Makkajipalle is a village in Anantapur district in Andhra Pradesh, about 200 km north of Bangalore. Anantapur is home to one of India’s best-known citizens — Sri Satya Sai Baba, who has a thriving ashram in Puttaparthi, not far from Makkajipalle. Anantapur is also famous for receiving India’s second lowest rainfall.
If all goes according to plan, there’s another reason why nondescript villages like Makkajipalle might emerge on the AP map in the near future. Tucked away in the village is a groundnut processing mill set up by the village co-operative. This is the brainchild of Trilochan Sastry, dean of academic affairs at IIM, Bangalore. This is also the crucible where Sastry is searching for a new co-operative model that serves the poor, without subsidy or funding
On that Tuesday morning, Sastry is present at the village, wearing his other hat: As head of the Centre for Collective Development (CCD), a Hyderabad-based NGO he helped found in 2003. He’s leading a meeting of the co-operative, which is attended by farmers, CCD officials and commodity brokers. Sastry explains how the co-operative members should distribute the profits among themselves.
Today, Sastry’s experiments with his NGO have reached a tipping point. CCD has 50 co-operatives with 2,500 members over two Andhra Pradesh districts — Adilabad and Anantapur. Till last year, the co-ops in Adilabad did a turnover of Rs. 2.4 crore and generated a surplus of Rs. 40 lakh. Each member received a bonus of Rs. 5,600 or 30 percent of their annual income. On the other hand, the seven co-operatives in Anantapur procured Rs. 50 lakh worth of groundnuts this season.
For Sastry, this presents a set of difficult personal choices. So far, CCD’s work has been funded by grants from Hivos, Ford Foundation and the Dorabji Tata Trust. None of the co-operatives have so far made a loss, but CCD needs to raise funds to take its operations to the next level and set up more co-operatives around the country. Sastry’s ambitions include hiring commodity analysts and specialists to train farmers and building a national brand for the co-ops produce.
Here’s the dilemma: Sastry is aware that no one has been able to replicate the success of the Amul milk co-operative movement. And if Sastry has to prove his detractors wrong, he’ll need to plunge full-time into CCD and give up his academic perch at IIM-B. So far, he has played the role of a CEO informally, balancing his responsibilities at IIM-B. He refuses to draw a salary from CCD, travels on his own expense and insists that his IIM-B salary is enough to take care of his needs.
Sometime ago, Shashi Rajgopalan, CCD’s chairperson, asked Sastry to take over as CEO of CCD and draw a salary. Sastry did not agree, and apparently told her that this was the way he wanted to run things at CCD. Rajgopalan resigned from the board soon after.
Meanwhile, Sastry’s career is at an interesting juncture. He’s been shortlisted for the director’s job at the upcoming IIM campuses. And while his strong leftist leanings irk many of his colleagues, Sastry shares a good rapport with Reliance supremo Mukesh Ambani who chairs the IIM-B board. Besides, being a part of the charmed IIM network helps open many doors for Sastry and the social causes he supports, especially at the time of fund raising, and it may not be easy for him to let go of this bully pulpit.
Rebel with a Cause
Son of a school teacher, Sastry excelled at academics, picking up degrees from IIT-D, IIM-A and a Ph.D from MIT. And yet he eschewed the trappings of a corporate job that would have undoubtedly made him wealthy. The apathy of the system towards farmers shocked Sastry. He would often wonder why corporations would get a working capital loan for 6 percent, while a village co-operative would be charged double that rate. “Infosys didn’t have to pay taxes for several years, but the co-operatives are paying almost 30 percent tax on profits” he says.
Sastry decided to do something about the farmers’ situation. About a decade ago, he took a 14-month sabbatical to volunteer for the Society for Elimination of Rural Poverty, an initiative of the Andhra Pradesh government to understand the problems of rural poor and look for solutions.
The inspiration for setting up co-operatives came from Dr. Varghese Kurien, who made Operation Flood one of the most successful development projects in the world. It pulled millions of people out of poverty, using milk cooperatives as a vehicle and created one of the world’s largest supply chains.
His commitment to the development agenda has attracted several leaders to CCD. S. Sivakumar, CEO, ITC’s Agri Business Division and the architect of its eChoupal model, was one such person. “Sastry is not a typical academician; he has actually gotten down to doing something,” says Sivakumar.
Setting up a co-operative is hard work. Initially, Sastry would drive out from IIM-B on weekends in his Maruti 800 to villages in Anantapur. The timing was bad. A three-year drought had left the farmers desperate and pessimistic. Undeterred, Sastry identified the poorest villages and started organising meetings of farmers. Today, 600 farmers in Anantapur have joined co-operatives. In Adilabad, CCD has had better results. The area receives more rainfall than Anantapur, the average landholding is bigger and there are fewer money lenders as compared to Anantapur.
Sastry wants to cut out the middle man, passing on maximum value to the farmers. CCD works in villages with less than 200 families, where money lenders typically do not operate.
Even though the CCD model is showing results, its impact is small. And this is the moment where Sastry has to prove that the co-operative model can be replicated to commodities. That’s something experienced practitioners like ITC’s Sivakumar reckon is difficult.