A Farmers Perspective

Based on true incidents

We recently hired a farmer’s son as a CEO in one of our supported FPOs. The FPO was unable to find the right candidate and requested us to help with their hiring process.

After working with the FPO for a month; he landed up in our office. I wanted to get a better insight into what goes on in a farmer’s mind when he leaves the comfort of his own village, family protection, support of his community to start on a very unfamiliar territory. So.. we got talking. Here is how it went.

Me – Nandu, you are a farmer first and now on the other side, where you would be expected to help the farmer through the FPO. After being with the FPO for a month, do you think you can provide any help to the farmers ?

Nandu – All I can say is if this FPO ( the one he is working with ) is going to implement the projects as per their plans, then as a farmer ; I would like to be a lifetime member of it.

Me – Why do you think so ?

Nandu – To answer that, I have to tell you my story. Sir.. a farmer’s life is miserable when you realize what he goes through to make through a year. I come from a family of six.. Four adults and two children. My father passed away in 2019 and I had to struggle to complete my studies. My mother , my brother and his wife supported me to pull through the pandemic. We have three pieces of land.. all of 5 acres and we grow cotton. Cotton needs a lot of water and in Beed ( the place where he comes from ), rain is scarce. We sow in June and harvest in October. Even though we can keep the crops for another 3 months to harvest; the cost of production goes up by at least 40 percent and the yield is not commensurate.

So in October, in a good year we get about 60 quintals of cotton. Our cost of production is Rs 50,000 if there are no heavy insect attacks . In a bad year, the production cost can go up by at least 30 percent just to get a normal yield. A standard 1 lt bottle costs anywhere between Rs 1300-1800 and we use at least 2 bottles for an acre.

The price that I receive from the trader is Rs 6000/quintal. So we make Rs 3 lakhs for our effort of 5 months. From November to March, I grow Rabi crops such as jowar, wheat, vegetables in 2-3 acres and we make about Rs 50 thousand / acre after settling all the costs.

In a year, our total household income is Rs 5-6 Lakhs. My family is one of the better placed in our community because we have 5 acres of land. Not all people in my village are so fortunate. In some families the income is as low as Rs 2 Lakhs in a year to feed a family of six.

Me – Yeah.. I understand, for a small farmer, it is difficult. But you still are better off.

Nandu – I haven’t yet told you the challenges we face in my place.

First, as a principle, I don’t buy any product on credit. The smaller farmers do and the local Krishi Kendra owner exploits them. The products don’t come cheap to us. Starting from seed to fertilizers to insecticides to weedicides; we feel we pay much more money. The cost of producing cotton has gone up by more than 100 percent and my yield hasn’t increased and most of all the selling price has remained almost the same.

Secondly, we don’t do any soil testing or preparation as it costs us anywhere between Rs 1000-1200 per test and it takes a minimum of 1-2 months to get the tests done in a lab. My brother and I understand that testing the soil can save us about Rs 10-15 thousand in input costs. But it’s just the convenience and there is always the peer pressure to use more fertilizers than needed.

Then my brother has two school going kids and in our household we regularly need money for medicines, repair works, school fees and other family functions. We take loans from the village moneylender at 36 percent a year. Less fortunate families get loan at 60 percent a year.

Next after harvest, the challenge is to get a good buyer. Most of the traders are old timers in the village and we can’t sell outside the village as they refuse to buy from us if we explore the market outside the village or the mandi. Many traders use weighing scales and weighbridges that are faulty. We lose about 50-60 KG in weight because of faulty weighing scales. My complaints in Panchayat and agri offices are not heeded.

Me – Now that you work for an FPO, how do you think you can help the farmers?

Nandu – I am really hopeful that we can start providing the inputs at a lesser cost. The FPO has an input selling license. The FPO is working with the large bank to be able to generate demand for various types of loans from farmers. At least the rate of interest will not be as high as back in my place. Within FPO , we have started the digitization of farm and crop information. We can plan marketing of the crops and share information with the farmers. They won’t have to make desperate sell. We have applied for an agri infra loan to set up a multipurpose warehouse where we can store produce procured from the farmers.

Even if the FPO executes 50 percent of the plan, the farmers will benefit tremendously.

The Nandus of rural Maharashtra are recognizing that they can bring their experience in agriculture to execute strategies. Beyond digitization, traditional market linkage, credit system; FPOs can indeed provide solutions to alleviate the pains of small farmers.

Digitization Part 2: Driving Market Expansion and Concerted Collaborations

In the previous sections, we delved into the transformative power of digitization, uncovering its role in surmounting challenges stemming from undercapitalization, securing funding opportunities, and guiding strategic business planning for FPOs. The creation of Farmer Producer Organizations (FPOs) and Farmer Producer Companies (FPCs) stems from a shared commitment to uplift the farming communities, necessitating not only optimized financial operations but also a profound understanding of market dynamics and fruitful collaborations. This article further highlights the multi-dimensional significance of digitization within FPOs, shedding light on its potential to eliminate financial constraints and foster an enterprising business approach.

Market Expansion and Access:

Digitization emerges as the catalyst propelling FPOs towards wider market horizons and expansion. Harnessing digital marketing techniques, e-commerce platforms, and online marketplaces empowers FPOs to transcend geographical barriers and engage a diverse clientele. This enhanced market access not only augments revenue possibilities but also diminishes dependence on localized markets, thereby addressing the pressing challenge of undercapitalization.

Data-driven Resource Allocation:

The advent of digitization furnishes FPOs with a sophisticated toolkit for resource allocation, guided by data-derived insights. With processes spanning supply chain management, inventory monitoring, and production planning digitized, FPOs can achieve operational streamlining, cost reduction, and heightened efficiency. The strategic allocation of resources not only alleviates the strains of undercapitalization but also ensures prudent resource utilization and elevated productivity.

Collaboration and Partnerships:

In the intricate tapestry of digitization, collaboration and partnerships emerge as key threads that address the complexities of undercapitalization. Through the strategic employment of digital communication tools and virtual platforms, FPOs can interlink with fellow organizations, sharing resources, insights, and embarking on collective ventures. This spirit of collaboration not only enhances resource amalgamation and risk-sharing but also ignites innovation, fortifying financial prowess and diminishing the impact of undercapitalization.

In conclusion, the journey towards financial sustainability for FPCs encompasses a dynamic blend of undercapitalization mitigation, strategic market outreach, and concerted collaborations – all intricately woven into the fabric of digitization. ArthAgri plays a vital role in this journey as a comprehensive solution platform. Alongside digitization, it addresses various other business needs, ensuring the well-being of FPCs, the prosperity of their farmer members, and the realization of their visionary potential. Through embracing the transformative potential of digitization, FPCs evolve from being confined by financial challenges into robust, adaptable, and visionary entities, driving their own metamorphosis towards success.

Who moved my Tomatoes, again!

Tomatoes have a quirky history that starts with their cheeky little ancestors in South America.

Fancy Spanish explorers sailed across the seas, discovering these peculiar red fruits. They brought them back home, leaving people scratching their heads, wondering what to make of them. Some even feared they were poisonous, but the clever Italians thought otherwise and started cooking up tasty tomato dishes. Fast forward to India, and tomatoes found a new home during the 16th and 17th century, thanks to trade routes with Europeans. Indians embraced the tomatoes with open arms and mixed them into their traditional cuisine.

Eventually tomatoes got settled in most parts of the world and scientists developed many varieties. Tomato became an important commercial crop by 20th century! But in 2015, even Israel, which is known for having super advanced agriculture technology and even invented cherry tomatoes, had a bit of a pickle with a shortage of tomatoes. The problem arose because the weather wasn’t favourable for growing tomatoes, and at the same time, there was a sudden increase in demand because of festivals of Muslims and Jews. So, when supply went down and demand went up, the prices of tomatoes went on a roller coaster ride!

In India, tomatoes are grown in tomato belts like Maharashtra, Karnataka, and others. These regions have the right conditions for tomato cultivation, making them fruitful lands for tomato lovers. As for prices, they’re quite the rollercoaster ride too! Prices drop in January and February but shoot up during the rainy season till and November of the year. This year, tomato farmers face challenges with diseases and unpredictable weather, leading to skyrocketed prices.

Tomatoe prices over a period of time in ₹

All India average prices of tomatoes in last three years, source: https://consumeraffairs.nic.in/

Can digitization moderate the jeopardised situation of tomato market?

Digitization can indeed moderate the jeopardized situation of the tomato market. When Farmer Producer Organizations (FPOs) digitize their data and integrate it with weather information, it opens up a world of opportunities for farmers to make better decisions and stabilize commodity prices.

🍅 Firstly, access to real-time information on market prices, demand trends, and supply dynamics empowers FPO members to make informed decisions about when and where to sell their produce. This reduces the likelihood of distress sales during times of low prices, helping farmers get fairer returns for their tomatoes.

🍅 Secondly, real-time weather data enables farmers to anticipate weather patterns, allowing them to plan their sowing and harvest cycles effectively. By aligning agricultural activities with weather forecasts, farmers can optimize their production strategies and protect their crops from adverse weather events, reducing losses and price volatility caused by supply disruptions.

🍅 Additionally, integrating weather data with market data and analytics improves price forecasting models. Armed with such insights, farmers can anticipate price movements and make informed marketing decisions, fetching better prices for their produce.

In conclusion, digitization empowers farmers with crucial information and resources to optimize their agricultural practices. By managing risks, enhancing productivity, and aligning marketing strategies with weather patterns, digitization can contribute to moderating tomato prices and creating a more resilient and sustainable agricultural ecosystem. So, next time you’re wondering “Who Moved My Tomatoes?”, remember their whimsical journey and how digitization can help keep tomato prices in check! 🍅😄











Digitization of FPO

Part 1: Driving Financial Sustainability and Strategic Business Design

2 min read

During a recent visit to a Farmer Producer Company (FPC) that had been established nearly a year ago, we observed that despite having qualified leadership and a well-established supply chain for their horticultural produce, they were facing significant challenges in achieving a profitable business model mostly because of lack of capital.

Based on government data, it is reported that as of March 2023, there have been 16,000 registered Farmer Producer Companies (FPCs). However, media research indicates that only 1.54% of these FPCs have a paid-up capital exceeding 30 lakh rupees. The low level of paid-up capital severely restricts their capacity to engage in business activities, particularly in trading agricultural commodities. This poses a significant obstacle to the primary objective of promoting producer companies, which is to enable small producers to pool their resources for commodity trading and processing. Unfortunately, the majority of FPCs are undercapitalized, preventing them from realizing their full potential in these areas.

The digitization of Farmer Producer Organizations (FPOs) is of utmost importance, addressing both undercapitalization challenges and enabling effective business strategy design. This article highlights the significance of digitization in FPOs from both perspectives, emphasizing how digital transformation can overcome financial limitations while shaping a robust and forward-thinking business strategy.

Overcoming Undercapitalization Challenges

Digitization enables FPOs to navigate the hurdles posed by undercapitalization effectively. By adopting digital tools and platforms, FPOs gain access to real-time financial data and analysis, allowing for informed decision-making regarding capital allocation, resource management, and financial planning. This data-driven approach helps optimize financial performance, mitigating the impact of undercapitalization on FPO operations.

Access to Funding and Investment Opportunities

Digitization enhances FPOs’ ability to attract funding and investment. By maintaining accurate financial records and embracing digital platforms, FPOs can present transparent and reliable financial information to potential investors, lenders, and funding agencies. This increased transparency and credibility create opportunities for securing capital, facilitating infrastructure development, and fostering sustainable growth.

Strategic Business Planning

Digitization plays a pivotal role in designing a strategic business plan for FPOs. Through digitized data analysis, FPOs can identify market trends, consumer preferences, and emerging opportunities. This information empowers FPOs to formulate robust business strategies, including product diversification, targeted marketing approaches, and effective pricing strategies. Digitization facilitates agility and adaptability in responding to market dynamics, ensuring long-term financial sustainability.

The digitization of FPOs serves as a dual-purpose solution, addressing undercapitalization challenges while facilitating the design of strategic business plans. At ArthAgri, we provide FPOs this facility and help them to with identifying business opportunities for their farmers. By leveraging digitized financial data, FPOs can optimize resource allocation, access funding and investment opportunities, expand market reach, and formulate informed business strategies. This comprehensive approach drives financial sustainability, resilience, and growth within FPOs, ultimately benefiting farmers and rural communities. With ArthAgri, farmers and FPOs can embrace digitization to overcoming undercapitalization and laying a foundation for thriving FPOs which is capable of navigating a dynamic agricultural landscape.

From Farmers to Agriprenuers: Collectivisation Approach for FPO

Capacity Building and Training Ecosystem for FPO in India

(2 min read)

For the fiscal year 22–23, the agricultural sector in India has grown at an average annual rate of 4.5% over the last six years, thanks to the implementation of the Farmer Producer Organization (FPO) policy, which aims to establish 10,000 FPOs by 2024. This presents a multitude of opportunities for stakeholders in technology, social impact, and finance, including investments, job creation, and technical research. However, to fully capitalize on these opportunities and ensure the long-term viability of FPOs at the grassroots level, it is crucial to focus on capacity building and training for farmers.

In addition to traditional approaches, there are various models available for capacity building and training, including digital and hybrid methods. The ecosystem provides ample resources to support these initiatives. The key functions of an FPO include procuring inputs for its members, aggregating produce for the market, and establishing value chains. Understanding these aspects during the initial stages of FPO development is crucial to achieving success.

Farmers with small landholdings often rely on agri-allied businesses to increase their income. However, challenges arise due to the limited size of their land holdings, necessitating a collective approach to agri-allied business for mass production and profitability. Addressing these challenges requires solutions such as providing ongoing support through handholding, conducting follow-ups after training, and establishing a robust support system. Continuous program improvement and collaboration between individual farmers and other FPOs are also essential.

By enhancing the capacity of farmers and promoting knowledge sharing, along with fostering a collaborative and collective approach among farmers and FPOs, the aim is to transform individual farmers into successful agriprenuers. This transformation will not only contribute to the growth of the agricultural sector but also empower farmers to run profitable businesses and uplift entire rural communities.

In conclusion, the scope for capacity building and training within the FPO ecosystem in India is vast. By equipping farmers with the necessary skills, knowledge, and a collaborative mindset, we can facilitate their transition from being mere producers to successful entrepreneurs in the agricultural domain. This comprehensive approach will drive economic growth and generate a positive social impact in rural areas.

How many Agri Market Platforms does India need?

Originally published in Linkedin

Often the marketplace solution providers in Agri space are confronted with the question on why they are developing something for which India is still not ready. The disorganised system, lack of trust, thousands of instances buyer-seller discussions going awry, strikes, logistical issues, farmers going back on their commitments to supply, buyers rejecting the consignment, delayed payments, partial payments, marketplaces taking the hit at the end to their reputation and finances… are some of the usual arguments. With overwhelming number of reasons staring at their faces; founders, to find more acceptability redesign the business model to give a semblance of a marketplace but not exactly what a marketplace should be.

I liked the way bredcrumb.vc has defined marketplace and how a full-stack marketplace should be. Besides defining marketplace, they define the full-stack or managed marketplace to be “more involved in the execution of transactions”. In India many agri marketplaces are already doing that. Again according to the definitions; most of the existing marketplaces fall into the category of Marketplace In Name Only (MINOs).

MINOs Vs None

Current marketplace models include procuring by self and selling to buyers after marking up the price. This is a favorite model with the buyers and the suppliers, as they enjoy several advantages with minimum risk. Few others have built a database of suppliers and buyers; matchmake; and assist in execution of transactions. The revenue source most of the times is a percentage of commission either from both sides or just one depending on the size and the pre-execution discussion. The information opacity is intentional from the marketplace for the fear of being bypassed.

To be “more involved…” most of the marketplaces have put their own equity money ( debt is too costly !! ) to procure and pray that they can sell the inventory at a profit. There seem not many more ways to be “more involved”.

Deploying capital is an easy and a stupid way to build a marketplace, especially when there are so many problems to be solved that can truly make a marketplace a “full-stack marketplace”. Indian Agriculture ecosystem has the capacity to absorb not one, but several full-stack marketplaces and if I can take the liberty; several “platforms”. I will touch on the reason of expanding the definition towards the end of this article.

Future of full-stack marketplaces

Starting from trust, quality, finding the right supplier and buyer, verifying and validating both, digitizing interactions, solving issues of storage, transportation, delivery, to collection

can all be individually provided or grouped as value-added solution/s from the marketplace. On input side of the business the list of issues is equally long and complex.

A true full-stack marketplace should focus on owning the “end to end process” and not “end to end solution” while solving at least one key problem on its own.

A full-stack marketplace can start as a matchmaker and onboard solutions for downstream problems that will arise in several stages of deal making. There are scores of solutions for each of the problems and every solution provider is basically going after the same set of customers. A full-stack marketplace need not provide all the answers to the problems on its own. The strength is in making a highly integrable marketplace. Onboarding a solution provider as a partner, connecting stakeholders, allowing the supplier / buyer to pick a service or product provider while executing a deal, opening the gateways for a seamless transaction can be great value-adds that will save lot of time, money and build trust.

Marketplaces are traditionally thought of as meeting places for suppliers and buyers with “network effect” as its sole biggest differentiator. If a marketplace were to deliver all that mentioned above, it must act as a “platform”.

Whoa.. what’s a platform ??

Things were already nebulous when we were debating between a MINO and a full-stack marketplace. Now it has got even murkier !! Let me try to demystify as much as possible, because there isn’t a single platform that I can call out to differentiate from the scores of MINOs.

Building a marketplace on a shopify like solution is far more easier than to conceptualise a platform that can act not only as a management solution, an automation platform, an integration interface, but also connect buyers and suppliers .

A platform makes a lot of sense when we are discussing a domain like Agri. We sometimes oversimplify the industry by dividing it into forward and backward linkage and demarcate the plays. Unlike other industries, the demarcation doesn’t work for many reasons. What happens behind the farmgate has profound effect on the downstream activities or business and subsequently the revenue.

If we consider just quality aspect of the product; the dependencies are on practices followed for growing to quality of inputs, harvesting, aggregation, storage to as simple as the number of hands through which the product moves. How can a disconnected marketplace solution assure an optimum price for a quality product and help the customer discern between great and ok quality?

One last point .. in-fact two

But as I mentioned earlier, India will need multiple platforms and when we are discussing the need for multiple platforms, interoperability among platforms will further boost trust among stakeholders, fine-tune fragmented processes and build sustainable business models.

The relevance of a platform is even more as we see the agricultural landscape in India changing from only farmers as producers to producer companies; from traditional methods to organised, contact and mechanised farming, managing the farms from just a piece of land to like that of a factory, buyer community being slowly replaced from middlemen and arthiyas only to corporates & large-scale processors. I am extremely optimistic about the role and the success of producer companies in the ecosystem and will dive deeper on how we see the problems firming up as they mature and solutions to their problems evolve.