Araku Valley tribal coffee farmers reap rich dividends from Walmart-TechnoServe tieup

A farmer producer organisation (FPO) working with coffee growers in the tribal Araku Valley in Andhra Pradesh, M. Nittapattu Mutually Aided Cooperative Society (MNMACS), won an award for being the Best Organic Business FPO in the south at the Jaivik India Awards 2022. 

The award could have been for the best organic business, but behind it are efforts that have been put in not just by MNMACs but also by seven other FPOs that are engaged in the valley to not just improve the economy of tribal growers but also make their living sustainable.

$25 m commitment 

Behind these FPOs—the eight in particular—are the Walmart Foundation, which addresses economic, environmental, and social challenges faced by growers, and TechnoServe, a US-based non-profit organisation that promotes business solutions to poverty in developing nations. 

“In 2018, the Walmart Foundation made a commitment to about $25 million to India over five years to improve farmer livelihoods. By 2019, TechnoServe came into the picture, and we pitched the idea of working with smallholding farmers,” said Sandesh Deranna, Coffee Value Chain Lead at TechnoServe. 

Sandesh Deranna, Coffee Value Chain Lead at TechnoServe

TechnoServe, which works in 30 countries in the agronomy chain, said it could improve the livelihoods of farmers, but its model is to work through FPOs, he said. 

The US-based NGO chose the FPO model to work with the tribal farmers, numbering one lakh but are spread over a huge area in 1,400 villages in the valley. 

Right model to reach

“They are dispersed in different villages and localities. To reach them, we found that FPOs were the right model since they were the collectives of all these farmers,” he said. 

Coffee is the main vertical, but TechnoServe helps them with black pepper and turmeric too. “Black pepper is grown as an intercrop (with coffee). So, that is already taken care of. Turmeric is grown in the lower plains,” the TechnoServe official said. 

Besides these, the farmers cultivate paddy and rajma (kidney beans). 

Rising buyer numbers

TechnoServe is working with the eight FPOs, and its main objective is to ensure the market linkages to farmers are enhanced. “Prior to our intervention, it was mainly middlemen (who were these tribal growers’ access to markets). Nandi Foundation, which was doing its own on a small scale, was also there,” Deranna said. 

So the first step in this direction was to approach institutional buyers. “We approached the institutions since they will make it sustainable for the tribal growers. They have an ethical and systematic way of doing business. We chose the buyers and worked with them,” he said.

These buyers, such as Tata and ITC, have begun sourcing coffee from the Araku Valley growers, and the list of buyers has increased to six now. “We were able to improve the quality a bit and post-harvest management too. We specifically got into the specialty coffee sector since this is a non-traditional area that has got a competitive edge,” the TechnoServe lead said. 

Specialty coffee

The farmers of the Araku Valley cannot compete in terms of competence, knowledge, and experience of traditional coffee growers. So, the NGO decided to make the growers compete on quality terms, particularly since the produce is organic by default. 

“We decided to get into the retail business, and we roped in Blue Tokai Coffee and HumbleBean Coffee. These companies have now started directly from the FPOs here with no interference from anyone whatsoever,” he explained.

One of the advantages of organic coffee from the Araku Valley is that it is a single source and is sold at around ₹700 for 250 gm. “What was happening before was that farmers were selling this coffee at a lower price. But with middlemen being cut out and the FPOs selling directly, they are now getting a fair price and competing with the best coffees at Kushalnagar, a centre for selling coffee,” Deranna said. 

Aware of marketing factors

The FPOs producing coffee transported 36 truckloads of coffee last fiscal year, up from practically zero three years ago. “Araku Valley coffee used to be rejected or offered low prices, with buyers pointing to high moisture. Growers are now aware of the factors responsible for marketing their produce and have set up facilities to improve the quality,” he said.

For example, the FPOs now use government-certified weighing scales. They have set up wet mills and dryers, including solar. “All these have been set up at their own costs. Our role has been to make the growers aware of these parameters and help them get market and financial access. Not a single truckload of the 36 consignments we sent to Kushalnagar last fiscal year was rejected. This fiscal year, we will send 38 consignments,” Deranna said. 

Certification audits

On the other hand, farmers now ask buyers to weigh their produce with similar government-certified scales. 

As a result of these efforts, the transactions and business of 5–6 of the FPOs have increased to ₹1 crore from nil in 2019. One of the FPOs earns over ₹2 crore. The significance of this is that the growers have understood the importance of quality and marketing without any funding from outside sources. The growers and FPOs have reinvested their profits into improving their prospects, he said. 

“All this has helped them get the market price for their produce now. They also go for certification audits,” the TechnoServe lead said.

 On the other hand, efforts have now begun to grow indigenous trees on coffee plantations instead of imported varieties such as Silver Oak. “Making pepper grow on these indigenous trees yield good results,” he said. 

Social responsibility

For pepper, the FPOs have been put through to one of the leading players in the spice trade in Bengaluru. Farmers get a premium as the produce is organic. All these efforts have been made without any child labour being involved. Then there is rain harvesting, too. Both of these fetch additional prices for growers since their produce gets certified for these social responsibility schemes.

Over the past three years, two of the FPOs, including MNMACs, have progressed in such a way that they have come up with their own infrastructure. Another feature of the FPOs composition is that one-third of the board comprises women. The farmer members are given training in agronomy, too.

“We are now getting digital IDs for farmers, the first in the country. Besides, the FPOs have adopted traceability in league with TraceX. This will ensure that we can carry a QR code on the package that will identify the village where the coffee has been grown. This shows the produce is from a single source and why it commands a premium,” Deranna said. 

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