Companies like Ninjacart, Crofarm and KrishiHub are now procuring directly from farmers and selling to retailers, thereby eliminating middlemen and tiers of commissions. Typically, these companies convince farmers to join their network by assuring them prices that are 15% higher than what local agents would pay, thanks to the elimination of commission. Farmers are kept updated about the quantum of demand for a crop, current prices offered and other details either via apps or by SMS.
Retailers and other wholesale customers can place orders through an app and are offered better prices, scheduled deliveries and a quality assurance. The produce is tracked at every stage, thus offering product traceability. At the office of Ninjacart , which has raised Rs 350 crore rom VCs, cofounder Thirukumaran Nagarajan explains why the startup pivoted from grocery delivery to one that procures fruit and vegetables.
“There is no price transparency for farmers and they have to deal with multiple middlemen. They waste time going to the market to sell the produce and have to deal with cash payments,” says the IIM-Kozhikode alumnus. Ninjacart buys produce from more than 4,000 farmers and sells it to 4,000-odd retail stores across Bengaluru, Chennai and Hyderabad, with operations launching in Delhi and Mumbai in February.
Using artificial intelligence, these companies are also able to predict demand from the data they have collected, allowing them to trim waste. Farmers have begun taking the companies’ advice on which crops to grow to get the best price as well. The companies say there is no contract or obligation on the farmers’ part to sell their produce to them. Payments are made online through bank transfers directly to the farmers’ accounts.
The companies use different models. At Ninjacart, once a farmer comes on board, his data is made part of the farmer harvest calendar, which captures what he is sowing, in what quantity and when. Once the crop is ready, the company offers to procure it, usually at prices that are 15-20% higher than at the mandi. The entire supply chain is automated. “Every worker in our warehouses has a smartphone, which gives him instructions continuously. Operations have 98% accuracy,” says Nagarajan.
Crofarm, based in New Delhi and founded by former Grofers executives Varun Khurana and Prashant Jain, keeps in touch with the 6,000 farmers in its network via SMS telling them about the quantity of produce required and the price offered. “Once the crops are picked up and reach our centre, he gets another SMS confirming arrival,” says Khurana. The company reduces logistics costs by aggregating demand.
KrishiHub, seed funded by IIT Kanpur’s accelerator Villgro, has three apps — one for the farmers, where they can maintain inventory, see the orders placed and track payments, another for retailers that allows them to place orders and one for delivery partners, to optimise logistics. “We also have a social platform, where they can ask questions on farming and discuss issues,” says co-founder Jyotiska Khasnabish.
Crofarm expects a revenue of Rs 30 crore in 2019-20 while the others declined to reveal top line numbers, only saying they had achieved operational profitability. Other B2B commerce players such as unicorn Udaan and Jumbotail Technologies, funded by Nexus Venture Partners and Kalaari Capital, will be entering the fruit and vegetables segment, too. “Our idea was always to aggregate scale on the demand side, which would be the kirana stores, before procuring from farmers,” says Jumbotail cofounder Ashish Jhina.
“Startups with unique tech and processes focused on B2B agriproduce fulfillment are interesting to evaluate as institutional buyers like restaurants, and canteens can command large demand of agri produce,” says Vani Kola, founder of Kalaari Capital. She expects tech-enabled precision farming, quality control and predictive data models to become more widely adopted and necessary for predictable B2B commerce.
Natasha SK, post-doctoral fellow at Indian Institute of Human Settlements researching the intersections of technology with old and new food supply chains, suggests that farmers must consider all aspects of the production and sale process when determining what steps to take. “When we look at such supply chains we have to look at what kinds of farmers are benefiting by these innovations, and who is able to capitalise on changing market trends and suggestions –and who is able to absorb losses.”