No bed of roses: how Urban Harvest braved the odds to post profit in agriculture sector

From drought to demonetisation, Urban Harvest has faced multiple hardships but has succeeded in scaling up.

Three engineers - Sahil Rao, 48, from Mangaluru, Biju Puthan Purayil, 41, from Calicut, and Satyajit Gantayat, 39, from Odisha - were colleagues in Bengaluru. Although they all have more than 15 years of work experience at Infosys, Flipkart and some companies abroad, the stability of corporate jobs was questioned during the recession.

Realising that no one is indispensable, they started thinking, why not channel all this hard work into something of their own?

Satyajit recollects, “It was clear that IT was not where we wanted to be. We explored domains that we were passionate about. When our attention turned to the numerous farmer suicides, we decided to do something with a vision to make agriculture profitable.”

With the kind of government support in the form of subsidies, it seemed like a no-brainer doing floriculture, and the idea of Dutch rose farming came to the fore. Thus, Urban Harvest came to be.

To say that their journey was tough will be an understatement. All entrepreneurs face challenges, but Urban Harvest is the result of resilience through disappointments and hardships. Unwilling to give up, the trio has made profit since their launch in early 2014 in Karnataka, and are scaling up now.

Niche segment, extra care

Urban Harvest operates out of Denkanikottai, 50 km from Electronic City in Bengaluru. Their primary farm is in the village of Dhalasur. They have also leased out a couple of other farms in the vicinity for open-field cultivation.

Dutch rose needs to be grown inside high-tech poly-houses for quality produce. But building this infrastructure will cost at least Rs 50 lakh.

However, there is consistent demand and a rose stem can fetch you upwards of Rs 5, which can go up to Rs 20 during peak seasons like wedding season. An acre of polyhouse gives more than seven lakh stems a year. The main consumer of these roses in India is the garland industry.

Dutch rose cultivation is quite labour-intensive. “Right from planting, utmost care needs to be given to the plants to achieve the expected productivity levels. A day’s delay in spraying could sometimes be catastrophic to the extent that it could wipe out the production for two to three months,” says Satyajit.

Right from the materials used for the polyhouse, to cross ventilation and orientation of the polyhouse, there are numerous technicalities involved in Dutch rose cultivation. The ongoing operations involve regular de-shooting, bud-capping, harvesting, and de-weeding, apart from fustigation and sprays.

In India, Dutch roses are primarily cultivated in Hosur–Bengaluru belt and some areas near Pune. Buyers’ network in Bengaluru and Hosur cater to the demands of the whole country. Satyjit says that 75 percent of their roses too take the same route. They have also established direct connects with some retailers in Kerala.

Going organic

Primarily into growing Dutch roses in hi-tech poly-houses, Urban Harvest has also dabbled in veggies, flowers like marigold, button roses etc. They have found the age-old method of farming much simpler and beneficial in the long run. They distribute the organic vegetables to some big names like Nature’s Basket, as well as some supermarkets and small vegetable retailers in the city as part of their six-month-long pilot a year ago.

For organic veggie farming, they replaced pesticides with natural concoctions like neem oil, pungam oil, agnishastra, 3g (ginger, green chillies, garlic) solution, 5 leaves solution, panchagavya, vermiwash etc. Instead of chemical fertilisers, they use vermicomposting, farm yard manure, panchagavya, jeevamrita, fish acid etc.

“After the rose started generating revenue, we experimented with chemical-free cultivation. Even the agriculture department officials had warned us that it will be impossible without chemicals. But with a lot of research and trial, we broke the myth and moved towards growing organically,” Satyajit recounts.

In the veggies space, there are quite a few online retail players. But Satyajit claims that most of them sell chemical and organically grown veggies. Prices (sometimes as high as 300-400 percent) are a big deterrent.

“We grow our own veggies and that differentiates us from the rest, who are primarily into trading. This also gives us a price advantage,” he says, adding that they reach out to other farm owners and inculcate their best practices too.

Teamwork and profit

At peak size Urban Harvest has had more than 50 workers, including three supervisors. Each acre of poly-house requires at least seven trained labourers. Satajit says that it was hard to get trained labour with expertise in Dutch roses; they had to be trained.

The team has invested around Rs 5 crore on the project - with around Rs 75 lakh between the partners, and the rest from bank loans and from friends. All the revenue generated has gone back into this venture. Satyajit believes that they are now in a stage where they can grow exponentially. They are looking for VC funding to achieve this growth.

“We turned operationally profitable in around a year’s time. We could have turned operationally profitable from the sixth month; but we were unable to attain the productivity levels expected, primarily because of our lack of expertise in floriculture. The cost of capital has been a spot of bother and we are in the process of reducing our debt liabilities,” he says.

Infrastructural challenges

Since it took them more than 15 months to get electricity connection, Urban Harvest started construction of their poly house with a generator as power source. But their hurdles did not stop there.

Satyajit says, “Waiting for people became way of life. The polyhouse which was supposed to be done in a month’s time took more than three months to reach its logical conclusion.”

Although they pooled in Rs 60 lakh between the three founders for the construction, the project needed much more. Without a job, no bank would give a loan to folks who were switching over their field of operation.

“In a country where agriculture is supposedly the backbone, slowly we realised what ails agriculture. All banks have agri loans; but not one was willing to back the founders who until recently were drawing six figure salaries,” Satyajit says.  It was a chance encounter with a high ranking official at KVB that finally made it happen.

The biggest blow

The first shock came when they dug the borewell. “Any area we went to, the common refrain was that water was available at no more than 300 feet. But our bore machine kept on drilling with no end in sight. So at 1,000 feet, we had to abort the mission. Not giving up, we waited for yet another weekend to dig another borewell and, fortunately, this time we hit water at around 1,000 feet,” says Satyajit. He adds that their experiments with rainwater harvesting have helped increase the water table in their land and the borewell yields have steadily increased.

Urban Harvest had expected November-December (2016) to fetch good revenues for vegetable crops as they usually do. So the team had primed their harvests for that period. But lack of rain followed by the demonetisation killed that possibility.

“We had 15+ acres of various vegetables ready for harvest when the country went through the demonetisation. The prices plummeted to such an extent that even harvesting the crop would have burnt a bigger hole. So we let the standing crops rot as is. The tomato harvest alone could have been easily over a 100 ton. We were then bankrupt and left wondering what to do next- should we get back to finding jobs, or somehow carry on,” Satyajit recounts.

Alas, all was not lost. Fortunately, Dutch rose farming stabilised and started giving steady returns. They soon equipped the farm with best processes and technology including a cold storage set-up.

They also tied up with numerous local buyers and international flower auction markets at Bengaluru, besides some florists outside Karnataka, for selling roses.

Future plans

An Urban Harvest-assisted Dutch rose cultivation project is in the works, where Satyajit and team would do the set-up and run the end-to-end operations on a profit sharing basis with interested individuals. Their target is 1,000 orders per day by December 2018.

They are also planning agri tours, to make use of the serene landscape and nearby forests, along with activities like camping and barbeque, coupled with veggie picking and volunteering at the farm.

Satyajit strongly believes that agriculture is a sunshine sector where in technology and investments can bring in a whole lot of benefits. Urban Harvest’s next big plan is e-commerce for vegetables through farmbox.in. They have earlier grown more than 25 varieties of veggies for farmbox.in, and at one point were doing more than 15 acres of open field cultivation, primarily veggies including exotics like lettuce, red cabbage, Thai basil etc. They are set to relaunch it at a larger scale offline too – across supermarkets, small retailers, as well as a in residential apartments – and are in talks with potential investors for the same.

Having made Rs 14 lakh in revenue from Dutch rose in 2017, they are targeting Rs 18-20 lakh this year without building any more greenhouses. For logistics, Urban Harvest has tied up with local vendors for need-based rental of vehicles. “This is going to be the focus area for farmbox2.0 and we are seeking investments on this front,” Satyajit concludes.