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Angara and Koyyalagudem: Marketing in Handloom Cooperatives

Angara and Koyyalagudem: Marketing in Handloom Cooperatives

Over the decades, the experience of handloom cooperatives has been a mixed one. The arbitrary mergers, excessive control by master weavers and local power groups, politicisation and bureaucratisation and mismanagement of funds are some factors that have stymied the efficient functioning of cooperatives. Through a focus on two handloom weaver cooperatives - Angara and Koyyalagudem in Andhra Pradesh - this article tries to explore the experiences of weavers working in such set-ups.

ANGARA AND KOYYALAGUDEM

Marketing in HandloomCooperatives

Over the decades, the experience of handloom cooperatives has been a mixed one. The arbitrary mergers, excessive control by master weavers and local power groups, politicisation and bureaucratisation and mismanagement of funds are some factors that have stymied the efficient functioning of cooperatives. Through a focus on two handloom weaver cooperatives – Angara and Koyyalagudem in Andhra Pradesh – this article tries to explore the experiences of weavers working in such set-ups.

DHARMARAJU P

Background

C
ooperatives were visualised as an important tool of change from the nationalist movement onwards. In Andhra Pradesh, by the 1930s itself, weaver cooperatives had emerged in different regions. Initially, providing yarn at subsidised rates was the primary concern, and only later did marketing and other concerns emerge. Over the decades, the experience of handloom cooperatives has been a mixed one. The arbitrary merger of cooperatives, control exerted by master weavers and local power groups, the politicisation of cooperatives, misappropriation of funds and overall mismanagement are some of the factors. Other problems include the near-total control of flow of credit to cooperatives by the government as well as excessive bureaucratisation of the cooperative structure. In 1995, Andhra Pradesh passed the Mutually Aided Cooperative Society (MAC) Act, which was supposed to simplify procedures considerably and allow autonomy to weaver-members in the managing of their societies. Only an appraisal of their implications and functioning in the coming years will give us an idea of whether this has facilitated handloom production and marketing.

Our focus here is on two handloom weaver cooperatives – Angara and Koyyalagudem. These have been chosen because of a certain uniqueness that each exhibit – Angara is a well-functioning society that targets local markets successfully, while Koyyalagudem has produced for both local, national and export markets.

Angara

Angara is a major gram panchayat located in the western parts of East Godavari district. There are 53 weavers’ cooperatives in the district, of which 49 are working at present. Master weavers play a very insignificant role in the handloom industry unlike some other districts. Majority of the weavers in this district work under the cooperative fold. Master weavers operate mainly from two big towns in the district – Mandapeta and Adivarapupeta.

Beginnings

Sri Ganapathi Chenetha Paarisramikula Sahakara Uthpatti Mariyu Vikraya Sangam, Angara was started on February 28, 1977. The following villages, namely, Angara, Padamara Kandrika, Korumilli, Machara, Kapileswarapuram, Pandapudi, Pinapalla, Pedapalla, Chinthalooru, Vakathippa and Sundarapalli are attached to this society. The society has been earning profits since its inception.

The society at present has 640 members on rolls with Rs 1.5 crore of cash credit limit and Rs 2 crore of turnover per year. The society at present has 510 active looms and 12 employees, of which 10 are on a regular basis and 2 on a daily wage basis. The distribution of the members among different activities is four employees in production, two dealing in yarn purchase and distribution, and four in sales and two in accounts.

The society gets its cash credit from National Bank for Agriculture and Rural Development (NABARD) through District Central Cooperative Bank (DCCB). The rate of interest on cash credit was 11 per cent earlier and now it stands at 10 per cent.

The society is using only a part of the cash credit provided to it from NABARD. And obviously the society has no additional borrowings from any other sources.

The production of the handloom sector in the district as a whole consists of 70 per cent sarees and the remaining 30 per cent is dress material, bed sheets, towels and lungis. Earlier all varieties that are woven in the different parts of the district were also woven in the society but now sarees are the major component of production. Now sarees are 90 per cent of the total production, 5 per cent is shirting and 5 per cent is towels. The decision to produce more sarees is a conscious effort from both the management of the society and the weavers. The management of the society came to know that demand for the sarees produced by the society is high and gave more space for the production of sarees. At the same time weavers got more wages for weaving the sarees and hence had an inclination for it. This is how the sarees became the major chunk of production in the society. The society is making nearly 30 to 40 varieties of sarees now.

The society adopted a strategy of marketdriven production and started to work in this direction. It appointed two professional designers who are trained in designing at Salem and then tried to incorporate the fast moving designs in the market into its production schedules. Gradually the scene changed and the society was able to sell major chunk of the production. It was able to create an identity for its products in the market and at the same time, withdrew from the strategy of producing the general items available in the district. This was a result of the constant interaction of the society with the market through its personnel. Its system of market-motivated production has worked out miracles. One significant factor that played an important role in this whole process was the readiness of the weavers working in the society to incorporate new techniques and designs into the production process. The weavers working for the society have witnessed regular and prompt payment of wages and this has helped them to learn that this was due to the capacity of the society to market whatever is produced and there would be no problems of working capital, stockpiling and slump in the production. They soon understood the importance of marketdriven production. Since the change in designs in this case does not need the acquisition of new skills, there was no hesitation to incorporate them in the production process. All these factors jointly and severally contributed to the society’s ability to convince the government and the

Economic and Political Weekly August 5, 2006 banks regarding its credibility and poten-Figure 1: Production from 1977-78 to 2002-03 tials. At once its problems relating to the 180 working capital were solved with the 160 government extending the working capital

120

and a different approach from the other

2.96 2.81 3.422.823.1 7.615.61 36.79 43.57 51.9 27.88 13.88 67.23 80.21 61.75 86.52 99.88 108.8 119 111.95 96.98 95.19

Production in Lakh Rs

societies in the district gave it a unique

position. This serves as an example to prove

that the cooperative system works well if it is led by a team, which can see things

differently, and which has a practical vision.

100

80

60

40

Sales 20

Unlike the other societies in the district 0 which are mainly dependent on order-based production, Andhra Pradesh State

1977-781978-791979-801980-811981-821982-831983-841984-851985-861986-871987-881988-891989-901990-911991-921992-931993-941994-951995-961996-971997-981998-99

Year

Handloom Weavers’ Cooperative (APCO)

Production from 1977-78 to 2002-03

and exhibitions, the strength of this society

that gave it a strong foothold is its vast retail market. Nearly 75 per cent of its sales are in retail market, of which only 5 per cent are through exhibitions. The remaining 25 per cent are sold to APCO. The management of the society is confident that it has the capacity to market the production if APCO reduces or stops its procurement at any given point of time. But one thing that catches one’s attention at this juncture is the stock. At the moment the society holds Rs 40 lakh worth of stock. But the management says that the piling up of stock was the result a sudden increase in the number of looms and this has happened recently. There is a 20 per cent increase in the production in the recent past but the sales did not increase accordingly. Now the management is working on the strategies to be adopted immediately to dispose of this accumulated stock and it is confident of doing it. The society has a retail outlet at Dwarapudi, which is one of the major centres for textile trade in south India. But again most of the sales happen at the society premises itself. Nearly 20 to 25 lakh sales take place through the retail outlet in Dwarapudi. The society does not have any problems in dealing with the payments due from APCO. Cloth merchants from Pedana, Guntur, Vijayawada, Karnataka, Hyderabad and Bodhan procure the stocks from here. The society does not sell on credit to the retail and wholesale customers. The sales made to APCO are paid for promptly.

When asked about what they think is the key to their success, Satyannarayana Murthy said, “the close observation of market trends and quickly incorporating them in their production process, usage of fine quality raw material and pricing strategies – no price discrimination between the customers based on their scale of procurement has, in fact, gained the reputation in the market for the society”.

They also have a wide range of sarees and have tapped the insular market effectively through existing trade networks. Their success demonstrates that there is a large local demand for traditional handloom products. In addition to quick responses to market changes, their policy of “no credit sales” could have helped efficient working capital rotation. The fact that they are not over-dependent on APCO for their marketing, but are also exploring local markets on their own is noteworthy.

Koyyalagudem

In spite of occasional hiccups, Koyyalagudem cooperative society in Nalgonda district of Andhra Pradesh has managed to reap the benefits of an expanding market segment to provide work to its members.

Region

The ikkat technique of weaving has been prevalent in Nalgonda district for the last 35-40 years. The origin of this technique is not very clear, but it appears to have been learnt, and was not indigenous to the region. According to one version, weavers from Chirala who migrated to Nalgonda brought this technique of tie and dye with them. Another view holds that the Nizam settled a few weavers of ‘mashroo’ (brocaded cloth, with cotton inside and silk outside) here and that the ikkat technique developed out of that. Old weavers in Koyyalagudem remember that experts from HYCO, Weavers’ Service Centre and Pochampalli had come to train them in ikkat weaving decades ago. Ikkats received a fillip in the 1960s, when the government began encouraging the export of such fabric. The festivals of India in the 1980s are also said to have fuelled export interest in ikkats. While this gave ikkats a clear-cut niche in markets, export-driven production had several other serious problems that will be referred to shortly.

Koyyalagudem is one of the weaving villages that dot Nalgonda district, popular mainly for its ikkat products. The weavers are almost all Padmashalis with no access to agricultural land; there are a few scheduled castes (gauda) weavers too. There are a number of other weaving villages in the vicinity, within a radius of 5-15 kms. Prior to 1947, ‘telia rumals’ and khaki cloth were being produced at Koyyalagudem. Telia rumals were red coloured headcloths that were used by some sections of the people, but they are no longer in demand. For many years after that, cotton sarees were the main items being woven. At least for the last 25 years, they have been weaving mercerised cotton sarees, dress materials and silk as well. Since the mid-1980s, there has been a demand for bedsheets, which needs a much wider double loom (with two persons weaving side by side). The demand for ikkats peaked during 1994-95, but has fallen now, and the export market has also become sluggish lately, the weavers complain.

The Cooperative

Koyyalagudem is popular for its ikkat products. There are several other villages in the vicinity where weaving is equally prominent, such as Choutuppal, Puttapaka, Pochampalli, and so on. In 1950, a handloom weavers’ cooperative society was set up in Koyyalagudem, with a membership of around 1,100, drawn from surrounding villages such as Choutuppal, Pochampalli and Lingotam. Over the next

Economic and Political Weekly August 5, 2006

Figure 2: Year-wise Production of Koyyalagudem Handloom Weaversin turn affects the frequency in giving workCooperative Society

to the weavers. The society charges a

14000000

uniform margin to all customers and holds a stock worth Rs 10 lakh at a given point

12000000

of time. On observation it is found that the

management of the society does not make

10000000

2390981 1548350 2554113 3826112 5830594 5391927 3635029 6800759 10134521 10313606 4135497 8771585 8567152 9828064 96493 5047092

any conscious efforts to study markets and does not have any mechanisms designed particularly to study the market. Only the

general observations on the market at the time of exhibitions and inputs given by some customers on some occasions are

taken into consideration while designing

the production patterns. It is only the unique

strength of the product that is keeping the

society in business.

Production in Rs

8000000

6000000

4000000

2000000

0

Conclusion

Koyyalagudem society capitalises on a

1983-841984-851985-861986-871987-881988-891989-901990-911991-921992-931993-941994-951995-961996-971997-981998-991999-00

Year

unique product and sells at exhibitions, on

Production in Rs.

order nationally and internationally. The state apex marketing body also picks up stock. They appear to have utilised exist

decade and a half, some of these other villages factors in the following manner: 40 per

also formed their own cooperatives (for cent to raw materials and dyes and 60 per

instance, the Pochampalli Cooperative in cent to wages. A uniform margin of 10 per ing marketing channels, but exposure to

1955 and the Choutuppal Cooperative in 1966). At present, the Koyyalagudem Cooperative has 640 members; it covers four other villages in the immediate vicinity, Bata Singaram, Malkapuram, Dharmajiguda and Peepalpahad, though a majority of the members are from Koyyalagudem itself. However, of these 640 members, there are only about 400 active weavers. In fact, this is one of the more successful working cooperatives in the area, but has reported a significant decrease in orders in recent years.

There are 12 employees participating in the day-to-day administration of the society. The society is entitled to Rs 62.40 lakh of cash credit by the NABARD at 11 per cent interest rate. The cash credit limit is being fully used by the society. In order to meet its additional working capital requirements, the society also borrows from local moneylenders. The sudden decrease in the number of members in the year 1997-98 and again in the year 1999-2000 was due to the inability of the society to provide work to the weavers as there was a drastic increase in the prices of the raw materials and slump in the market.

Production

The product range of the society comprises the tie and dye varieties, silk sarees, bedsheets, shirting, furnishing cloth and mercerised and cotton sarees. Out of the total production, dress material accounts cent is charged on the entire range of products. The dyeing and sizing is to be done by the weavers themselves and even the costs incurred for this will have to be borne by the weavers. The society only supplies the yarn and dyes and other materials required, if any.

There is no major variation over the years in the production of the society, except around 2000-01, which is when APCO’s procurements dipped. Today, production appears to be absolute and is not related to market in any great degree.

Sales

APCO is the major buyer for this society. It purchases almost 50 per cent of the stock in the society. APCO picks up whatever limited varieties that the society has. It does not give any design inputs to the society. From the rest of the stock the All India Handloom House (AIHH) purchases 20 per cent, exhibitions 20 per cent and others 10 per cent. The sales to export agencies are included in the category of others. The export agencies purchasing from this society are the South Indian Producers Association and International Foundation for Fair Trade Development Association based in Chennai and the Lakshmi and Kakatiya exporters based in Hyderabad.

The society sells on credit to APCO and AIHH. The credit period ranges between one month and a year. Since the total sales to these apex bodies account to 70 per cent, design intervention and new markets seem sporadic. Unlike Angara which banks on a traditional product like sarees, Koyyalagudem, perhaps due to its proximity to urban centres, specialises in dress materials. To succeed in this, it is essential to have one’s ear close to the ground – but this market feedback is incidental in the case of Koyyalagudem. There are no institutional channels by which this information transfer and market exploration could happen effectively.

During the ikkat boom and years of good export business, Koyyalagudem used to attract a number of migrant weavers from other places in AP. This has changed in the recent past, mainly due to a fall in exports. Since 1995, export orders have not been as forthcoming as in the past. Several reasons have been cited for this trend, some of which are: the ban on chemical dyes by European markets. (Azo-free dyes are used instead, but this renders the product expensive); the drastic increase in prices of yarn and dyes. To cut costs, inferior materials are used, and weavers lose out in the world market.

The experience of Koyyalagudem shows that though orienting production to exports may be beneficial in the short run, a long-term reliance on exports of cloth alone creates instabilities in demand, production and livelihoods that cannot be absorbed by the handloom sector. In addition, it is also important for cooperatives to explore domestic markets

for 75 per cent and the remaining 25 per the duration of the credit period has gained much more proactively. cent belongs to the other varieties. The cost significance, as it involves holding costs

EPW

of production is distributed among various and affects the size of operations which Email: dharmapraju@hotmail.com Economic and Political Weekly August 5, 2006

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