Rice Bowl

Background

Despite the economic growth and prosperity that India as a country has
achieved over the past decade, there is one stark reality that is indisputable –
this growth has been inequitable with the gap between the rich and the poor
widening and more than 75% of the population still living on less than two
dollars a day. Consequently, one of the biggest challenges today for India and
the developing world is poverty eradication.
As a historically agrarian society, one of the largest constituents of this
demographic of India’s poorest people is the farming community. Amongst
the many documented reasons for the plight of India’s farmers, one key
element is the lack of a fair price for their goods sold. Currently, small and
medium scale farmers typically sell their produce to “kirana” or middlemen,
who capture inequitable value in the value chain by capitalizing on farmers’
lack of price information and low bargaining power.
Rice Bowl’s vision is the eradication of poverty through equitable and fair
development. Our mission is to provide sustainable livelihoods for farmers in
India through the creation of local markets for their products at fair prices.
We aim to achieve this through the creation of a fair market for SME farmers
in India by incorporating best practices from the fair trade movement so as to
improve farmers’ income levels and contribute significantly to their socio-
economic development.
We intend to do this by retailing rice as a premium fair price product to our
target market of upper middle class and high-income families in India. These
SEC A and SEC B customers will be our primary clients who will be reached
through in-store kiosks in supermarkets.
Other key stakeholders will be the farmers working through cooperatives and
partner organizations such as rice millers, supermarkets, NGOs and banks.
By linking these stakeholders together, Rice Bowl will attempt to fill a market
gap by offering farmers a fair price for their product while keeping the cost to
the consumer competitive.

Market Failure and Social Need Addressed

National fair price markets are underdeveloped in India, leaving many small-
scale farmers without access to fair pricing, long-term contracts, advance
payment and debt financing, and development assistance associated with the
fair trade movement. Additionally, India’s growing middle and upper classes
do not have access to fair trade goods, which are typically shipped to Western
countries for consumption. Consequently, there exists a market gap between
farmers who would benefit from fair trade exchange and Indian consumers
who would value supporting equitable economic development within India.
With so many basmati farmers in India participating in the export market for
rice, the need for more equitable rates has been well established. Typically,
farmers have sold rice to local agents, receiving low rates which often do not
cover the cost of production. Farmers are also typically indebted to these
middlemen after taking out usurious loans to pay for basic needs (Figure 1).
Fair trade has stepped in to correct this market failure between local farmers
and the export market. By connecting farmers with consumers wiling to pay a
premium to cover both the costs of production and investment in meeting
social needs of local communities, the global fair trade movement has
successfully intervened to improve the lives of small-scale farmers.
There is a clear opportunity to bring the gains of the global fair trade
movement to the local level.

Figure 1

Strategy

Rice Bowl will achieve its mission by entering into profit-sharing arrangements
with supermarkets that will house retail kiosks selling fair trade rice (shop-in-
shop concept). These kiosks will specialize in high-quality, local rice and will
carry only products that have been sourced according to fair trade standards.
Rice Bowl will work closely with local NGOs, banks, cooperatives, and farmers
to support the development of fair trade markets for rice throughout India.
Social Enterprise Design Criteria

Social Criteria
Fair Trade philosophy is relatively nascent in India and a comprehensive
outreach campaign targeted to all stakeholders based on their specific needs
is critical to the success of Rice Bowl. Working with farmer cooperatives in
India is a time consuming process given the caste and power dynamics in
rural India. This will need to be considered when drawing up expansion
timelines and growth plans.
There is a strong educational component to Rice Bowl’s strategy, which
includes providing farmers with agriculture education, training on organic
growing, higher yield strategies and business basics. A targeted marketing
and advocacy campaign is required for the target consumer to drive home the
benefits of the fair price model. Consequently, we will partner with NGOs and
other stakeholders already working in this space to develop a local fair price
market and educate consumers.

Business Criteria
The expansion and growth plan for Rice Bowl is provided in Table 1 below:

PHASE   PRODUCTS   SERVICES   TIMELINE  

White Rice - “Ponni” and
Parboiled - “Idli” rice as Market access: instant
detailed in the Industry cash payment for grains
I   Analysis section   upon harvest   Years 1 - 3  
- Market access: instant
Add further rice varieties cash payment for grains
including organic and upon harvest  
II   hand pounded rice   - Long Term Contracts   Year 4  
- Market access: instant
cash payment for grains
expand product portfolio upon harvest  
to other rice varieties - Long Term Contracts  
III   from the rest of India.   - Extension Contracts   Years 5 -6  
- Market access: instant
cash payment for grains
upon harvest  
- Long Term Contracts  
replicate model to other - Extension Contracts  
IV   cities in India   - Input support   Years 7 - 9  
- Market access: instant
cash payment for grains
expand product portfolio upon harvest  
to include rice related - Long Term Contracts  
products sourced through - Extension Contracts  
V   cooperatives   - Input support   Years 9 - 11  
Table 1.
Other financial criteria and breakeven requirements are detailed in other
sections in this document.

Institutional Criteria
Rice Bowl will be set up as a non-profit in India with a board that consists of
representatives from the cooperatives and other partner organizations and
also relevant corporates to be decided in consultation with the key
stakeholders.
It will be managed professionally by a team headed by the CEO and including
key corporate functions such as Finance, HR, Marketing and Operations.
Corporate accounting and reporting practices will be followed to ensure that
operations are transparent to all stakeholders, specifically our most important
clients – the farmers and their cooperatives.
Given that the primary aim of Rice Bowl is to improve farmer welfare in India,
the key principles of fair trade, fair price, long-term contracts and advance
payment will be strictly adhered to. The requirement for minimum labour
standards is much harder to achieve given the nature of agriculture in India,
and Rice Bowl will take an advocacy approach on this front with a view to
establishing these standards through consensus.

Social Enterprise Concept

Business Description
Rice Bowl will address a market failure and ensure that producers get a fair
share of profits from the sale of their produce. By linking farmers to local
consumers by using a judicious mix of market access mechanisms and
continuous support and inputs, Rice Bowl will be able to shorten the supply
chain from farmer to consumer, ensuring that leakages are minimized and
thus transferring an equitable share of profits to farmers. Farmers and their
families can therefore use agriculture as a viable source of income, enabling
them to put money away for key social needs like education and health.

Products and Services

In Phase I of the business plan Rice Bowl will sell premium, high quality rice
sourced from Tamil Nadu. As the enterprise grows, these products and
services will scale as detailed in Table 1.
This plan will ensure that while satisfying the immediate needs of farmers for
better income from their produce, other growth and development needs are
also met ensuring efficiencies of crop yields are achieved through innovation.
We hope to achieve a sustainable, profitable fair price market for rice in India.
By way of this market, we expect higher wages for farmers, which in turn will
result in improved welfare.
Necessary Conditions and Enabling Circumstances

• A retail market is available for the products

• Collaborators buy-in
• Collaborators/partners convert buy-in to involvement
• Farmers/co-ops translate learnings into action
• Price premiums trickle down to farmers

Industry Analysis

There are around 36 main varieties of rice grown in India (although the total
varieties are estimated to be over 4,000). The annual production of rice is
around 125 million MT out of which 12 million MT is produced in Tamil Nadu –
the target state for Rice Bowl.
In India, among consumers, rice is differentiated broadly under two types:
basmati and non-basmati. Aged basmati rice is retailed at a very high
premium and is usually sold to high-end restaurants and in select shops and
supermarkets. Among the non-basmati varieties, there is very little
differentiation and the prices charged are mostly based on the type of
treatment/processing1:

• White rice or raw milled rice (aka polished rice): Most of the outer
layers like husk and bran are removed from the kernel through the
milling process.
• Brown rice: Only the husk is removed while the bran layer (containing
all nutrients) remains, which makes it more nutritious than white rice.
• Parboiled rice or sella: Raw rice treated through a process of boiling
and steaming wherein the nutrients and aroma of the bran are forced
into the rice.

The Rice Value Chain

The typical value chain for rice production in India is as follows2:

The typical markup from farmer to consumer is around 47%, which means
that the farmer gets about 53% of the final selling price of rice. Interim

1
Rice Industry Overview: Sector Report Batlivala & Karani.
2
http://www.world-agriculture.com/agricultural_marketing/agricultural-marketing-
inadequacies-marketing-system.php  
milling processing and milling technology are both critical for yield quality
and, therefore, can dramatically affect the final price of rice.

Regulations in Rice Trade

The rice trade in India is highly regulated through a Minimum Support Price
(MSP) program which was designed to encourage farmers to increase
production. This price assurance is modulated through ‘agriculture produce
markets’ locally called ‘Mandis’. Food Corporation of India (FCI) undertakes
procurement on behalf of the Government of India and purchases
approximately 20-25% of the total national rice production. The Central Issue
Price (CIP) for rice is fixed on the recommendation of [the] Commission on
Agriculture Costs and Prices (CACP). Rice is sold at highly subsidized prices to
families who qualify as “below poverty line”3.

Rice Bowl Business Model

As discussed earlier, the mark up on rice from farmer to consumer is around

47%. One of the key objectives of Rice Bowl will be to reduce the mark up
from farmer to consumer by shortening the supply chain, while
simultaneously passing on a larger portion of the proceeds directly to the
farmer.
To do this Rice Bowl will need to collaborate with farmer co-operatives who
will become the starting point of the sourcing strategy. Rice Bowl will work
closely with farmer co-operatives to ensure that in addition to increasing
revenues for the crops, farmers receive other extension and financial supports
necessary to create significant changes in their overall productivity and
efficiency.
Some of the dimensions of support required by farmers are:

• Market Access: price, payment terms (cash)

• Extension Support: farming practices, weather forecasting etc.
• Input Procurement: seeds, fertilizers, pesticides etc.

Role of the Farmer Co-operative

The farmer co-operative will be launched at the producer village level. The co-
operative will serve as the contact point during harvest for grain collection
and cash transaction with Rice Bowl.

Role of Rice Bowl with Regard to Farmers

Extension support to the farmer co-operatives will be provided initially
through the expert contacts of Rice Bowl (and at Rice Bowl’s expense) with
an intention to make the farmer co-operative independent over a period of

3
Rice Industry Overview: Sector Report Batlivala & Karani.
time. Further, Rice Bowl will provide coordination with input companies so
that the farmers get access to the best inputs necessary for them to increase
rice yields and quality. Rice Bowl will provide farmers with the following
support:

• Market access: instant cash payment for grains upon harvest

• Extension support: visiting experts to provide extension support to
farmers on the best farming practices
• Inputs: co-ordinate with seed, fertilizer and pesticide companies to
provide inputs at reasonable prices

Rice Bowl Supply Chain

Rice bowl will procure directly from farmer co-operatives and have the rice
milled, processed, graded and packed under contract with rice millers. The
rice miller will also serve as the stock point from where packaged rice will be
shipped to Rice Bowl kiosks across supermarkets in Chennai.

Market Analysis

Based on primary consumer research as well as data detailing consumption

habits of our target population, we have sized and segmented the market for
fair trade rice in India.
 
Market for Rice in India
With a population of more than one billion, India is among the largest rice
markets in the world. Rice is the primary source of carbohydrate for
approximately 65% of the population, and per capita rice consumption in
India is approximately 75 kg per year (compared to around 5 kg/person/year
in Europe)4. In many parts of India, rice forms the basis of all three meals of
the day; in South India, for example, rice is transformed into different
products customized to suit the occasion, which keeps the product interesting
and in demand throughout the year.

Market Segmentation, Target Cities and Size for Rice Bowl

According to the Indian National Census in 2001, India is comprised of 5,161
cities and towns in 35 states and union territories and almost 600 districts
4
http://www.rice-trade.com/rice-in-india.html
across the country. We have adapted the classification used by the McKinsey
Global Institute as the basis of our planning, which groups cities and towns
into 4 tiers based primarily on population.5 Tier 1 cities include the top 8 cities
with a population of over 4 million.
We further evaluated the breakdown of top cities based on SEC classification
to assess market potential. SEC classification is based on Occupation and
Education of the chief wage earner (head) of the household and has the
following classes: SECA1, A2, B1, B2, C, D, E1, E2 (see Appendix 1 for SEC
classification criteria). A SEC breakdown of the population of the 8 top cities is
given below.6 We will be using the SEC breakdown of population to build the
sales forecast.
India Consumer Outlook by SEC Classification

5
Tier 1 cities include the top 8 cities with a population of over 4 million; tier 2 includes 26
cities with a population of over 1 million; tier 3 includes 33 cities with populations of between
5
500,000 to 1 million; and tier 4 includes 5,094 small towns and villages .
6
India Consumer Outlook 2005. KSA Technopac.  
Market Size by City7:
Total
Pop AB
City '000 A1+ A1 A2 B1 B2 ‘000

Greater 16,368 859 1,163 782 1,387 1,258 5,450

Mumbai

Delhi 12,791 1,016 1,258 1,102 1,264 1,287 5,927

Kolkata 13,217 817 1,117 946 1,342 1,182 5,405

Chennai 6,425 424 55 7 484 669 567 2,700

Hyderabad 5,534 575 769 520 448 443 2,754

Bangalore 5,687 411 598 331 378 507 2,225

Ahmedabad 4,519 204 265 288 452 363 1,572

Pune 3,756 243 326 223 342 284 1,418

Target Market
The primary target for Rice Bowl will be tier 1 cities since they represent a
large population base with a significant upper-middle class. We will begin with
Chennai as our entry point and test market. In segmenting the market we will
be targeting SEC A and B.
Chennai
The size of our primary target group (SEC A and B) within Chennai is around
2.7 million. Given national per capita consumption of 75 kg, this represents a
total market potential of 205,200 tons per year (or 562 tons per day) of rice
consumed by our target segment in Chennai.
Assuming that only around 5% of the SEC A and B market can be converted
to fair trade rice, it represents a market of around 28 tons per day. Since, we
will be among the first fair trade rice brands, we would attempt to capture at
least 50% of this potential market - giving us a sales target of around 14 tons
of fair trade rice per day.

Sales Target: 14 tons per day

Customer Behaviour Analysis

Understanding customer behaviour is integral to the success of Rice Bowl,

and we have attempted to gain a comprehensive view of our target
consumer. To analyze typical customer behaviour, we have drawn from
primary personal interviews, secondary quantitative and qualitative studies

7
Estimated from The Marketing Whitebook, Businessworld 2007 -2008.
 (focus groups) published by Technopak Food & Grocery Retail Trends 20088,
and internet surveys pertaining to rice purchasing in India.
Personal interviews revealed the following priorities in food and grocery
purchasing habits:

• Proximity and convenience is very important.

• Consumer does not like to travel long distances to buy food.
• Food and groceries are mostly bought by housewives.
• Housewives prefer to purchase fresh produce (vegetables, fruit, milk, meat)
frequently rather than buy in bulk and store purchase several times a
week due to
o Perception of freshness
o Lack of refrigerated storage space
o Need to cook almost 3 fresh hot meals a day
• Housewife typically has reduced mobility to travel distances to buy food

The following data from the 2008 Technopak Food & Grocery Trends Report
2008 reveals important insights about customer behaviour that will be critical
for the launching of Rice Bowl:

• Food purchase is the domain of the housewife. She is the

decision maker on what to buy and where to buy in 95% of
the cases.
• Loyalties are strong with housewife. Getting her to switch is
challenging.
• Housewife still a regular shopper at the kirana store even in
cases where modern retail format is located in close
proximity, particularly for daily needs.

The following table reveals that a very large portion of consumers still buy
from traditional formats (local grocer/kirana shops) even in the presence of
modern formats (supermarket, hypermarkets etc).9 However, consumers go
to modern stores for staples like rice, spices, and lentils that can be stored
and bought in bulk. On the other hand, for fresh produce, the convenience of
buying from the local grocer is still more attractive than making a trip to the
supermarket. For Rice Bowl this is a significant insight, as consumers will
travel to buy rice that is typically bought in bulk.

8
Technopak Food & Grocery Retail Trends 2008 was unveiled at Retail Conclave 2008,
February in New Delhi
9
Technopak Food & Grocery Trends 2008
The Technopak Food & Grocery Report revealed the following drivers of
loyalty toward traditional and modern stores:

Stated Critical The Commitment

Needs Drivers
The Traditional Polite, courteous staff, Quality products,
Format Shopper availability of store at reasonable prices,
staff, wide range of polite and courteous store
brands, Fresh, high staff
quality stocks,
Reasonable prices,
Availability in all pack
sizes
The Modern Format Polite, courteous staff, Availability of latest
Shopper Fresh, high quality products, brands,
stocks freshness of produce
Availability of latest Private labels
products brands Modern shopping
experience

Among the consumers who bought from modern formats, the study revealed
that close to two-thirds claim that ‘availability of high quality store
brands’ (private labels) is extremely important in their choice of a store.
Purchase of private labels in the last 3 months among modern format
shoppers was as high as 59%.

The Modern Format Shopper

Modern format stores are seen as a place to buy pre-processed, packaged
foods whereas dairy and other fresh perishable items are bought from
traditional format sources. The following table reveals the types of goods
purchased at modern format stores versus traditional format stores. For
example, 95% of customers say they purchase staple foods at modern format
stores and 23% of customers say they purchase staple foods at traditional
format stores10:

% of shoppers who made purchases in the last 3 months at…

Products Modern format store Traditional format store
Staple Foods 95 23
Fruits & Vegetables 55 70
Milk & fresh milk products 21 83
Other milk products 38 36
Heat & Serve / ready to 24 23
serve

10
 Technopak  Food  &  Grocery  Trends  2008  
Frozen vegetarian food 32 21
Eggs 37 56
Fresh non-veg (meat/Fish) 9 72
Frozen non-veg (meat/fish) 18 23
Health drinks, tea, coffee 94 10
etc
Fruit drinks, soft drinks, 91 15
other packaged drinks
Snacks, savouries, sweet 91 13
and confectionery
Other packaged food 50 10
Toiletries and cosmetics 95 10
Homecare and cleaning 94 10
Sanitary products 95 9

A web-based survey was conducted to collect further primary market

research. The survey inquired about participants’ understanding of fair trade,
willingness to buy fair trade products, interest in premium rice, and influence
of brand loyalty and brand recognition on purchasing. The results of the
survey indicated that quality and convenience are the primary drivers of rice
purchase. While there was interest in premium products, respondents also
indicated an unwillingness to pay a premium over their current brand of rice.
Most respondents felt ambivalent about fair trade products, and the majority
do not currently purchase any fair trade products. Survey results and
respondent feedback have suggested that consumer education about fair
trade and the details of premiums will be critical to Rice Bowl's success (see
Appendix 2 for sample responses).
Our primary interviews revealed that issues around quality and fair trade
resonate most with women shoppers. In order to reach this consumer
segment, however, attention must be paid to the quality of branding efforts.
Consumers perceive supermarket brands as high quality. Any competing
brand for this consumer segment must make an effort to have a
contemporary feel.
Given the above, the following conclusions form the basis of our marketing
strategy:

• Rice bowl needs to target women shoppers within the target

market of SEC A & B.
• Need to construct a brand of fair trade rice that can compete
with packaging and grading standards given by supermarkets 
perceived quality is important.
• Need to have outlets that have contemporary feel.
• Price point should comparable to supermarket private-labels.

Channel Selection

We have considered the following sales channels for Rice Bowl:

1. Exclusive Rice Bowl retail stores
2. Retail through kirana stores by appointing distributors
3. Retail through a kiosk in a profit-sharing arrangement with
supermarkets (shop-in-shop concept)
The key criteria used to evaluate the above options are as follows:
• Scalability: ease of scaling the model nationwide and ease of day-to-
day operations
• Market penetration: potential to capture market share from existing
rice brands
• Investment level to risk: the scale of investment needed vs risk of
failure
• Margins over cost: mark-up less distribution, retail, promotional and
selling overheads
• Competitive pressure: including concentration among modern
formats and risk of price wars
• Brand building opportunities
 We have used the following scale to analyze the viability of each retail
channel:

1   2   3   4   5  
Most Unfavourable   Moderate   Favourable   Most
Unfavourable   Favourable  

Key Area   Exclusive Rice Retail through Retail through

Bowl Stores   kirana stores by existing
appointing supermarkets –
distributors   Rice Bowl kiosk  

Scalability of Business 2   4   5  
Model  
Market 2   5   5  
Penetration  
Investment level to 2   3   4  
Risk  
Margins over cost   2   3   4  
Competitive Pressures   3   2   3  
Brand Building 5   2   4  
Opportunities  
Summary of 16   19   25  
Rating  

Based on the analysis above, we will target the most important supermarkets
and establish a profit-sharing arrangement with them in return for visibility
and access to their customers. Rice Bowl kiosks in supermarkets will be a
low-cost alternative to setting up exclusive stores. At the same time, Rice
Bowl will have an opportunity to access existing footfalls within these stores.
Furthermore, by associating with certain supermarket chains, Rice Bowl can
get immediate access to hundreds of supermarkets across the city of Chennai,
which has approximately 451 supermarkets11.
Rice Bowl can negotiate with supermarkets on the following basis:
• Rice Bowl will be marketed as a fair trade brand. Supermarkets will be
able to project a more equitable image among their customer base by
associating themselves with fair trade brands like Rice Bowl.
• Supermarkets will get a share of the profits in return for providing
space in their store for the Rice Bowl kiosks.

11
http://local.google.co.in/?hl=en&q=supermarkets&near=Chennai,+Tamil+Nadu+India&fb=
1&view=text&sa=X&oi=local_group&resnum=1&ct=more-results&cd=1
Rice Bowl Cost Structure

Rice Bowl Marketing Plan

The Rice Bowl marketing plan will focus on SEC A & B women who frequent
supermarkets for their grocery shopping. The value proposition will be quality
rice that gives producers a fair deal. Rice Bowl will use farmer testimonials to
connect the shopping experience for urban consumers with the reality of
small-scale Indian farmers. Rice Bowl kiosks will be stylishly designed to
reflect ‘green’, farmer and rural imagery along with nutritious, wholesome,
and aromatic properties normally associated with rice. The kiosk will be large
enough to stock daily targets of 300 kg rice, and will have one sales person
behind the counter.
Over a period of time, Rice Bowl will aim to build a community of users to
trigger a fair trade movement within the target city of Chennai, which can
then be replicated in other cities.

Competition

The biggest competitive threat will be premium basmati rice and supermarket
private labels. As noted earlier, there is a good deal of loyalty towards
supermarket private label products in India. Given our conservative market
share estimates, however, we believe our targets are achievable. Additionally,
further research is needed regarding the perception of fair trade brands
within the target market in Chennai prior to launch in order to support
branding and communication strategies.

Operational Requirements

Farmer Level
Identify Farmer Co-operatives based on procurement target  Sign MOU with
Co-operative  Organize extension support services pre-seeding and through
crop life cycle  Procure paddy

Miller Level
Identify Miller  Sign MOU  Organize paddy shipments  Rice shipment to
supermarkets

Supermarket Level
Identify supermarket chains  Sign MOU  Install kiosks  Develop
promotional material  Sales

The initial phase will require personnel in the following functional areas in
order to complete the tasks mentioned above:

• Sourcing: 1 person
• Sales & Marketing: 2 persons
• Accounting & Logistics: 1 person
Management Requirements

To achieve the growth plan outlined in Table 1, Rice Bowl will need an
experienced CEO to manage strategy, branding, and growth as well as a
proficient COO to oversee company operations. Once proven, the model will
expand beyond Chennai and additional managers will be hired.
Rice Bowl’s Board of Directors will also play an instrumental role in the
company’s ultimate success. As noted earlier, this Board will consist of Rice
Bowl’s CEO, along with key stakeholders including farmers, co-operative
leaders, and strategic figures from within partnering NGOs.

Financial Requirements

Rice Bowl will seek startup funding to complete further market research and
pilot the model in Chennai. Funding in the amount of $25,000 will initially be
sourced through grants or soft loans from major foundations involved in
economic development and fair trade initiatives, such as OxFam. Follow-on
funding in the form of repayable grants or soft loans will be pursued once the
model is proven for expansion into other regions of the country. Rice Bowl will
incorporate as a Section 25 company registered under section 25(1)(a) and
(b) of the Indian Companies Act. Please refer to Appendix 3 for financial
projections.

Key Risks and Opportunities

We have identified several risks associated with this project:

• Rice consumption and economic status: Some research indicates
that rice consumption is inversely proportional to household income,
suggesting that the premium market segment may not purchase
substantial quantities of rice. This risk is mitigated, however, by the
sheer size of the rice market in India. While it may be true that upper-
middle class Indians do not eat as much rice as Indians of lower
economic class, it remains the case that average rice consumption of
the upper-middle class segment is still much higher than the average
European consumer.
• Rice as a premium product: While basmati rice is widely
acknowledged as a premium product, other varieties of rice are less
recognized. Some marketing efforts may be required to educate the
target market segment as to the wide variety of rice available and
specific benefits of each.
• Government regulation of rice prices: As noted earlier, the Indian
Government places significant regulations on the price of rice and
purchases a significant portion of the rice produced nationally. This rice
is then sold at subsidized prices to the “below poverty level” segment
to promote food security. This risk is mitigated by way of target market
 segment—Rice Bowl will target upper-middle class segments whose
purchasing patterns and price sensitivity are unaffected by government
pricing regulations.
• Social enterprise risks: Some additional risks should be considered
when starting a social enterprise, such as legal structure; while
incorporating as a non profit offers significant benefits when attracting
start-up funding, it may result in legal limitations for follow-on funding
or expansion as Rice Bowl grows. Other legal structures will be
explored to ensure the best fit to achieve Rice Bowl’s social mission of
poverty eradication for small-scale Indian farmers. Likewise, the risk of
mission drift must be closely monitored.
• Other risks: Rice Bowl will also need to address the risks common to
conventional start-ups, including economic climate, tax implications,
legal and contractual risks and human resource requirements.
Additionally, natural disaster could significantly impact Rice Bowl’s
ability to do business if rice crops are affected.

Rice Bowl also enjoys significant opportunities:

• Growing middle class: India has one of the fastest growing middle-
class consumer segments in the world, predicted to reach some 583
million people by 2025. “These households will see their incomes
balloon to 51.5 trillion rupees ($1.1 billion)—11 times the level of today
and 58 percent of total Indian income.”12
• Established fair trade movement: Rice Bowl can benefit
tremendously from the existing fair trade movement and lessons
learned from pioneers in the industry. Fair trade has grown in Western
countries to represent a significant portion of sales in commodities
such as coffee, tea, and chocolate. Rice Bowl has a unique opportunity
to introduce fair trade purchasing on a local and national level through
the sale of rice.

Conclusion

As demonstrated, Rice Bowl has the potential to significantly impact the

income and welfare of small-scale rice farmers in India through the
development of a national fair trade rice movement. Building on the successes
of the existing fair trade industry and capitalizing on a quickly growing middle
class who will value quality rice and fair trade principals, Rice Bowl has a
unique opportunity to not only become a self-sustaining high-impact social
enterprise, but a profitable business in the long run.

Word count: 4930

12
Farrell, Diana and Eric Beinhocker. “Next Big Spenders: India’s Middle Class”.
BusinessWeek: May 19, 2007
 
Appendix 1: Market Socio-Economic Classification

Socio-Economic Classification Grid

Education/

Some college but not

School up to 4 Years
Occupation

Graduate - General
School 5-9 years
formal schooling
/ literate but no

Graduate / Post

Graduate / Post

Professional
Graduate -
graduate
SSC/HSC
1 Unskilled workers Illiterate
E2 E2 E1 D D D D
2 Skilled workers E2 E1 D C C B2 B2
3 Petty Traders E2 D D C C B2 B2
4 Shop Owners D D C B2 B1 A2 A2
5 Entrepreneurs D C B2 B1 A2 A2 A1
Employees None
6 Entrepreneurs C B2 B2 B1 A2 A2 A1
Employees < 10
7 Entrepreneurs B1 B1 A2 A2 A1 A1 A1
Employees > 10
8 Self-employed D D D B2 B1 A2 A1
professionals
9 Clerical/Salesmen D D D C B2 B1 B1
A Supervisory level D D C C B2 B1 A2
B Officers/Executives: C C C B2 B1 A2 A2
Junior

Appendix 2: Survey Results

Can you name a few top-of-mind brands?