Tuesday, 19 November 2013

Adding new value to traditional ways of production - Innovative business models for watermills in Uttarakhand

Traditional watermill in Baliya, Uttarakand
Using the power of water and converting it into mechanical energy has a long tradition in Uttarakand. However, owners of traditional watermills, so-called gharats, are recently facing increased competition from diesel and electric mills located directly at the markets where they grind wheat to flour. Although many nutrients get lost in the accelerated milling process of diesel and electric mills, the shortened processing time and convenient location allows them to sell their products at a higher price than traditional mills.

In cooperation with the Uttarakhand Renewable Energy Development Agency (UREDA), IGEN-RE follows a two-pronged approach to improve the livelihoods of mill owners: firstly, IGEN-RE supports the process of upgrading traditional mill technologies to increase their efficiency level and output. Secondly, the project develops models to set up additional sustainable livelihood activities based on the energy generated.

Water mill owners in Baliya, a small village near Almora all share concerns for their businesses in the near and long-term future. “It is the older people that come here. They like our flour and appreciate its superior quality” the mill owners say. “They are loyal customers who don’t mind travelling the extra distance down the river. But what will happen once they are gone?”

Khemsingh next to his flour scales
Further down the mountains, Khemsingh, the head of a 15 person household and owner of a watermill located along a water channel close to Dehradun faces a different situation. He explains: “there is no competition from electrical or diesel powered mills here, and there are only a total of three water driven mills in this area, but the demand for wheat grinding is higher than these mills can cope with”. Kamla, who has been operating her family’s watermill on her own since her husband died 29 years ago, confirms this statement. For 12 hours she grinds up to 500kg of wheat every day – when the demand is too high or if she needs the additional income, she also works throughout the night. For each kilogram of ground wheat, she earns 1 Rupee amounting to a daily wage of 400 to 500Rs. “With a more efficient mill, I could shorten my workdays and maybe also increase my income”.


Kamla at her work place
A Self Help Group (SHG) of 15 members, with support from the local NGO IDS, has developed a promising business idea based on the assumption that the improved mills will shorten processing time and increase milling efficiency. The concept foresees to carry out bulk purchases from mills, package the flour, and sell it off to wholesalers who would then distribute and market the product in local markets. By emphasising the product’s premium quality due to the traditional milling process, they can achieve a higher market price. Currently, individual farmers deliver their wheat to the mills and pick it up again once it is processed paying either in cash or flour. The new set-up would enable mill owners to increase their daily throughput allowing them to raise their turnover and revenues whilst decreasing transaction costs and establish long-term business contracts. SHG members on the other hand would get the opportunity to increase and diversify their portfolio of livelihood generating activities. So far, the SHG has been successfully engaged in the set up of dairy farming businesses, sewing classes, intra group lending schemes as well as insurance provisions to members and non-members.

One obstacle for the venture is a general lack of market data, e.g. it is unclear whether a premium price for traditional watermill products can be achieved and how much output the improved mill as well as the SHG are able to deliver. Another difficulty that has yet to be overcome is the need for a certification process that guarantees the superior quality of products from watermills in a transparent manner to wholesalers and end consumers. In cooperation with local and regional stakeholders IGEN-RE is working to overcome these barriers and to identify additional potential uses of the energy generated by the mills which, for example, could be utilized as a source of independent and decentralized electricity provision.