• Uncategorized

Entrepreneur (E): When and why did UB get into contract farming?
R K Jindal (RKJ): UB started its malting barley contract farming initiative in 2002 in association with Punjab Agro Industries Corporation. The research, however, started in 1992 for evaluation, breeding and introduction of malting barley varieties.
The main objectives are to arrest the decline in barley planting area in India through contract farming, improve the general quality of barley and expand barley cultivation to new areas by developing area-specific production technology. Initially, UB sourced barley varieties from across the globe and started breeding with these varieties to improve the quality of local barley.

E: How many farmers are engaged in it?
RKJ: UB has its contract farming program operating in Punjab, Haryana and Rajasthan and plans to expand it to Uttar Pradesh and Uttaranchal this year. Demonstrations have been conducted and the results are really good. Around 3,000 farmers are associated with the group now.

E: How does UB manage its contract farming business?
RKJ: UB has its research farm and is associated with Punjab Agricultural University, Ludhiana, and Directorate of Wheat research, Karnal, for development of barley varieties. Improved barley variety seed multiplication is done by UB and the same is distributed to farmers to ensure better yields. UB also provides technical know-how for cultivation of barley crop.

E: What is the farm procurement strategy?
RKJ: The farmers are contracted at the time of sowing with a predetermined minimum buy-back price at which the produce is purchased. This helps a farmer with an assured income at the time of sowing.

E: What investment did the business require?
RKJ: UB has invested heavily since the beginning of research activity in 1992 to develop malt quality barley and to fund barley research-related activities of DWR Karnal and PAU Ludhiana.

E: How UB Breweries benefitted from contract farming?
RKJ: Barley malt is the soul of beer. Using better quality barley helped us improve our products and gain greater market share. We have also introduced flagship premium brands.

E: What are the benefits of contract farming?
RKJ: Benefits of contract farming:

a. FOR FARMER
1. A farmer gets assured returns even when the market prices go down.
2. A farmer gets quality seed year after year.
3. Extension service is free of cost.
4. Barley consumes lesser water than wheat.

b. FOR UB
1. Assured quality raw material for its malting operation
2. Uniform quality (single variety) – easy operation both at malting and brewer

E: How do you select a farm?
RKJ: Information regarding land and soil characteristics and irrigation availability is obtained from farmer before selecting a farm and entering into contract farming arrangement with him. We discourage all those farmers who do not have an irrigation facility.

E: How big is the sourcing? How many farmers? What’s the worth?
RKJ: Farmers in our country, especially in North India, are used to a crop rotation of paddy and wheat. It will definitely take time to convince them to rotate barley with paddy instead of wheat and mustard.

E: Does UB give any specific training to farmers?
RKJ: At regular intervals, at field level, our agronomists look at the health of plants and give required advice to help farmer get maximum yield.

E: What was the state of these farmers before?
RKJ: Before contract farming, a barley farmer was dependent on market prices which were quite volatile and governed by demand and supply. Besides, farmers sowed barley only when there was no other option.

©Entrepreneur June 2011

Tags:
breweries, contract farming, Directorate of wheat research, entrepreneur, farm outsourcing, farmers, farming, haryana, ludhiana, PAU, Punjab agricultural University, Rajasthan, rk jindal, sowing, UB, Uttaranchal