From working with marginal farmers, women and even giving prison-inmates with minor offences a second chance at life, ayurvedic-products maker Himalaya expects to increase its sourcing of herbs from such small farmers.

Himalaya's contract farming engages small and marginal farmers, and women farmers with small or fragmented land holdings.

“While we focus on small farmers, collectively they contribute to 40 per cent of our raw material requirement,” says Mr Ravi Prasad, Executive Chairman, The Himalaya Drug Company. This is expected to increase to 60 per cent by 2015, he told Business Line .

A different CSR

The estimated Rs 1,200-crore Himalaya group works with farmers who have three to four acres of land or less, and assures them mutually-agreed upon prices when buying herbs from them, at about 10-15 per cent above market price, he says.

Also, these farmers do not have to depend on middle-agents to sell their produce, translating to less exploitation and better price, he adds. Besides, farmers are also spared other costs such as storage and transportation.

As the Government debates whether corporates set aside a percentage of profits towards Corporate Social Responsibility, Mr Prasad advocates similar sustainable CSR programmes that integrate into the business, benefiting all stake-holders.

Quality produce

The backward integrated contract farming arrangement gives Himalaya access to good quality, authentic herbs, he says. Farmers are trained, quality monitored and the arrangement helps Himalaya develop a secure supply chain.

“Factors like seasonality, price, monsoons, usually determine what herbs are cultivated. This could either lead to a ‘no supply' situation or one where we have to pay an exorbitant price. But with our contract farmers, we can plan our cultivation beforehand. Herbs that are not in season can be cultivated and stored. This helps us circumvent the unpredictability of the open market,” he explains.

Geographic spread

The company's contract farming arrangements spread from Sikkim to Madurai, he says. “Medicinal plant cultivation is based on the soil and agro-climatic condition of the particular region. Several plants are cultivated in the kharif season.

“There are also a few hardy crops that grow well on fallow land. Farmers who grow kharif and rabi crops, can earn additional income by cultivating medicinal plants as intercrops or on their fallow land. We are exploring the possibility of working with these farmers to help supplement their income,” he says.

Traceability

Meanwhile, with quality becoming a key concern, especially in overseas markets, Himalaya has elaborate records to trace herb history, including names of farmers, place of cultivation, season, quantity, quality, price and so on.

The company has recently introduced “a unique barcoding system” to trace-back a farming activity and ensure conformity with Good Agricultural and Collection Practices. The system has been rolled out for select farmers and by 2014, all farmers would be integrated, he says.

GACP includes standardised practices for cultivation, collection, harvesting and storing of herbs. “The barcode will provide detailed information on farmers, suppliers, herb origin, and seasonal and geographical variations,” he says, adding that coding improves efficiency and gives information that is accurate and transparent.

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