Enterprising Ladakh Prosperity, Youth Enterprise and Cultural Values in Peripheral Regions

Working Paper No 11

Army Outsourcing

by

Ankur S. Singhai Tarun Verma

Center for Development of Corporate Citizenship

S P Jain Institute of Management & Research Mumbai

July 2005

Ladakh Autonomous Hill Development Council, Leh Druk Pema Karpo Educational Society

Drukpa Trust

in association with SECMOL

Preface This Working Paper was prepared as part of an 18-month project entitled ‘Enterprising Ladakh’. The Paper seeks to identify economic opportunities available to Ladakhis – especially young Ladakhis - in local, national and international markets. The findings will be discussed at a Workshop in Leh in July 2005, with the objective of identifying economic activities that Ladakhis themselves consider feasible, acceptable and appropriate within Ladakhi society and values. Subsequently, the project team will scope the skills and attributes required to access the preferred market opportunities, while the final stage of the project will outline a new school curriculum to impart enterprise-related skills and motivation to young Ladakhis, alongside traditional teaching of cultural and ecological values.

‘Enterprising Ladakh’ is a project being conducted by the Ladakh Autonomous Hill Development Council (LAHDC) Leh, Druk Pema Karpo Educational Society and Drukpa Trust, in association with SECMOL. The findings set out in this Working Paper are the work of Ankur S. Singhai and Tarun Verma of the Center for Development of Corporate Citizenship, S P Jain Institute of Management & Research, Mumbai. The work was carried out under the supervision of Professor Jiban Mukhopadyay, Professor M. S. Rao and Professor Nirja Mattoo (Chair of the Centre for Development of Corporate Citizenship). You are kindly invited to communicate your views on this Working Paper to the project team:

Project Coordinator 'Enterprising Ladakh'

Hemis Complex, Zangsti Leh, Ladakh -194 101

Phone: +91 94191 77536; 252 133 enterprisingladakh@rediffmail.com

This document has been produced with the financial assistance of the European Union. The contents of this document are the sole responsibility of Ladakh Autonomous Hill Development Council, Druk Pema Karpo Educational Society and Drukpa Trust, and can under no circumstances be regarded as reflecting the position of the European Union.

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Army Outsourcing Ladakh region has approximately 63,000 army personnel. The major requirement of the Army in the region is addressed through the Army Service Corp (ASC). But unfortunately, due to certain bureaucratic bottlenecks, the Army did not co-operate nor did it share any information about its procurement procedures. The report though contains details about the vegetables and milk purchased by the army locally. The information and data provided herein are through the people from Farmers Co-Operative Marketing society. A negotiated contract was signed between the Indian Army and the farmers’ societies in Ladakh. The negotiated contract includes fresh vegetables, fruits, onions and potatoes. Efforts are on to persuade the army to include fresh milk, wheat and barley hay and crushed barley in the negotiated contract. The Table 1.1 below provides the rate list for provided to the army, while Table 1.2 provides the quantity that the local farmers can supply to the Army for the year 2005-2006. But the army generally does not procure the stated quantity. There is a variation of 10-15% every year on either side. The quantity supplied by the farmers makes up for around 50-60% of the Army’s requirement. Army purchases the remaining quantity from the markets in Delhi and Chandigarh. The landed price of the vegetables purchased from plain is definitely much higher than that available locally. Every morning two to three Army planes get these vegetables, fruits, chicken, eggs and milk from the plains. The Army did not furnish the data about the price and quantity purchased from Delhi and Chandigarh. Table 1.1: Rates Offered by Farmers Co-operative marketing Society Rates (Rs.) Sr. No. Items 2004-2005 2005-2006 FSD Thoise 1 Potato fresh 1246 1271.00 FSD Kargil 2 Potato fresh - 1200.00 FSD Kumbathang 3 Potato fresh 1169 1204.00

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Rates Offered by Farmers Co-operative marketing Society, Leh Rates (Rs.) Sr. No. Items 2004-2005 2005-2006 FSD Leh 4 Beans French 1810 1910.00 5 Cauliflower 1518 1601.00 6 Peas Green 1795 1894.00 7 Pumpkin 634 669.00 8 Knol Khol 707 746.00 9 Brinjal 1518 1601.00 10 Cabbage 1100 1161.00 11 Carrot 1174 1239.00 12 Spinach 923 974.00 13 Tomato Ripe 1842 1943.00 14 Turnips 751 792.00 15 Bottle gd 1518 1601.00 16 Radish 723 763.00 17 Capsicum 2727 2877.00 18 Tomato green 1513 1596.00 19 Chinese W/B 684 722.00 20 Karam Sag 996 1051.00 21 Mint Green 2496 2633.00 22 Corriander green 2496 2633.00 23 Chillies green 3445 3634.00 24 Cucumber 2359 2489.00 25 Ginger green 5500 5803.00 26 Beetroot 1200 1266.00 27 Onion Spring 1200 1266.00 28 Apple Tha 1200 1266.00 29 Apple Mongol 1200 1266.00 30 Apple Kashmir 1280 1350.00 31 Apricot 1050 1108.00 32 Limesoure - 5200.00 33 Smar squish - 1300.00 34 Turnips with leaves - 780.00 35 Potato fresh 1070 1113.00 36 Onion dry 1481 1540.00 37 Garlic 6000 6000.00

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Table 1.2: Availability of Potato, Fresh onion, Garlic and Bread FM for the year 2005-2006 Sr. No. Item Quantity (kgs) FSD Leh 1 Potatoes 9000800 2 Onion 140000 3 Garlic 15000 4 Bread FM 60000 FSD Thoise 1 Potatoes 360000 FSD Kargil 1 Potatoes 255000 Availability of fresh vegetables and fruits for the year 2005-2006 Sr. No. Item Quantity (kgs) 1 Beans French 10590 2 Cauliflower 23500 3 Peas Green 30000 4 Pumpkin 5000 5 Knol Khol 19890 6 Brinjal 9850 7 Cabbage 59000 8 Carrot 45025 9 Spinach 19550 10 Tomato Ripe 25060 11 Turnips 42000 12 Bottle gd 11000 13 Radish 43000 14 Capsicum 5850 15 Tomato green 22890 16 Chinese W/B 11700 17 Karam Sag 4680 18 Corriander green 1200 19 Chillies green 3000 20 Mint Green 1000 21 Onion Spring 5500 22 Smar squish 4000

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Availability of fresh vegetables and fruits for the year 2005-2006 Sr. No. Item Quantity (kgs) 23 Turnips with leaves 4000 24 Beet Root 2000 25 Cucumber 1500 26 Chukender 1000 27 Ginger 1200 28 Limesoure 1000 29 Apple Tha/Mong 25000 30 Apple Kashmir 33000 31 Apricot 10000 The requirements for the Army can be classified into two broad categories as far as the food items are concerned. Every day consumables Eg: Vegetables, fruits, eggs, chicken, Milk, etc

Others Eg: Potato chips, biscuits, etc

Thus, for the farmers, there are avenues for growth in existing supplies as well as exploring new economic activities like poultry and dairy farming along with the agriculture. Most of the farmers in Ladakh still practice subsistence farming. Even though wheat and barley are available from the plain at much cheaper rates and of superior quality, farmers still grow wheat and barley. So there is uneconomic use of the agricultural land. If the land is properly utilized, and vegetable and fruit production increased, the farmers can satisfy 100% of the army’s demand of the region. The presence of FRL and SKUAST has had no significant impact on farmer’s life. Though a lot of work has been done by both these agencies, the lack of information seems to be a major bottleneck in the growth of this sector.

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In the past, the total amount of business done with the army is as follows:

Sr. N o . A m ount (R s.)

1 Supp ly o f V egetab le and Fresh F ruit in 2004-2005 at Leh 4817039

2 Supp ly o f P o tatoes and o ther item s in 2004-2005 at

1 Leh 77088502 T hoise 18690003 K um bathang 1169000

3 T o tal 15563889

4 P ercentage fo r Farm ers C o-O perative M arketing society and 12%other transportation and logistic costs

5 T o tal am ount that w ent to farm ers by do ing business w ith 13696222 .32the arm y in 2004-2005

Item

Issues

Concerning farmers There is a certain amount of discontent amongst the farmers that the rates

offered to them by the Army are not competitive. Farmers do not get a firm commitment from the Army that all the

vegetables produced by them will be procured by the Army. There is no dairy co-operative society that could supply milk to the Army.

Though milk was supplied to the army in 2004-2005 at the rate of Rs.16.75/-, it was grossly inadequate for the farmers. While the landed cost of these items is Rs 43/- at Leh.

Since the dairy sector is undeveloped, the Army consumes butter, cheese and other dairy items from the plains. There is not a single firm in Leh that produces and markets these items.

There are no cold storage facilities for the farmers to store their products. The farmers are not educated about commercial level production using

greenhouses. This could help them in producing vegetables even during the winter season.

Since all the products are mostly through organic farming practices, they command a premium price. But no Certification Agency exists in Ladakh.

Concerning the Army The vegetables produced are in very small quantities, so there is a

considerable amount of demand-supply gap. The vegetables are produced only during three months of the year, so

year-round availability is a major issue.

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Recommendations The Army should ensure fair and competitive prices to the Co-operative

Marketing Society and thus the farmers. LAHDC should set up cold storage on a priority basis. If not the

government, it should encourage the private entrepreneurs. LAHDC or a private entrepreneur should set up a dairy co-operative and a

poultry unit to cater to the Army’s demands. A food processing unit that will produce butter, cheese, etc. should be set

up by the private enterprise of Ladakh to fulfill Army’s requirements. An agricultural university be set up to train and educate farmers in

agriculture science. Modern agricultural and irrigation techniques be introduced by the

government to increase the awareness amongst the farmers.

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