Aggregation for Livelihood
Creation
L
ivelihood generation encompasses the process of setting up of various micro and small enterprises to help people achieve income generation, food security, etc. A sustainable livelihood approach focuses on capacities, needs and strengths rather than weaknesses and constraints.In order to improve the living conditions of any community, interventions should improve peoples’ access to livelihood assets and then improve their capabilities to select appropriate strategies to achieve their livelihood outcomes. One of the interventions for supporting livelihoods is aggregation. In this, emphasis is laid on the marginalised groups or local producer groups who are devoid of market access and different modes of income-generating activities. Due to lack of access, diversification and skills, these groups do not have sustainable livelihood options. For example, despite some instances of well-known design houses using locally produced handmade products such as FabIndia and Anokhi, majority of the craft production sector in India remains unorganised and informal without realising its full market potential. The artisan community more often than not continues to struggle for sustenance. Propelled by loss of markets, declining skills and difficulty in catering to new markets, a large number of artisans have moved to urban centres in search of low, unskilled employment.
According to the United Nations, over the past 30 years, the number of Indian artisans has decreased by 30 per cent, indicating the need to re-invest in livelihood security for the artisan community, safeguarding an important aspect of our culture and tradition.
Challenges faced by artisans
a. Low productivity
b. Inadequate inputs
• Lack of quality raw materials
• Lack of funding
• Design inputs
c. Information asymmetry
d. Fragmented value chain
• Lack of market linkage
• Dominance of middlemen
• Lack of aggregation
e. Lack of enabling environment
• Neglect by central and state governments
• Lack of interest by second generation end users
Aggregation involves bringing together products from decentralised production units to enable economies of scale in transportation, storage and retail. Aggregation as a model helps to create livelihood opportunities for people by providing them with access to markets. It also provides a platform to the producer groups and helps the socially conscious consumers who are willing to pay a higher price to buy these products.
Aggregation creates an opportunity for entrepreneurs to together and create the kind of wealth that would otherwise remain outside their reach if they to operated separately. It helps in exponentially increasing sales through cross-marketing and dramatically reducing the costs through resource sharing and accumulated purchasing power. The power of aggregation is achieved through the merging of several similar or related businesses into a combined entity resulting in a whole that is greater than the sum of its parts.
An aggregation becomes strategic when its members are gathered around a marketing theme that facilitates growth through cross-marketing and cost sharing.
Different Aggregation Models
• Contemporary Arts and Crafts (CAC), founded by Vina Mody and run in partnership with Feroza Mody, is a boutique retail outlet that provides unique and rare craft products to urban consumers. CAC’s success is based on its strong relationships with artisan communities in Gujarat and Rajasthan from where the products are sourced. The CAC team invests significant time in understanding craft products and working with artisans to create outputs that will be appreciated in urban markets.
• Anokhi is a clothing chain well known as an alternative role model for good business practices, and the revival of traditional textile skills. The company works closely with the Jaipur Virasat Foundation that provides capacity building inputs to artisan suppliers on design techniques, quality control and enterprise development. In addition, the foundation works in other areas such as folk art, music and dance to promote livelihoods and preserve the cultural heritage of Rajasthan.
• Fabindia, founded by John Bissell in 1960, is India’s largest private crafts business that has taken traditional techniques, skills and hand-based processes to global markets. The company has been recognised worldwide for its socially responsible business model that links over 80,000 craft producers to the markets. This has been achieved through its innovations in supply chain management through Community Owned Companies (COC), which serve as intermediaries and are owned by the communities themselves. Artisans form a significant part of the shareholding of these companies. Fabindia’s supply chain consists of numerous backward and forward linkages in a multi-layered supply chain from suppliers and artisans in rural areas to Fabindia stores in cities. These linkages ensure that the products that are sold cater to consumer tastes, quality standard and timely delivery. The multi-layered supply chain ensures that each group’s strengths are leveraged efficiently.
• Industree, a social enterprise that connects rural producers to urban markets, has been able to rapidly scale up operations through equity investment by Kishore Biyani’s Future Group. This has enabled the company to set up a retail brand called Mother Earth, and increase the number of clusters from whom they source crafts as well as provide artisans an opportunity to link to mainstream urban markets.
• Society for Technology and Action for Rural Advancement (TARA) is a 27-year-old social enterprise of the Development Alternatives Group set up to create sustainable livelihoods’ at scale. TARA’s mission is to build capacities, incubate business models and manage processes to create economic, social and environmental value on a large scale. One of its various roles is as an aggregator, where it helps large corporations explore new markets. It also develops markets for ethical products by aggregating the output of local producer groups including micro, mini and small enterprises and providing them with organised market opportunities.
TARAgram store, an initiative of TARA, houses eco-friendly hand-crafted products and aims at providing market linkages and livelihood opportunities to artisans. The store is a very strong tool for scaling up sustainable lifestyle products.
The success of these models has been built on the zeal of their founding members, who have overcome challenges in the value chain through innovative strategies that not only ensure bottom-line growth for businesses but also fair and consistent earnings to the artisans.
Investing in enhancing artisans’ incomes will not only provide greater livelihood opportunities to millions, but also ensure the longevity and relevance of Indian culture and traditions. q
Shipra Krishan
skrishan@devalt.org