Krushi Samruddhi Producer Company Ltd, a farners’ company promoted by Ravikiran Patil, an engineer-turned-social activist, looks to do business with textile giant Raymond Ltd, as it builds Rs1400 crore plant at Nandgaonpeth in Amravati. They look to supply lint (processed cotton) to Raymond. A meeting of representatives of the two companies facilitated by chief minister Devendra Fadnavis is expected to be held next week.

Based in Achalpur town, this farmers' company came into existence two years ago. Formed under state government's convergence of agriculture intervention in Maharashtra programme, at present it has 2,000 shareholders and the share capital stands at Rs4 lakh. The government has infused Rs2 lakh with an equal amount subscribed by the farmers, said Patil, also a director in the company.

The shareholders are farmers in the vicinity with each one holding a single share. Most farmers have holding below 5 acres bringing them into small and medium category growers. They have clocked a turnover of Rs3.68 crore so far. However, this cannot be compared with any conventional business.

Their company does not directly deal in the farm produce but facilitates. They facilitate contract farming arrangements for members. The income earned by the farmers through such deals is taken as their turnover. It is a no-profit-no-loss company with discounts earned on bulk purchases of raw material also passed on to the farmers.

A group of 60 farmers associated with the company have undertaken cotton ginning operations. Instead of selling raw cotton for a small margin, they decided to sell lint instead. Textile industry buys lint which is made after separating seeds out of raw cotton.

They began with making 110 bales of lint. The first lot was sold to Netherland-based Louis Drefus through a local stockist as the company does not have direct export licence. The next year production was doubled with the lint sold to Indore-based based Laxmi Cotton Mills. Patil claimed this year it had a stock of 1200 bales which are being disposed of as and when profitable deals happen.

With Raymond, there are plans to jack up the production 10 times at 12,000. The company is already getting calls from farmers in the area to join the group. The bales would have to be made according the Raymond's standards of length and weight which will be discussed in next week's meeting, said Patil. A similar deal is planned with Siyaram's too.

Patil admitted this year the profits were just Rs300 a quintal more than what would a farmer gain if he sold raw cotton. Last two years were better with a premium of Rs500 and Rs700 per quintal of cotton sold after processing into lint. It is a part of business so they have to be prepared for ups and downs.

Ravi Agrawal, a cotton ginner in Paratwada, said that he was aware of the company's activities and it was indeed helping the farmers. The company has been set up based on government's idea of making the grower sell his produce directly to the end-user.

The business idea came up during discussions with farmers themselves. It was seen that selling raw cotton through middlemen fetched them around Rs4000 to 4500 a quintal. Lint fetched them Rs32,700 per candy (2 bales). Each quintal of cotton generates 37kg of lint. A candy weighs 370kg. Around 10 quintals of raw cotton go in making one candy of lint. Apart from it farmers sell 650 kgs of cotton seeds generated at Rs2250 a quintal.