Marico, one of India’s fastest growing consumer products and services companies, has been following the process of contract farming for several years. The process of contract farming involves cultivating and harvesting for and on behalf of business establishments or government agencies and forwarding the produce at a predetermined price. In return, the contracted farmers are offered a good price against their farm produce.

The contracted farmers grow kardi (saffower oil) for Marico, a key ingredient in Marico’s Saffola brand. The primary reason for the company to go for contract farming of seeds in India was in order to ensure stability of supplies.

Due to instability of the market in the last couple of years, kardi as a crop had to compete with other cash crops like gram.

“Despite being on contract, farmers would start growing other crops. This meant that there was no assurance of supplies and we ended importing oil. This impacted our top and bottom line in terms of availability of raw material,” says Girish Rao, Head IT Solutions, Marico.

Getting farm facts right
To address this concern, Marico went live with a Contract Farming Management System (CFMS) late last year. For this, field personnel (agriculture representatives) were provided with mobile phones that hosted an in-house developed application using  J2ME technology to capture farm data.

The company made use of Global Positioning System (GPS) to track their personnel who validated the standing crops, checked whether what was contracted by the farmer was farmed or not, looked for insect infestation, and whether they would get the required harvest during the end of the cycle.

It also captures requisite data when the farmer sells the produce in the market.

The data captured on the mobile device is relayed to a central system every thirty minutes. Even if there is no signal, the device keeps storing the data and sends it when the signal is available or when the personnel visit the nearest branch office after a day’s work.

“With CFMS, we have a very good visibility of farmer level data. It has improved our reaction time to farmer queries, reduced damages for crops and improved productivity,” says Rao.

The company witnessed increase in productivity by 30 percent and reduction in crop damage by 50 percent as compared to the previous year.

No fooling us
Using a J2ME application, the company created a portal that now allows the company's buying agents to send kardi-related information to the portal in real-time from various mandis (markets) using their mobile phones. As a result the company now has better visibility into the prices and this is used to take immediate decisions like buying from a market with good quality and low price. The data is also posted in the Business Intelligence (BI) system for conducting long-term strategic analysis. “Previously, there was delay in providing information to the buyers who needed to take a decision on what
quantity to buy and at what price,” says Rao.

Marico has been able to get an additional average discount of Rs 1-2 per kg from the market price after deploying this system. This has added around Rs. 1-2 crore to their bottom-line. Also, the turnaround time for getting market information has been reduced to a day or two from 8-10 days earlier. “This process has real time data capturing. It is like an in-house stock exchange which provides market information in terms of arrivals and posts rates at the various mandis (markets) across the nation,” says Rao.

The local buying agents can now concentrate on keeping a tab on the material and price movements rather than spending time in relaying the market information verbally to the central team.

“With CFMS, we have clear visibility of farmer level data. It has improved reaction time, reduced damages for crops and improved productivity” Girish Rao Head IT Solutions, Marico