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opportunity/agri-tourism
Digging gold in rural India Agri-tourism is a Rs 4,100 crore opportunity. Are you ready to hit the village trail? /Vimarsh Bajpai
Sunil Bhosle, farmer, (extreme right) with his family.
F
or Sunil Bhosle, a farmer in the Jogwadi village in the Baramati taluk of Pune district, a 13 acre piece of land tilled by his entire family round the year meant an annual income of Rs 60,000-75,000. This was before he was exposed to the benefits of agri-tourism six months ago. Bhosle, with the help of the Agri Tourism Development Organization (ATDO), opened his farms to tourists in June last year, charging each Rs 300-350. He has since welcomed 150 tourists with traditional garlands and authentic Maharashtrian delicacies. The effort translated into an additional income of Rs 15,000, after deducting an equal amount in expenses. He is now constructing two more rooms for tourists. "Agri-tourism has given Bhosle a full-time job,� says Pandurang Taware, Director, Marketing and Sales, ATDO. Taware is the brain behind the launch of a pilot project in agri-tourism in Baramati in 2005. Having spent
around 17 years in the tourism industry, he realized that for marginal farmers, farming alone could not bring the necessary financial benefits. He felt that attracting tourists to rural India could open a new earning stream and help promote village handicraft, food and culture. In the first year of operations, between October 2005 and October 2006, 8,700 tourists visited farms pooled in by villages in Baramati. The influx grew to 17,000 in the second year. Since October 2007, more than 21,000 tourists have taken the rural trail.
Old ways, new ideas Agri-tourism is all about unraveling various facets of village life. This includes opening up farms to tourists from cities and abroad, and letting them spend some time in the lap of nature. Apart from telling them about the various crops and how they are sown and harvested, agri-tourism exposes
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opportunity/agri-tourism tourists to authentic food, handicraft, dress, culture, music and language. Tourists get to indulge in rural activities such as bullock-cart rides, milking cows and goats and picking farm-fresh fruits and vegetable. The activities may vary from village to village, as a country as diverse as India has so many different experiences to offer. Agri-tourism activities can help generate more jobs in rural areas, and thus reduce large-scale migration from villages to cities. Two-thirds of India’s population lives in villages, and agriculture is their mainstay. But unfortunately, unlike IT, agriculture is facing under-investment. So here is a chance to marry the benefits of agriculture with those of tourism. “India has a global edge in its potential to offer unique experiences, particularly linked to rural India, which has tremendous wealth in its rich tradition, lifestyle, culture and wisdom. Unfortunately, tourism in these areas is at a nascent stage and it can therefore absorb much of the necessary expansion in the tourism sector as a whole,” says Tushar Pandey, Country Head, Strategic Initiatives – Government (SIG), Yes Bank. The private-sector bank is bullish on the prospects of agri-tourism in several states, particularly Uttar Pradesh. It is partnering with CII to study the potential of agri-tourism in Uttar Pradesh. The study is likely to be presented to the state government soon. The Central Government has a scheme on rural tourism, as part of which various activities, such as improvement of infrastructure, are being conducted in a big way. The focus of the scheme is to tap the resources available under different schemes of the Department of Rural Development and state governments. Setting up an agri-tourism farm doesn’t cost the earth. It can be developed in a village where farmers are willing to showcase their culture and traditions. All one needs to set up is a decent boarding and lodging facility for tourists. It is important to have a clean place and hygienic food. The spend on travel, food and accommodation is low and so it is easy to scale up the number
of tourists they can receive. “To make arrangements for 12 tourists, for whom you need to build four rooms, costs approximately Rs 5 lakh,” says Taware. (See Table 2: Money Matters)
A Rs 4,100 crore opportunity The tourism sector is one of the major foreign exchange earners for the country. In 2007, 50 lakh tourists visited India, up from 44.5 lakh in 2006. Correspondingly, the foreign exchange earnings grew 33% to over $12 billion, compared to $9 billion in 2006. According to estimates, 40.6 crore domestic tourists criss-crossed the length and breadth of the country. So, presuming that 10% of the total number of tourists may consider visiting various farms across the country during the year, the number would be close to 4.1 crore. Each person stays for about two days, and the tariff is Rs 500 per day. Thus the size of the opportunity is a whopping Rs 4100 crore! Agri-tourism is now growing in a big way. However, it may take some time before it starts to grab a major share of the revenue generated from tourism-related activities. “In the initial stage, we expect only a marginal contribution, but in the long-term perspective of 10-12 years, we expect rural tourism to contribute about 7-10% of the total revenue generated from tourism and close to 10-15% of the total jobs in the tourism sector,” says Pandey. There is a huge scope of developing various pockets of agri-tourism in the country, as India is a counFEBRUARY 2008 49
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opportunity/agri-tourism How and when did the idea of starting an agri-tourism project come about? During our market survey in 2005, we found that 73% of the people in urban India had no relatives in villages. So we thought that this segment could be our prospective tourists or guests. I mooted the idea to the villagers in Baramati, my hometown. Around 40 farmers came together to start this project on their farms. We then started calling tourists to the farm. The number of tourists increased to 25 by October 2005. This was when we registered the Agri Tourism Development Corporation. The current area under the project is 110 acres, which belongs to Agricultural Development Trust.
How did you spread awareness about the project? We did road-shows in Pune and Mumbai on bullock carts to spread awareness about the project. First we got tourists from Mumbai and Pune to spend the day at the farm. When the tourists arrive, we extend a traditional welcome, with marigold garlands and saffron. Then we take them to the farm for breakfast. After which, we take them around for sightseeing. Also, we tell them PANDURANG TAWARE, about sowing methods and harvesting methods, ie, give them some basic knowledge about DIRECTOR, MARKETING AND SALES, AGRI TOURISM DEVELOPMENT ORGANIZATION agriculture. We told villages to prepare and sell souvenirs to tourists. For this, we set up a souvenir shop. It was important to make the stay of tourists safe and hygienic. Also, to provide them clean rooms and toilets. We started holding one-day seminars for farmers to help then understand the nuances of the business . What is the minimum area and capital required to start a small agri-tourism project? What is the return on investment? Most farmers in our country are marginal farmers with less than 2-5 acres of land of holdings. We are asking those farmers to come forward and start agri-tourism activities. To make arrangements for 12 tourists, for which we are asking them to build four rooms. To construct, say, a 180 sq ft room for 3 tourists. This will cost approximately Rs 5 lakh if we consider a rate of Rs 400 per sq ft and keep Rs 300 per sq ft for furnishing. Today there are a lot of banks in the cooperative sector that are willing to give loans to farmers. The Pune District Cooperative Bank is the first bank in the country to offer loans for agri-tourism. There is no electricity in villages for about 12 hours, so we also give loans for generators. So the total cost may come to around Rs 575,000. So Rs 5 lakh can come as loan while the farmer can put in about Rs 75,000. According to our experience, we receive tourists for 104 days out of 365 days. Say ten tourists visit a farm each day for 104 days, and each pays Rs 500. This works out to Rs 5,20,000. The expenses are about Rs 15,000 per month ie, Rs 1,80,000 per year. Now deduct annual loan payment of Rs 1,50,000 per year. So the net income of a farmer is Rs 1,74,000 a year. This is additional income for the farmer only from the land. Tourists also buy food grain, fruits and vegetables, handicraft, etc. This results in some additional earnings. Is there any government clearance needed to set up a project like this? We have told the farmer that for every acre, he can take 2-3 tourists. So for five acres, he can take 10-12 tourists. When this is the scale for a project, it does not require any clearance from the government. But when tourism activity will overrule agricultural activity, then it will be considered as a tourism project. In this case, the project would require clearances related to tourism projects. If one were to do it in a commercial manner, it would be treated as a tourism project and the necessary clearances have to come from the tourism department. How has the state government supported the project? This project was actually a pilot project. It was a new idea even for the Maharashtra government. The government has taken steps and has included this in the tourism policy 2006. The government has supported us unequivocally. It felt that since this is a pilot project, let the farmers first see the pros and cons for 2-3 years. Under the tourism policy of the Maharashtra, the government is planning to launch a brand called Mahabhrman. This will give a marketing platform to all those involved in agri-tourism.
Total number of tourists in 2007
41.1 crore
try of extreme diversity. “There is a saying in India that with every 12 miles you cross, the water changes, the culture changes and the food habits change. So at every 12 miles there can be an agri-tourism project!” says Taware.
Say, 10% of tourists are game for agritourism
4.11 crore
Look before you leap
Tariff from one tourist for a day
500 Rs
DARE/estimates Number of foreign tourists who visited India in 2007 Number of domestic tourists in 2007
Say, each tourist stays for
50 lakh 40.6 crore
2 days
Earning from each tourist
1,000 Rs
Estimated size of opportunity
4,100 Rs crore
Here are a few things you have to keep in mind before taking the plunge. Community exercise: An agri-tourism project is less about money and more about the rural experience. Therefore, a farm house in the outskirts of any city can never meet the basic need of
agri-tourism. It is important to develop agri-tourism as a community exercise, which should involve every section of a village society. A big challenge is to convince most people in the ecosystem to play the role of a good host. Location: The location of a village would play an important role in attracting tourists. Proximity to a big city can be a big positive because most tourists would prefer to spend less time on the road and more time in the village. Marketing: Getting a village ready to welcome guests is not all, if tourists don’t get attracted to the site. Suitable marketing strategies need to be devel-
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opportunity/agri-tourism Yes Bank is partnering CII for a study on the prospects of agri-tourism in parts of Uttar Pradesh. What does the study aims to achieve? Agriculture and allied activities remain the single largest contributors to India’s GDP and represent the means of livelihood for about two-thirds of the workforce in the country. With Uttar Pradesh being a predominantly agrarian economy, it also represents a substantial segment of India’s agrarian population. The accelerated growth of this sector will support inclusive economic growth, and sustainable development reflects positively on the progress in the state and the nation as a whole. While opening up a whole array of unexplored tourist destinations in Uttar Pradesh, the basic foundation of agri-tourism lies in community welfare, rural economTUSHAR PANDEY ic growth and social equity. It supports development COUNTRY HEAD, STRATEGIC INITIATIVES - GOVERNMENT in both agriculture and tourism and our SIG group (SI-G), YES BANK has proposed this as a rural employment generation mechanism for the state. The publication also brings to focus potential regions in Uttar Pradesh where considerable opportunities for the development of agri-tourism exist and highlights the investment potential. What is the bank’s view on the growth of rural and agri tourism in the country? Yes Bank’s strategic initiatives and advisory – government (SIG) division has consistently been advocating rural and agri-tourism as an innovative and effective mechanism for driving growth in the rural economy, and has identified it as a crucial contributor for inclusive growth, wealth distribution, sustainable development, employment and income generation. We foresee a positive outcome of a collaborative approach that involves all stakeholders and advocate a cooperative/cluster structure where entrepreneurial sprit is the driving force for success. In the initial stage we expect a marginal contribution whereas in the long-term perspective of 10-12 years, we expect rural tourism to contribute about 7-10% of the total revenue generated from tourism and close to 10-15% of the total jobs in the tourism sector.
DARE/money matters ACCOMODATION Number of rooms needed to accommodate 12 tourists
4
Size of one room
180 sq ft
Cost of constructing one room
400 Rs/sq ft
Cost of furnishing one room
300 Rs/sq ft
Total cost of one room
1,26,000 Rs
Total cost of four rooms
5,04,000 Rs
EARNINGS Say, 10 tourists visit the village for 104 days/year Each tourist pays Gross earnings
500 Rs 5,20,000 Rs
EXPENSES Monthly spend on food, electricity etc
15,000 Rs
Annual spend on food, electricity etc
1,80,000 Rs
Loan repayment of Rs 5 lakh
1,50,000 Rs
Total spend Net Earnings per year
3,30,000 Rs 1,74,000 Rs
Do you believe that public-private partnership can help promote agri-tourism? Development in the rural sector is significantly embedded within the purview and domain of the government. It is from this perspective that Yes Bank has been steadily advocating the public private partnership (PPP) approach to facilitate the bridging of the urban-rural divide. For rural tourism, we believe that a collaborative strategy built on the foundation of PPP principles will enable the penetration of benefits to all stakeholders and facilitate a win-win situation. Based on this, the SI-G division within the bank executes this by working in close collaboration with the government and key stakeholders. SI-G has been compelling governments through thought leadership initiatives, knowledge publications, advisory and knowledge partnerships to recognize their role as facilitators of growth in the rural economy. oped such as road-shows on a bullock cart! Internet could be the best bet to advertise an agri-tourism unit. Accommodation: Providing clean and well-furnished dwelling units for tourists is very important. Some of them could be allergic to dust and pollens and would prefer to stay in a hygienic environment. This could be an uphill task.
Doctor on call: Although most tourists are advised to take precautions while moving around in a village but as a host, you have to be prepared for any untoward incident that might happen. Having a village doctor on call could help. If nothing, keep a first-aid DAR E box ready. FEBRUARY 2008 51
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