Five Minute Farmer Ecosystem

In the past few months, I have been meeting various members of the farming community in India to understand the root cause of their issues.

This is one classic example of ‘peeling the onion’ story where as you learn more and more about the issues of the farmers, you see layers and layers of problems surrounding it.

Some of the classic issues related to farmers are:

1. Economies of Scale: Farmers in India mainly comprise of marginal farmers and hence they do not have economies of scale working on their side.

2. Local Traders Grip Over The Farmers: Farmers get loans from local traders who give it at 36% interest rate and when they are unable to repay the loan, they end up pledging their farms to the same traders and after a generation or two, become farmers whose lands are permanently under debt. On top of this, in most cases, these traders are the ones to whom they are forced to sell their produce to the traders at the rates fixed by the traders.

3. Government Officers: In many areas, the Government has appointed officers to help the farmers improve their profits by understanding the bottlenecks in the supply chain and removing them. Instead of doing that, many of the officers have learnt how to make the most of the situation and get a good amount of commission in this supply chain.

4. Mandis: The Government is also trying to organise Mandis (farmers market) where farmers can sell their produce for a good rate. Instead of helping, most of these Mandi owners have started dictating the price of the produce and make sure this is retained for generations together.

5. More Emotions Less Data: Farmers continue doing farming using emotional parameters to decide on the crop and have never looked at it as a business. Due to this, their decisions are emotion based and not fact based. There are farmers around the world who use business driven parameters such as shorter days to maturity, high yield per acre, higher price per kilo, long harvest period, popularity etc before deciding on the crop. In India, it is mainly based on what the neighbours decide to plant.

6. Lack of Technology: Due to their lack of technology expertise, the farmers do not have much information about best practices, techniques etc used in the other states and the rest of the world. Due to this, they are not familiar with many of the techniques which have now become basic necessities in farming in the western world.

Dr.M.S.Swaminathan had led a initiative on this topic and come up with a set of excellent points which cover a lot more than the examples listed above.

The most fascinating thing that pulled me towards the farmers topic was the fact that there are farmers in western world who make 300,000USD (1.8Cr INR) per year from one acre of land. A farmer in India makes about 5,000 to 10,000 Rupees (INR) per month, which translates to a maximum of 2000USD (1.2L INR) per year. In simple terms, a farmer in a developed country makes 300 times more profit yearly when compared to his counterpart in India. Such a gap in this number is not seen in any other industry across the world. Hence I made a simple promise to myself that if I can reduce this to say 30 times, that itself means the farmers make 10 times of what they are making today.

As I spend more time understanding the issues, it is very obvious that this industry is ripe for disruption. With focus on 100% transparency in the entire ecosystem and the objective to help the farmer get 10 times more than what they are making today, I have started this journey to build a ecosystem for the farmers where all players can interact with minimum wastage in the middle. In this ecosystem, the farmer will be person in control and will decide the prices (exactly like how a producer like BMW decides on the selling price for their cars). All other players will have the freedom to play within their boundaries, but at the end of the day, the farmer will no longer be at the mercy of any other middleman.

Will keep updating here as the journey progresses. Keeping my fingers crossed 🙂

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