprise. Follow up of Principles of Competitive, complementary & supplementary enterprise. The timely and purposeful ploughed back of funds, income and revenue. Stringent system of regulating solvency and financial recovery of each enterprise. Harnessing the optimum potential in every possible way of existing resources including household.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Contnd
Proportionate disbursement and trickle down of funds, investment and their servicing. Rural entrepreneur are guided by personal and peer group objectives and quite often they rely upon their own outlook. They remain ignorant and sometimes ill informed (due to limited information network and language constraints) of the state run support and corrective measures. The level of their awareness, information, technical expertise is the significant reason of their high order vulnerability to the insolvency and failure of financial recovery system (See Notes) 1.

1In

present case, agripreneur put a larger reliance to the local information network and this is therefore the big reason why the enterprise has not expanded harnessing full potential of the resources.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

The mechanism of averting agricultural enterprises insolvency includes two forms of recovery: financial and economic. Unlike financial recovery, where the priority task is to reach the standard financial operation, to eliminate insolvency and bankruptcy threat, an enterprise economic recovery involves the increase of production facilities operation efficiency, property and labor resource use efficiency, reorganization of marketing, management, etc. The implementation of the mechanism depends on how successful the extend management and the financial recovery is. The financial recovery should aim to retain an agricultural enterprise as a jurisdical person3. Financial Recovery and Formation of competitive enterprises, concentration of capital of agro-industrial enterprises by rural entrepreneurs, development of land market, formation of state system to regulate agro-industrial sector, expansion of private farming sector in the form of household plots are few components of Russian agricultural sector reforms4.
Bychkov, N.A. (2007): Anti crisis manager as the tool of sanitation of insolvent agricultural organizations; Centre of Agricultural Economics, National Academy of Sciences, Institute of Economics; BY2007000902; AGRIS record, Minsk (Belarus); v 35 p. 68-75 http:// www.fao.org/agris/search/display.do?f=2008/BY/ BY0708.xml;BY2007000902. Norsworthy, Alexander L. (2000): Russian View of Transition in Rural Sector: Structures, Policy Outcomes and Adaptive Responses; Environmentally & Socially Sustainable Development, Europe & Central Asia Region, The World Bank, Washington DC, p.p.33

Notes-III anti-crisis management as a means of

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Comprehensive approach for self employment

In usual sense it is believed that agribusiness enterprise works only for its owner in routine business activities. But it is noted fact that agripreneurs performs multi-level tasks in the small cities and rural economy (see Notes).

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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Notes-IV
The implementation of Agriclinics and Agribusiness Centers Scheme resulted in the establishment of Agriclinics and Agribusiness Centers. All those who were trained under the scheme have started their agriventures. The agriventures not only provided advisory services on production, processing and marketing, but also supplied the inputs required by the farmers in time and in the villages itself. Some of the agripreneurs also provide paid extension services in Maharashtra. The impact of the agripreneurs is so visible that the farmers are coming forward to pay consultancy fee for the service of the agripreneurs.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Notes-IV
The analysis clearly shows that the agripreneurs provide specialized extension services (especially green house technology in Maharashtra) to the farmers, which also supplement the efforts of public extension besides providing better income earning opportunities and gainful self-employment and other employment opportunities to the unemployed people. The percent of agriculture laborers has also been growing and now it had touched 48 percent. Giving a push to the manufacturing sector will help check this trend. The agripreneurship opportunities in climate management, soil health management, cultivation of medicinal plants, plants that have potential for extracting ethanol like sweet sorghum, etc. carried a lot of promise6&7.
Chandrasekhara, P & Durga, P Kanaka (2007): Agriclinics and its Impact on Agripreneurship Development; ICFAI Journal of Entrepreneurship Development, Vol. 4, No. 2, June. Staff Reporter (2005): Seminar highlights potential of agripreneurship' The Hindu Sunday, Oct 30, 2005.

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Contnd
There are opportunities galore for agripreneurs. Earlier it is observed that employment opportunities can be accessed with secondary sector only. Later, this notion was countered by expansion in service sector. Very soon economy realized the utility of services and the hidden potential to usher in development in semiurban and rural area and somewhere it emerged most appropriate for peri-urbanites. Perhaps agripreneurs is the first entrepreneur who has opportunities in climate management, soil health management, cultivation of medicinal plants (Exhibit-4).
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Exhibit-IV
Agripreneurs have multiple opportunities in every single area of agriculture which has any relationship with agriculture and allied sector. Agripreneurs realized this truth and started with training and consultancy. Processed food products are not produced, processed and sold at one place. In fact, offloading of the processing is practiced on regular basis. This in fact, reduces cost of establishment and expands business premises.
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Supply Chain & Role of Agripreneurs

Supply chain management is most crucial for every industry especially for agro processing industry. As evident, large number of middlemen are present in the supply chain of the agro processing industry. Still, the number of agripreneurs at every nodal point in distribution network is scanty. Supply chain is hardly observed associated with value chain. Value addition is the fact which needs attention to strengthen supply chain. Value addition and creation at every stage of supply chain can create multiple opportunities for agripreneurs and thereby ensure supply of more designed and ready to use agro food products and other agricultural products to consumers.

This does not end here rather it create circular effect as habits of eating processing food increases and make stride in the overall development and expansion of food processing and agro processing sector.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

Self Employment & Role of Employer

The establishment of any venture requires several inputs and these inputs are supplied by societies which in turn gets benefit of the establishment. Similarly, agripreneurs employ several inputs from society thereby performing the role of employer. Organizing, employing and expanding the business premises is three fold path of development for every agripreneurs. Being the employer, its the first duty of the agripreneurs to understand the growth potential of the business so that timely expansion of the business for the sake of employment of more inputs in order to harness the economies of scale can be materialized. This can be practiced with the correct idea of the role of auxiliary activities in the market.
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AMITY SCHOOL OF RURAL & AGRICULTURE MANAGEMENT

It is revealed from studies that quality fads are need to be ignored as quality production, processing, distribution, packaging comes at very reasonable price. The reports from Regional Food Research and Analysis Centre, Lucknow opined the fact of the possible application of quality production, cultivation, handling, processing and post harvest management giving long shelf life, high nutritive value to the products which may be sold at very reasonable price in the open market.

Minimizing the post harvest losses by advocating the marketability of the product and package

Agripreneurs can take this responsibility to tap the potential of making huge profits with the development and expansion of economic activities for all. Moreover, there are evidence of selling fruits and other food products in various categories of eating processes e.g. packet of chopped mangoes, ready to sale uniform sized potato, package for breakfast, dinner and lunch and several others.
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Open for House

In the nutshell it is desirable

to encourage youth to come forward to harness business potential of emerging opportunities in agribusiness.

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