Crofarm hopes to bring down the country's post-harvest losses, which equals Australia's annual production
Friday May 20, 2016,
5 min Read
While technology is making an impact across commerce, education, and healthcare, among other sectors, in India, it barely impacts the supply chain of the country’s largest employer, agriculture. A poor, antiquated supply chain causes post-harvest losses of 20 million metric tons annually in India, a waste that awaits the impact of technology. The good news is change is finally afoot, both at a policy level, with the introduction of initiatives like Aadhar and the Jan Dhan initiative, and, perhaps more importantly, the attention of entrepreneurs, who finally see possibilities in the sector. That is what makes the story of Crofarm really interesting.
The Ministry of Food and Civil Supplies estimates total preventable post-harvest losses of foodgrains at 10 percent of total production, equivalent to the total production in Australia annually. Varun Khurana (35), Co-founder, Crofarm, says:
In a country where 20 percent of the population is undernourished, post-harvest losses is a substantial avoidable waste.
Varun observed the poor state of supply chain in the agriculture sector while leading technology at Softbank-funded Grofers. “At Grofers, we set up a supply chain to deliver perishables by procuring vegetable and fruits from the mandi and delivering to the consumer. However, knowing what happens behind the mandi was always a matter of curiosity,” he says.
Varun and Prashant Jain (36) joined Grofers after the Sequoia-funded company acquired Greenbox in April last year. The duo founded Greenbox, a smartphone-based grocery delivery platform in 2014. Varun was serving Grofers as its Chief Technology Officer, while Prashant worked in the capacity of Vice President, Operations.
Varun, along with Prashant, moved on from Grofers in February this year after a year-long stint at the Gurgaon-based company. Since then, the duo started spending time at farms across states including Haryana, Uttarakhand and Uttar Pradesh. Varun adds,
We tried to understand the process. After visiting nearly a dozen farms, it was pretty evident that opportunities in agrotech are immense. And the best part –is that there is hardly anyone looking into it.
After four months of rigorous on-ground research, the duo floated Crofarm in April this year.
Apart from farms, the duo also spent time meeting city-based grain and vegetable merchants and participated in various agri-conferences. Prashant adds:
There is so much effort going into enticing farmers to buy better farm machinery, fertilizers, seeds etc., however, very few people are talking about how to help them sell their produce.
Selling produce at right price-point is a huge challenge for farmers
Selling crops at decent price-point is the biggest headache for farmers. We often see how farmers forced to sell produce at cheap prices while intermediaries hoard it and make a killing when demand soars and supply plummets. “We aspire to weed out the multiple layers existing between farmer and market,” says Varun.
Existing supply chains require a lot of work. The produce spends too much time in transit, with multiple loading/unloading causing wastage, and with several intermediaries involved a lot of money ends up going to entities that don't add much value. Varun points out,
We decided to focus on this problem, and help farmers sell better.
Penetration of smartphones and Aadhar pave way for disruption in agriculture
Penetration of smartphone and The Unique Identification Authority of India (UIDAI) have created scope to turn around existing supply chain. Varun says,
Besides access to smartphones, with 93-percent coverage, Aadhaar has made great inroads with the farmers, almost everyone we met had Aadhaar. This opens up a lot of opportunities to leverage technology that were not possible earlier.
He explains that Aadhaar uniquely helps to identify farmers, keep track of their produce and quality, as well as pay them through their Aadhaar-linked bank accounts.
Currently Crofarm is in the proof-of-concept (PoC) stage, by partnering with select farmers for select products and selling them to select merchants. “So far, the response has been very encouraging,” reveals Varun. The company has on-boarded about two dozen farmers and claims to process over 100 tonnes of produce on a weekly basis from farms across Haryana, UP and Uttarakhand.
Crofarm makes revenue through a commission on every sale it facilitates. “Right now, we're focussed on getting our POC right and accordingly will take it further,” says Prashant.
Agriculture forms 13 percent of our GDP and according to government estimates, it’s an over $250-billion market. At present, over 95 per cent of agricultural produce is traded by well-entrenched multi-layer intermediaries. These intermediaries eat up a major chunk of profit, leaving too little on the table for most farmers. However, with the power of Internet, smartphone and government initiatives like Aadhaar, this sector appears to be at the cusp of disruption. Thus, be it better targeting of credit or better access to market prices, farmers will presumably get the benefit of both access and choice finally, opening up better opportunities for Crofarm.
By using scientific processes for managing storage and agri-logistics in existing structures storage losses could be reduced from 10 percent to a mere 0.5 percent, translating into a saving of $13 billion. A saving that could help attack the challenge of a staggering 20 percent of Indians that still go hungry regularly.
So far, agriculture is one of the most neglected sectors by technology. However, things are now looking bright for the sector, as tech startups have started showing interest in one of the largest unorganised sector in the country. Startups like Awaaz De, Anulekh Agrotech, FreshWorld, Farmily, and Sahaja Organics are disseminating farm information through mobile phones, bridging the gaps in agri retail supply chain, providing farmers with direct market access, besides weather, water and soil management services.