Last week, the 2010 Villgro fellows took a trip out to Gobichettipalayam, site of Villgro’s pilot project of 10 retail agricultural supplies stores. Located in the Erode district of Tamil Nadu, Gobichettipalayam is the heart of paddy (rice) country. According to Wikipedia, the fertile paddies of Gobi are the cause of the perpetual influx of Tamil dancers and singers who like to film amidst all the lush greenery. The same lush fertile paddies were also the same reason that Villgro decided to pilot its retail store model in Gobi – the local farmers had steady enough crops year round to be willing to try out new agricultural products. Gobi was just ripe for retail agriculture.
The Model
Villgro’s retail model revisits an old-fashioned salesman model that has since gone out of fashion in the West – the Avon model (see model in photo).
In order to address the challenge of reaching small rural farmers, Villgro has come up with the concept of a Village Level Entrepreneur (VLE), who are local farmers and act as the direct sales representatives for Villgro. Each VLE is responsible for 4 villages, and each Villgro store has 5 VLEs, thus each store can reach 20 villages in an are. Like the Avon ladies who go door-to-door to sell cosmetics, the VLEs reach out to each individual farmer in their village to demonstrate and sell crop fertilizers and animal feeds. VLEs help to increase the credibility of the products by providing local endorsements. In addition, each Villgro store conducts pilot tests locally of each product before they are sold. The pilot tests serve to both demonstrate to farmers the value of the fertlizers / feeds, as well as increase the brand visibility. All of these labor and cost intensive measures are necessary in order to overcome the difficulties of building the trust and distribution channels for sales penetration of the rural market.
We visited with several VLEs and farmers who were conducting pilot tests for Villgro products around the Gobi area. They weren’t the most sophisticated business people, but they were financially savvy and understood the cost-benefit analysis behind the fertilizers and feeds that they used. They said that they saw dramatic benefits in terms of their crop yields and dairy production when they used the organic products distributed by Villgro. The farmer pictured below is a woman with 5 acres of land on which she grows 2 seasons of sugarcane and 1 season of rice. She stands amidst a health strong sugarcane crop that is fertilized using one of the organic products tested by Villgro. Even though she had little knowledge of the Villgro brand, she trusts the VLE who sells products to her and above all, she trusts the results that she sees from usage.
Sustainability
It’s undeniable that sustainability is a key issue in this model. Not only are there great risks in the VLE model, the same ones that have led to the negative perceptions of Avon and other pyramid schemes in the US, but there are also risks with the cost-heavy structure of the sales process. However, there are great benefits to be considered as well, which is why Villgro is hoping to roll out 20 more stores within the next year. The benefits are that farmers are finally aware of the products that are available to help them increase their income generation. The other benefit is also the development of a whole new level of entrepreneurs within the villages. VLEs, who undergo significant training and who develop these businesses, may just lead to the next generation of rural innovations. So even though the risks are high, it is a worthy undertaking and if Villgro can succeed to create a rural distribution channel to take it to that last mile, then we all profit.
