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RUDI-SEWA: RURAL DISTRIBUTION

NETWORK

DOCUMENTATION OF BEST PRACTICE

DECEMBER 2010
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EXECUTIVE SUMMARY

Supply chain management of farming activities in rural India is often disadvantageous for
marginal farmers. Surplus grown and sold may be minimal, but what is more, is middlemen
buy from farmers at very low prices, resulting in profit margins on production that barely
allow for survival. Poor access to both preservation units for bulk storage and a wide
network of suppliers leave many farmers with little choice but to sell small quantities to the
middlemen working in their communities.

Self Employed Women’s Association (SEWA) is one of

the most well-known and well-respected trade unions
and movement for the improvement of women’s lives
in India. It began in 1972 and has since helped
women throughout the country through various efforts
including social network building, financial inclusion,
and community empowerment through radio, with the
ultimate goal of full employment.

RUDI Multi Trading Company aims to generate funds,

internal to the SEWA network, that would enhance the
quality, capacity and efficiency of rural production. By
leveraging their large-scale membership for nurturing
local skilled businesswomen along the rural production value chain, SEWA piloted the RUDI
initiative in Sabarkantha district of Gujarat.

Today, there are five RUDI processing centres catering to 14 districts in Gujarat. Each
centre is comprised of technical teams that nurture skilled workers at all levels of the supply
chain – from purchasing to marketing. Production is focused on spices (i.e. cumin, chilli,
coriander, fenugreek, mustard), pulses (i.e. daal), and cereals (i.e. rice, wheat, millet).
Packaging and marketing include technical training sessions in labelling and brand
promotion.

The sales turnover has been doubling year over year and aims to reach 6 crores in 2010-
2011. Moreover, the profit margin has reached 12 percent.
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BACKGROUND

A RURAL DISTRIBUTION NETWORK

“The idea of setting up the Rural Distribution Network is to internally rotate the scarce funds
of rural producers in a way that fetches maximum benefit and brings about positive changes
in their lives and to provide multi-user facilities, reduce incidental expenses and build-up an
integrated value chain in order to enhance the efficiency of agricultural activities, to reduce
the hardships of the producers, processors and to create multiple employment opportunities
and an efficient supply of agro-products to rural members”

RUDI was launched to raise the economic status of women farmers in a sustainable,
scalable and systematic manner by nurturing livelihoods at all levels of the supply chain. As
the largest rural women’s network in the country, SEWA - the Self Employed Women’s
Association – in partnership with the Government of Gujarat, determined to assist rural
women to produce, process, market and sell agro-commodities through training and
mentoring, as well as eliminating middlemen through establishing direct ties with bulk
buyers. This rural distribution network is intended to raise profit margins for local workers,
by which the whole community should benefit through profit-sharing amongst self-help
groups.

In 1999, the Department of Rural Development, Gujarat and SEWA founded SEWA Gram
Mahila Haat (SGMH) in order to ‘eliminate middlemen and provide direct technical financial
and marketing facilities to the rural poor producers’ of the state. The programme focuses
on linking local producers in four sectors - agriculture, salt, forest produce, and handicrafts-
to large corporate bulk buyers. Through its pilot, SGMH connected 1450 SEWA sesame
farmers to bulk buyers. Upon the conclusion of the pilot, it was determined that the
mechanism work towards helping a larger number of SEWA members across the value
chain. As such, the pilot gave birth to the RUDI Multi Trading Company, which aims to
generate funds within the SEWA network to enhance the quality, capacity and efficiency of
production. By leveraging their large-scale membership for nurturing local women
entrepreneurs along the farming value chain, SEWA piloted the RUDI initiative in
Sabarkantha district of Gujarat.

Today, there are five RUDI processing centres catering to 14 districts in Gujarat. Each
centre has a technical team with six major groups that nurture entrepreneurs at all levels of
the supply chain – from purchasing to marketing. Spices (i.e. cumin, chilli, coriander,
fenugreek, mustard), pulses (i.e. daal), and cereals (i.e. rice, wheat, millet) are produced.
Processing includes appropriate packaging and labelling. Marketing and brand promotion
educates the populous on how to build and sustain demand in order for activities to be
profitable. The women who perform sale transactions with buyers are called ‘rudiben’.
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OBJECTIVE

The high level objective of RUDI-SEWA is threefold:

1. Employment of women year around (i.e. not merely during the agricultural season)

2. Rid middlemen to better the economic situation of producers

3. Better the quality of local agro-commodities

To reach the above goals, the programme aims to:

1. Assist in all levels of the supply chain – crop production, purchasing, quality control,
accounting, processing, brand promotion and marketing

2. Connect local SEWA members through value chain linkages

Following their parent organisation’s vision of Gandhi’s ‘Gram Swaraj’, RUDI-SEWA looks to
improve the conditions of India’s rural population by making them self-sufficient.

WORKING DESIGN

The rural distribution network that is RUDI works through dedicated centres that operate at
all levels of processes. Village hubs cater to three villages at any given time. Above village
hubs are district level hubs. There are storage and processing centres at all village hub
centres. Distribution centres sit at the village and district levels. RUDI retail outlets operate
in villages across the state. A targeted 80 percent of total production is sorted, cleaned and
packed at village hubs. It is then sent to the district hubs where it is supplied to sellers
based on demand.
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There are five RUDI processing centres that cover 14 districts. Each processing centre has a
technical team comprised of six groups that facilitate all post harvest management
activities:

1. Procurement:
Procurement Women purchase agro-produce in tons. This is a significant process
because these local women are introduced to the fundamentals of market pricing;
they become familiar with price discrepancies between suppliers and also learn how
to determine fair pricing.

2. Processing and Packaging:

Packaging Rural women are taught to clean, sieve, grind, weigh,
package and label agro-commodities. This stage introduces the concept of ‘value
added’ to women producers who are witness to the transformation of a raw material
to a marketable product.

3. Quality Control:
Control Agro-commodities are inspected for quality. Women learn about the
meaning and value of product quality.

4. Brand Promotion:
Promotion: Rural women spread awareness about RUDI products. They learn
the most effective ways of spreading awareness about a brand.

5. Marketing: For every processing centre, there are around 100 Rudiben who work to
market RUDI products. Rudiben learn to effectively advertise products to buyers.
RUDI products are promoted as ‘value for money’ products that are ‘pure’ because
they are developed at the local level by rural women.

6. Recordkeeping
Recordkeeping & Accounting:
Accounting: A small contingent of women is trained in basic
financial accounting.
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Source: Sewa.org

Other activities include transportation where women load and unload goods at the villages
and hubs. Additionally, continual production is carried out whereby women make washing
powder, agarbatti, toothpaste and other basic commodities.

Basic technologies are leveraged throughout the process. These include the use electronic
weighing machines, stamping and sealing tools and printers. At the district level, a
management information system is used to monitor activities as well as develop purchase
plans.

In the post harvest phase, district workers seek market prices from the SGMH Business
Information Centre and then send this information to village hubs. At village hubs, third party
service providers help to provide adequate storage space and facilitate cleaning, drying and
grading. Goods are organised based on whether processing, packing or further production is
required.
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At village hub centres, rudiben navigate a defined route through a cluster of villages to sell
products. Rudiben are selected based on a few minimal criteria: not too young or old, not
having small children or in the business of animal husbandry, basic intelligence, and in good
health in order to walk for long distances. Rudiben receive a 10 percent commission on all
products that they sell. Major buyers/dealers are selected through the SEWA network.

METHODOLOGY

The OneWorld Governance Knowledge Centre research team identified RUDI-SEWA as a best
practice in service delivery because of its unique approach to nurturing rural and marginal
women with relevant business skills.

The model is particularly noteworthy for a couple of reasons. First, because of its highly
intricate and powerful SEWA network base, it has been able to penetrate this particularly
disadvantaged sector of society. Second, the platform allows for skill enhancement at all levels
of the value chain which increases the economic status of the worker in a sustainable manner.

OneWorld researchers performed secondary research through online sources. An interview

questionnaire was developed to fill in all remaining gaps in understanding. Researchers
travelled to Ahmedabad to the RUDI-SEWA head office to gather information from a Project
Manager and the Director.

KEY STAKEHOLDERS

Institutions:
Institutions:

Rudi Multi Trading Company Ltd. – business owner; Sewa Gram Mahila Haat - SGMH
carries out training and capacity building efforts. Regulates and supports activities.
Provides market prices to district centres and also possible business expansion
opportunities; District Associations - District associations procure raw produce from
producer groups, or self-help groups of small and marginal farmers, and then process
the them at the highest level of efficiency possible.

Individual Actors:

1. Farmers
2. Third party technical trainers
3. Service providers – transport, warehousing
4. Processors and promoters at the district level
5. Rural retailers at the village level
6. Consumers
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LESSONS LEARNED

Since its inception, RUDI has been doubling its sales turnover year over year. Today, the
profit margin is 12 percent. The director of RUDI attributes these strong figures to the
quality of the products being produced. Below are some additional reasons for success, as
well as pointers for replication.

Rural Network Distribution

The distribution model streamlines the process in such a way that production to sale is
effective and efficient. The model takes a basic rural raw product, adds value to it through
networked management of processing and promotion, and then connects it to the urban
market through dedicated buyers. The end result is profitable products which contribute to
the economic growth of workers at all levels of the value chain.

The model creates efficiencies that rids waste in all stages of processing including picking,
harvesting, packing, transporting, storage and marketing. These efficiencies reduce cost in
big way.

Clear Understanding of Supply/Demand

When operating in a market economy, it is crucial to focus on the factors that affect supply
and demand. In this case, RUDI initially saw very fast growth in rural areas, so prices were
raised; however, as prices increased, demand began to fall and eventually, it was clear that
volume of sales needed to expand for sustainable and long-lasting growth. With this,
marketing and brand promotion efforts were extended beyond the starting target market.

Employment with Skill Enhancement

RUDI employs a growing number of village women who are of poor communities. The
programme gives them work throughout the year, whereby they can generate enough
income to feed and educate their children. Employment also brings with it feelings of
greater self worth. RUDI is unique in that it supports skill enhancement along with
employment and therefore, provides a platform for income growth over time. As workers
learn new skills, they are likely to continue learning and moving into more profitable
activities along the value chain.

Research was carried out by the OneWorld Foundation, Governance Knowledge Centre (GKC) team.
Documentation was created by Knowledge and Research Coordinator, OWFI. Nicole Anand.
For further information, please contact Mr. Naimur Rahman, Director, OWFI.
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APPENDIX A – INTERVIEW QUESTIONAIRRE

Uma Swaminathan, Director, SEWA-

SEWA-RUDI

1. How does RUDI-SEWA operate – from partnering with village farmers to diversifying their
agro-commodities, to partnering with buyers? How does the entire supply chain
management process/ rural distribution network work?

2. What are the key objectives of RUDI-SEWA?

3. The marketing strategy includes the sale of ‘pure’ products – what does this mean?

4. Can you talk about the range of agro-commodities under the ‘rudi’ brand? What are they and
why were they chosen?

5. How are the women entrepreneurs (500 per month) selected? How are some chosen for
certain jobs perhaps those requiring specific training i.e. Finance?

6. How is technology leveraged in RUDI-SEWA? What do the IT and MIS jobs for women
involve?

7. What sorts of training programmes are encompassed under the project?

8. Which large retailers/bulk buyers has RUDI teamed up with to increase market reach?

9. 2009-10 marks the fifth year of RUDI-SEWA operations.

a. How has strategy to create an impact changed over time?

b. What was the sales turnover for 2008-2009? What is the expected sales turnover
for this year?

10. Do you believe that RUDI-SEWA has fulfilled their goal of upholding gram swaraj? If so how?

11. How has RUDI-SEWA impacted the communities it works with in terms of employment
creation, income elevation, and enhanced agro-diversity? What about impact on buyers - how
have they benefited from buying and selling rudi products?

12. What have been some of the challenges faced in the past and what measures have been
taken to overcome them?

13. Do you believe that RUDI-SEWA is sustainable? Financially and socially? Why?

References

http://www.changemakers.com/node/90693
http://www.sewa.org
http://www.sewarudi.com
Interviews with Director, Uma Swaminathan and Sunitaben.