| Revenue
Model of Krishi Pragati Kendra (KPK)
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1. Assumptions
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Krishi Pragati Kendra (KPK) is a center in a village, which
gives all the necessary information & training about Agri-Inputs to the
member farmers. It also helps farmers to get better price realization for their
crop.
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To start with, a KPK provides its services to a farming area of 20 Sqr.
kms or 4000-5000 Acres. One KPK starts its operations with 100 farmers
& this number gradually increases up to 1000-1500 farmers.
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To be very precise the KPK is responsible for providing following services
to the farmers:
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- Training, knowledge & availability of Agri-Inputs.
- Knowledge dissemination of various segments of agriculture.
- Better price realization for the crop.
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The above services are provided by KPK with the help
of District Management Network and revenues are shared amongst the various
participants. The revenue sharing pattern is different for different sources of
revenue and is explained in the point below.
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2. Revenue Model
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Revenue model is so designed that revenues are shared amongst the network according to the value
additions made by them.
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There are three sources of revenue generations and the same are shared with the network as below.
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Through registration |
Through input (VAC*) |
Through output (VAC*) |
| KPK Owner |
15% |
40% |
40% |
| KPK(C) |
5% |
20% |
20% |
| TC |
3% |
12% |
12% |
| DLC |
2% |
8% |
8% |
| ZI |
1% |
6% |
6% |
| Total sharing |
26% |
86% |
86% |
| ANPL Share |
74% |
14% |
14% |
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2.1 Example of a Territory & Revenue sharing
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- A territory consists of 1 TC, 4 KPK(C), 20 KPKs, 100 villages and 100 registered farmers per KPK in the first year.
- For the ease of calculation purpose, one crop of wheat and rice is taken in a year with following calculations.
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First Crop: Wheat
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Average production per acre = 25 mann = 1000 kg
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Average production per farmer = 125 mann = 5000 kg
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Average price realization per kg = Rs. 6.30
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Total realization = 5000 x Rs. 6.30 = Rs. 31500
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Second Crop: Rice
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Average production per acre = 20 mann = 800 kg
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Average production per farmer = 100 mann = 4000 kg
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Average price realization per kg = Rs. 5.50
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Total realization = 4000 Rs. 5.50 = Rs. 22000
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2.2 Projected revenues for various stakeholders per KPK
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Assumptions :
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| 1 KPK |
= |
100 farmers |
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| Total service area |
= |
100 * 5 acre(per farmer) |
= |
500 acres |
| Input comsumption per acre |
= |
2 bags urea + 1 bags DAP + 1 bag seed + agrochemicals |
= |
Rs. 1500/- |
| Output per acre |
= |
10 qntl. wheat + 8 qntls. paddy = Rs. 6300 + Rs. 4400 |
= |
Rs. 10700 |
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| At 100% operation level |
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From Registration
100 * 250 = 25000 |
From Input
5% of 100 * 5 * 1500 |
From output
1% of 100 * 5 * 10700 |
| KPK Owner |
15% |
Rs. 3750/- |
40% of 5% |
Rs. 15000/- |
40% of 1% |
Rs. 21400/- |
| KPK(C) |
5% |
Rs. 1250/- |
20% of 5% |
Rs. 7500/- |
20% of 1% |
Rs. 10700/- |
| TC |
3% |
Rs. 750/- |
12% of 5% |
Rs. 4500/- |
12% of 1% |
Rs. 6400/- |
| DLC |
2% |
Rs. 500/- |
8% of 5% |
Rs. 3000/- |
8% of 1% |
Rs. 4280/- |
| ZI |
1% |
Rs. 250/- |
6% of 5% |
Rs. 2250/- |
6% of 1% |
Rs. 3210/- |
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| At 50% operation level (other than registration) |
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From Registration
100 * 250 = 25000 |
From Input
5% of 50 * 5 * 1500 |
From output
1% of 50 * 5 * 10700 |
| KPK Owner |
15% |
Rs. 3750/- |
40% of 5% |
Rs. 7500/- |
40% of 1% |
Rs. 10700/- |
| KPK(C) |
5% |
Rs. 1250/- |
20% of 5% |
Rs. 3750/- |
20% of 1% |
Rs. 5350/- |
| TC |
3% |
Rs. 750/- |
12% of 5% |
Rs. 2250/- |
12% of 1% |
Rs. 3210/- |
| DLC |
2% |
Rs. 500/- |
8% of 5% |
Rs. 1500/- |
8% of 1% |
Rs. 2140/- |
| ZI |
1% |
Rs. 250/- |
6% of 5% |
Rs. 1125/- |
6% of 1% |
Rs. 1605/- |
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| At 25% operation level (other than registration) |
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From Registration
100 * 250 = 25000 |
From Input
5% of 25 * 5 * 1500 |
From output
1% of 25 * 5 * 10700 |
| KPK Owner |
15% |
Rs. 3750/- |
40% of 5% |
Rs. 3750/- |
40% of 1% |
Rs. 5350/- |
| KPK(C) |
5% |
Rs. 1250/- |
20% of 5% |
Rs. 1875/- |
20% of 1% |
Rs. 2675/- |
| TC |
3% |
Rs. 750/- |
12% of 5% |
Rs. 1125/- |
12% of 1% |
Rs. 1605/- |
| DLC |
2% |
Rs. 500/- |
8% of 5% |
Rs. 750/- |
8% of 1% |
Rs. 1070/- |
| ZI |
1% |
Rs. 250/- |
6% of 5% |
Rs. 562/- |
6% of 1% |
Rs. 802/- |
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* In principle policy of Value Added Commission(VAC) to be
shared in the network on account of fecilitating distribution of Inputs
and outputs.
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1. There is got to be VAC(value added commission) to be
distributed in the network those who are adding values so that benefits
to farmers are made possible. This VAC will vary from item to item and
will be decided by ANPL.
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2. This VAC will be collected by ANPL thru either companies (in
ideal scenario) or thru KPK's (in reverse scenario).
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3. Thus VAC will be distributed on monthly basis to the
network as per following sharing pattern :
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| 40% |
==> |
KPK Owner |
| 20% |
==> |
KPK(C) |
| 12% |
==> |
TC |
| 8% |
==> |
DLC |
| 6% |
==> |
ZI |
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4. Scenarios and Alternatives
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4.1 Ideal Scenario (where commission is paid by seller)
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VAC (value added commission) is paid by seller to ANPL and ANPL
distributers it in the network by way of cheque/demand draft.
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e.g. KRBL sells seeds @ Rs. 25/- kg in the market through dealers and is ready
to deliver seeds @ Rs.23/- kg to the network to sell it to farmer @ Rs. 24/- kg
giving Rs. 1/- advantage to the farmer and the balance Rs. 1/- KRBL passes to
ANPL for distribution in the network.
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Thus out of Rs. 2/- advantage
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50% to the farmers |
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50% to the network |
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Thus VAC is Rs. 1/- which is 4% of the transaction value and will be distributed as below
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| 40% |
-- |
Rs. 0.40 |
-- |
KPK Owner |
| 20% |
-- |
Rs. 0.20 |
-- |
KPK(C) |
| 12% |
-- |
Rs. 0.12 |
-- |
TC |
| 8% |
-- |
Rs. 0.08 |
-- |
DLC |
| 6% |
-- |
Rs. 0.06 |
-- |
ZI |
| 14% |
-- |
Rs. 0.14 |
-- |
ANPL |
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4.2 Reverse Scenario (where commission is paid by buyers)
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Since to collect VAC from the buyer is only a hypothetical situation, it
needs to be added in the basic price before the same is offered to buyer.
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Price offered = Actual price + VAC
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Hence the mode of collection of price offered is got to be in cash and
thereafter two separate drafts are to be made, 1) Actual price (favouring
the company) and 2) VAC (favouring ANPL).
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The draft received by ANPL is then distributed in the network as per the following pattern :
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| 40% |
-- |
KPK Owner |
| 20% |
-- |
KPK(C) |
| 12% |
-- |
TC |
| 8% |
-- |
DLC |
| 6% |
-- |
ZI |
| 14% |
-- |
ANPL |
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e.g. NFL offers the fertilizers to be made available at Rs. 225/- at KPK
for it to sell to farmers at Rs. 230/- (Market price being Rs. 235/-&
thus farmer getting advantage of Rs. 5/-).
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KPK to collect @ Rs. 230/- from farmers on accumlated demand
and thereafter make 2 separate DDs –
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1) @ Rs. 225/- favouring NFL
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2) @ Rs. 5/- favouring ANPL
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If the demand is of 200 bags thus the two DD values are :
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225 * 200 = Rs. 45000/- favouring NFL
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5 * 200 = Rs. 1000/- favouring ANPL
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Rs. 1000/- so received by ANPL will get distributed as below :
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| KPK
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| 40%
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| Rs. 400/-
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| KPK(C)
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| 20%
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| Rs. 200/-
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| TC
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| 12%
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| Rs. 120/-
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| DLC
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| 8%
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| Rs. 80/-
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| ZI
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| 6%
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| Rs. 60/-
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| ANPL
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| 14%
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| Rs. 140/-
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| Total
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| 100%
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| Rs. 1000/-
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