Araku Valley’s Tribal Coffee Growers Reap Rich Profits from Walmart-TechnoServe Tieup

M. Nittapattu Mutually Aided Cooperative Society (MNMACS), a farmer-producer organisation (FPO) working with coffee growers in Andhra Pradesh's tribal Araku Valley, was named the Best Organic Business FPO in the South at the Jaivik India Awards 2022.

The award could have gone to the best organic business. Still behind it are efforts not only by MNMACs, but also by seven other FPOs working in the valley to not only improve tribal growers' economies but also to make their lives more sustainable.

"In 2018, the Walmart Foundation committed approximately $25 million to India over a five-year period to improve farmer livelihoods. By 2019, TechnoServe had entered the picture, and we pitched the idea of working with smallholder farmers," said Sandesh Deranna, TechnoServe's Coffee Value Chain Lead.

TechnoServe, which works in 30 countries along the agronomy chain, stated that it could improve farmers' livelihoods, but its model is to work through FPOs. The US-based NGO chose the FPO model to work with the valley's tribal farmers, who number one lakh but are spread across a vast area in 1,400 villages.

"They are scattered throughout various villages and towns. To reach them, we discovered that FPOs were the best model because they were collectives of all these farmers," he explained.

The central vertical is coffee, but TechnoServe also assists them with black pepper and turmeric. "As an intercrop, black pepper is grown (with coffee). So that's all taken care of. Turmeric is grown in the lower plains," according to a TechnoServe official. Aside from these, farmers grow paddy and rajma (kidney beans).

TechnoServe is collaborating with the eight FPOs with the primary goal of improving market access for farmers. "Before our intervention, tribal growers' access to markets was primarily through middlemen. There was also the Nandi Foundation, which was doing its own thing on a small scale," Deranna explained.

 As a result, the first step was to approach institutional buyers. "We approached the institutions because they will ensure the sustainability of the tribal growers. They conduct business in an ethical and systematic manner. We chose the buyers and collaborated with them," he explained.

These buyers, including Tata and ITC, have begun sourcing coffee from Araku Valley growers, bringing the total number of buyers to six. "We were able to improve the quality and post-harvest management a little bit. We specifically entered the specialty coffee sector because it is a non-traditional area with a competitive edge," said the TechnoServe lead.

Farmers in the Araku Valley cannot compete with traditional coffee growers regarding competence, knowledge, and experience. As a result, the NGO decided to make growers compete on quality, especially since the produce is organic by default. "We decided to enter the retail market, and we enlisted Blue Tokai Coffee's and HumbleBean Coffee's help. These businesses have begun directly from the FPOs here, with no interference from anyone," he explained.

One of the benefits of Araku Valley organic coffee is that it is a single source and costs around Rs 700 for 250 gm. "Previously, farmers were selling this coffee at a lower price. However, with the middlemen removed and the FPOs selling directly, they are now getting a fair price and competing with the best coffees at Kushalnagar, a coffee-selling centre," Deranna explained.

Last fiscal year, the FPOs that produce coffee transported 36 truckloads of coffee, up from almost nothing three years ago. "Araku Valley coffee was previously rejected or offered at low prices, with buyers citing high moisture. Growers are now aware of the factors that influence the marketing of their produce and have established facilities to improve quality," he said.

FPOs, for example, now use government-certified weighing scales. They have installed wet mills and dryers, as well as solar panels. "All of these were set up at their own expense. Our role has been to educate growers about these parameters and assist them in gaining market and financial access. Last fiscal year, not a single truckload of the 36 consignments we sent to Kushalnagar was rejected. We will send 38 consignments this fiscal year," Deranna said.

Farmers, on the other hand, are now requesting that buyers weigh their produce using similar government-certified scales. As a result of these efforts, 5-6 of the FPOs' transactions and business have increased to Rs 1 crore from nil in 2019. One of the FPOs earns more than Rs. 2 crore. The significance of this is that the growers realised the importance of quality and marketing without outside funding. According to him, the growers and FPOs have reinvested their profits in improving their prospects.

"All of this has helped them get a market price for their produce. They also go for certification audits," explained the TechnoServe lead. However, efforts are now being made to grow indigenous trees on coffee plantations rather than imported varieties such as Silver Oak. Growing pepper on these indigenous trees yields good results," he says.

The FPOs for pepper have been routed through one of Bengaluru's leading spice traders. Farmers are compensated because their produce is organic. All of this has been accomplished without the use of child labour. Then there's rainwater harvesting. Growers benefit from higher prices because their produce is certified for these social responsibility schemes.

Over the last three years, two FPOs, including MNMACs, have advanced to the point where they have developed their own infrastructure. Another exciting aspect of the FPO's composition is that one-third of the board comprises women. Agronomy training is also provided to farmer members.

"We are the first in the country to receive digital IDs for farmers." Furthermore, the FPOs have adopted traceability in collaboration with TraceX. This will allow us to include a QR code on the package to identify the village where the coffee was grown. This demonstrates that the produce is from a single source, which is why it commands a premium," Deranna said.