Interviews with BCTA businesses: BASF india

In July 2014 Tom Harrison interviewed Thilo Bischoff, Head of Business Development for BASF in South Asia. Tom asked Thilo about BASF’s Samruddhi initiative, which is providing smallholder farmers in India with demonstrations and advice on the benefits of using chemicals to improve yields and showcasing BASF products. Samruddhi forms the basis of BASF’s BCtA commitment to ‘enhance the Soybean productivity significantly leading to prosperity of farmers and improve their livelihood, simultaneously increase BASF’s customer base and cover 300,000 farmers by 2020.’

Tom: Tell me more about the evolution of the initiative.

Thilo: BASF corporate strategy is to create a sustainable future. It is important to put our business in the context of the overall economy and society, but any activity has to be core to the business to be self-sustainable. The business model was evolved to suit the Indian context where there are many low-income farmers, who don’t know a lot about agronomical practices and suffer from low-productivity, and who are interested in trying something new. For example, soya productivity is one of the lowest in the world due to lack of good agronomical practices. BASF saw this as an opportunity but European sales models weren’t working. We developed a model where a sales force works directly with farmers to give them technical assistance to make sure that their yield will grow, and also to create trust among the farmers

Tom: How does it work in practice?

Thilo: The sales force are employees of BASF, to ensure that there is a direct contact with farmers. We also have a call centre that farmers can access to get advice from the BASF agronomists. The sales team are dealing with 20 villages each. They run different programmes to teach agro-chemical practices, safe handling of products, discuss crop diseases, other tips to help improve the yields. Anyone who is interested in attending can attend these meetings. There are lead farmers that work directly with BASF to create control and treatment groups to demonstrate the improvement in yields. This helps other farmers to understand the benefits of the right practices. Farmers buy BASF products from the retailers – farmers don’t purchase from the BASF sales-force.

Tom: Does the business model need any partnerships?

Thilo: BASF doesn’t have other partners because we want to make sure that the service provided to the farmers is fully controlled. We need to make sure that the services we offer is the same in every village.   It also allows new programmes to get rolled out on disease detection and other technical issues very easily.

Tom: How do you differentiate BASF from your competitors?

Thilo: Sales officers really get respect from farmers.  This takes a long time to establish and is considered as an asset for the company. This differentiates BASF from our competition because competitors can copy this, but a high commitment is required to do this kind of initiative and that is not so easy to replicate. In particular, the model needs significant and sustained commitment from the management level in the organization. Differentiation also comes from the way that we execute Samruddhi and our attention to detail, as the business model design itself is something that other people can replicate.

Tom: How does the model work from a commercial perspective?

Thilo: The budget comes from the business itself so Samruddhi must be commercially sustainable within the business unit.  We have found that it works financially as long as there is critical mass, but this is not possible with relatively small numbers of farmers.  We are also expanding this model to other crops including onion (25,000 farmers), chilli, groundnuts and tomatoes.

Tom: What impact is Samruddhi having on farmers? 

Thilo: We are well on our way to achieve our goal of reaching 300,000 soy bean farmers.  From our records of lead farmers and the call centre we have engaged with 220,000 farmers directly, but many more will have attended training days and interacted with the lead farmers.  We commissioned a study in 2012 to verify the benefit of the overall programmes by PwC and they found that the soy bean farmers who have benefited from the initiative get 25% more yield on average per hectare and 38% more net profit on average per hectare. In the end, these farmers are uneducated but the way they spend their increased income demonstrates that they are smart – a lot of this is re-invested into the farm and education is a priority that comes out in the PwC report. Farmers’ also spend this incremental income on better food and medicines as well as better fertilizers, machinery and also on loan repayments.

Tom: Any final comments on lessons learnt..

Thilo: The success of a resource-intensive programme like SAMRUDDHI requires a long-term commitment from the top management. The BASF Management understands this and fully supports the programme. The second important factor is to establish trust between farmers and the company which takes time, investment and commitment to create mutual gains.

This interview was one of many carried out as part of the review of the Business Call to Action (BCtA) portfolio that was published as the Flagship report Breaking Through: Inclusive Business and the Business Call to Action Today