01 May New crop of start-ups
From soil preparation to harvest, many new ventures are sowing the seeds of a farm revolution
Imagine farming in India and the picture that immediately comes to mind are wizened old men, bare-chested, oxen pulling ploughs and women bent over either planting saplings or helping harvest the crops. Of course, there is the occasional tractor and the combine harvester, but the image is always one of age-old practices.
This may not be the true picture, but that is the lingering image reinforced partly by the small farm holdings that prevents large scale mechanisation, the poor productivity compared to other nations, the huge amount of wastage from farm to fork and the low income that farmers earn.
The reasons are many: poor quality of inputs; farmers are not trained on best practices; small farm sizes, an average Indian farm is one-hundredth the size of one in the US, which prevents mechanisation on a large scale; the more recent development of non-availability of farm labour; numerous intermediaries from farm to the market, with none of them adding much value and which results in huge wastage at each stage; and, lack of a cold chain infrastructure, including adequate number of refrigerated trucks for perishable produce, and warehouses.
Hoping to bring about a transformation is a bunch of entrepreneurs who are trying to change the way farming is done. There are ventures that provide men and machinery to help farmers from soil preparation to harvest, those that source fruits and vegetables and market them after cleaning, grading and packing them, some even export the produce, and others that provide scientific storage facilities.
The opportunity is so huge which explains why Mahindra & Mahindra, a leading tractor maker, has started a venture called Trringo, a tractor and farm equipment rental business.
Supporting them with funds are venture capital firms such as Aspada, Aavishkaar, Ankur Capital, Bestseller Foundation, Unitus Impact, Unilazer Ventures and some wealthy individuals.
According to Rohtash Mal, Chairman and Managing Director, EM3 AgriServices, almost 90 per cent of farmers cannot afford to buy tractors and other equipment. Farm labour is also in a shortage. What EM3 — which has raised funds from venture capital firm Aspada and is looking at a bigger second round — does is provide labour and equipment for the complete range of farm activities, charging the users on a per-acre basis. EM3, according to him, owns the equipment and also gets under-utilised implements from other farmers. It operates in Madhya Pradesh, Uttar Pradesh and Rajasthan.
Importance of mechanisation
Says Adwitiya Mal, CEO, EM3, “the lack of farm labour has catalysed the movement towards mechanisation.” The demand for such services is huge. Farmers need mechanisation on a large-scale to improve productivity, but the small sizes of farms prevents many of them from buying their own equipment.
Zamindara Farm Solutions, which too provides Farming as a Service (FaaS), boasts of a large equipment bank. Renting out the equipment came with its own set of problems of poor maintenance and so Zamindara started supplying farmers with the equipment and the manpower. Gradually, it made sure that the employees themselves had a stake in the business so that their feeling of ownership increased. “It is like an Uber or an Ola for the farm equipment business,” says Vikram Ahuja, Director. Zamindara too works on a pay-per-use model, serving the complete value chain. It operates in Punjab, Rajasthan and Haryana and plans to concentrate in these States as it feels going to other States will spread its resources thin.
INI Farms, according to Purnima Khandelwal, CEO, is a focussed commodity player, integrated player across the value chain. It started with pomegranate in 2009 and about three years back, got into bananas. Branding is an integral part of INI Farms’ strategy; it sells the fruits under the ‘kimaye’ brand. INI Farms has its own farms and also works with farmers, in Maharashtra and Madhya Pradesh and has started working with farmers in Gujarat and Andhra Pradesh to aggregate the produce.
The company provides support on know-how and exports, including to the US, Germany, the Netherlands, Italy, Greece, West Asia, Singapore, Malaysia, New Zealand and Canada. In FY2017, it handled about 25,000 tonnes of these two fruits.
Lawrencedale Agroprocessing India Pvt Ltd (LEAF), which started operations in the Nilgiris in Tamil Nadu, sources fresh vegetables directly from farmers in Tamil Nadu, Karnataka and Andhra Pradesh, eliminating intermediaries and paying farmers market prices. It cleans, grades and packs the produce and sells them to retailers, including large supermarket chains, under the LEAF brand, according to P Vijayaraghavan, CEO.
LEAF provides farmers with quality inputs, helps them with technical support to cut down post-harvest losses, has its own cold chain facilities to transport the produce. “We have around 3,000 farmers linked with us, most of whom are small-hold farmers,” says Vijayaraghavan. LEAF handles 25-30 tonnes of produce every day and plans to go up to 50 tonnes by October. It has raised about ₹50 crore in two rounds.
There are ventures on the post-harvest side too, looking at storage. Arya Collateral Warehousing Services Pvt Ltd provides storage serving a range of customers – farmers, farmer producer organisations, companies such as Cargill and ITC, and financial institutions – to ensure that farmers get a remunerative price, that the foodgrains are not damaged and offering collateral management services for banks and financial institutions.
Farmers and FPOs can hold the stock in the warehouses till the prices are remunerative. For the companies, it cleans and fumigates the warehouses and ensures that the grains are safe and not damaged. Arya operates in 17 States, handling 700,000 tonnes to a million tonnes across 550 warehouses in the country, says Prasanna Rao, Managing Director.
The building blocks are in place. These efforts need to spread across the country for them to bear fruit. More such ventures in the agriculture technology (AgTech) space that provide vital inputs to farmers and others in the ecosystem and those offering farming-as-a-service (FaaS) are needed for farmers to benefit and agriculture to become attractive.