Make way for Start-ups! Capital Inflow to launch the growth of agri-tech startup, says Co-founder of Bighaat: Ken Research
India holds enormous potential to become the ‘next destination’ for AgriTech platforms propelled by increased capital investment, and mobile penetration. With growing demand patterns, the industry is expected to see a huge demand for AgriTech platforms.
In conversation with Mr. Sateesh Nukala, CEO and Co-Founder of Bighaat we attempted to seek his opinion and understand his side of story to the changing fortunes of the AgriTech Industry and how are companies gearing up for it.
Q1) How has Bighaat’s journey been in the industry so far? How does the platform help farmers in making their produce more profitable?
For a farmer, there are two primary stages to the entire process. Pre-harvest and post-harvest. Pre-harvest is the time period ranging from the sowing to harvesting and post-harvest includes the produce reaching the consumer from the processing / marketing stage. A farmer spends 80% of his time in the pre-harvest period. The tests/processes/checks/resources used during the pre-harvest period help to determine the earning potential of the farmer at the time of harvest, which is the primary aim of the farmer. The post-harvest period will include marketing and sales which is only 10% to 20% of the entire process. Challenges are abundant in the pre-harvest period. Hence, if challenges are addressed in the pre-harvest period, the earnings can increase multi-folds. Our vision starting 2015 was to increase sustainability by eliminating these challenges in the pre-harvest period. There are 2 main challenges in the pre-harvest period- access to the technical customised guidance to the farmers and access to the high quality and highly relevant widespread of inputs. In the traditional supply chain, a farmer would only be connected to a retailer who himself would give technical guidance without actually being equipped to do so. The motive behind it is always to push high margin products irrespective of quality or relevance, leading to a higher cultivation cost for the farmer with substantially a lower yield, quality. We aspire to solve this issue through our platform at each stage of the crop cycle. We have successfully managed to reduce the cost of the farmer by 20% to 30% and increase productivity and the yield significantly. Another challenge we face is gaining the trust of the farmers who have been functioning a certain way for ages. We wanted them to look at us as a knowledge partner and this is where our advisory services came into place. In 2015, when we started off, there was also a lack of capital as there were not many start-ups providing funding. However, now, there is an understanding in the market that this sector is bound to develop, grow expoentially and capital flow has become sufficient.
Q2) What geographical regions does Bighaat cover? Could you also give a brief about your engagement model and the team?
BigHaat is the only pan India platform operating in all major locations for agricultural processes. Our competitors have business models operational only in selected states. We have our presence ranging from the length and breadth of the country (about 15,000 pin codes from where the farmers engaging with us). In addition to our vast digital presence, we provide assisted agronomy advisory services with our qualified agronomy customer support who can converse in the local languages of the farmers. Our overall team consists of about 120 people.
Talking about our engagement model, we deal directly with the manufacturers and have two models of distribution- market led model and inventory model. We have our own warehouses / fulfilment centres for the inventory model.
Q3) Could you help us understand how does the inventory based engagement model work?
We are a data driven company, and through our agronomy team, current trends, vast historical data, and other sources we analyse the data with us to determine the demand patterns to store our inventory. Based on these models and forecasting, we source the inputs for storage (this is true for the inventory led model). Based on this forecasted demand, we come up with sales strategies right from procurement to shipment. For transportation, we work with private OEM partners including IndiaPost to ship our products.
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Q4) Could you please elaborate a little upon the services that are provided through your online application?
There are numerous one of a kind advanced technology / data based services offerings which we provide to the farmers through our application. For example, a farmer can upload a picture of his soil/crop etc. on the application and we can instantly give him a solution/service based on the picture to improve the health of the crop. The farmer will have instant access to the comprehensive technical guidance along with type of products needed to maintain the health of the product. We also leverage on the satellite remote sensing model where we provide a heat map of the disease in the farmland which helps to identify the area and spread of infection. These services are free of cost. We build the profile of the farm and the farmer on our application based on our artificial intelligence led model. Based on this we have the crop cycles and patterns of the farmer with us which helps us to pitch customised solutions to them. We only charge the cost of the goods which are purchased from us. There is no other subscription or service fee for the solutions provided.
Q5) How do you assure quality of your products to the farmers?
There are two things to consider here. Firstly, how genuine is the product, and secondly, the quality. As mentioned before, we are in direct contact with the manufacturers for the inputs. This solves the problem of the product being genuine. It’s a fool proof method which helps gives us a guarantee to the farmers that the product provided is genuine. The agronomy team goes through all reports and diligence while on boarding a manufacturer which eliminates any chance of adulteration in the products right at the source. Our platform is also helping the manufacturers to instantly launch their products without spending significant amount of time and cost to introduce in the traditional distribution channel, and it is also helping the farmers to access to high quality, highly innovative, and more affordable products conveniently.
Q6) How has database creation helped your platform in growing?
When we first started off, we started off only with seeds. This would give us an outlook into the entire process to follow and gave us an advantage. We also started creating a database of the farms, farmers and even trends, crop patterns, crop cycles etc. to determine the demand patterns. This collation of database made it extremely easy for us to expand into segments other than just seeds. With a database ready at our disposal, we had all the information we needed to expand into other segments such as crop protection, small implements / equipment and more. We knew the demand patterns and what would be required by the farmer during the entire process from farm to the consumer.
Q7) For the purpose of our research, we have divided the farmers into three categories- small-scale farmers (with land of 5acres or less), mid-scale farmers (with land of about 5 to 20 acres), and finally large-scale farmers (with land of more than 20 acres). Out of these who are your target audience?
About 70% of the farmers in India are small scale farmers with a land of about 5 acres which are followed by mid-scale and then large-scale. Our target audience also follows a similar pattern. Largest target audience is small-scale farmers followed by mid-scale and then large-scale. Most of the target audience are horticulture farmers followed by field crops such as paddy, cron, wheat etc. When we started off, we started with horticulture seeds and even now we lead with them as the horticulture segment has the best year on year growth and technical advancements.
Q8) What would you say is the strength of Bighaat?
There are two things worthy of mention here. Firstly, the knowledge and information the farmers can get from Bighaat. Now here, we are talking not only of the availability of information but also the ease with which it is available to them and how quickly it is available to them which ends up saving their time. Secondly, the ease which Bighaat provides the farmers. For example, let’s take quality and availability. If a farmer goes to a retailer, he has to buy whatever quality and product that the retailer can make available to him. However, at Bighaat, the farmer can pick and choose the product he wishes to buy according to his need and quality requirement. Also, the range of products we provide are extremely affordable to the farmers which helps them reduce their cost and also doorstep delivery to the farmer which saves on transport cost and time. We also have highest number of partnerships with agri input manufacturers, and we are the only player having this relationship for pan India. Leveraging on strong farmer network and data driven capabilities, we have started building a very focused supply chain for specific commodities in specific regions and offering a fair market linkages platform for farmers.
Q9) Could you comment on why Bighaat does not engage in providing any financial solutions to the end-users?
The Indian agricultural market is 60% credit driven. However, the market is so huge that the other 40% is also an extremely large market to cater to. At Bighaat, we have concentrated on and channelized our efforts into capturing that 40% of the market. Our told, solutions and knowledge base are specialized. To sum it up, we have specialized in this segment instead of dipping our hands in all segments. This being said, we are in talks with certain partners to help farmers secure loans. We do not wish to directly provide credit options to the farmers, but merely act as a lending platform in connecting the lenders and borrowers.
Q10) What are the future plans of company?
We started as a pre-harvest platform and have now entered into the post-harvest market linkage system. Now, we are talking of the entire technology driven ecosystem from sowing to the market. Which means, we aim to provide any service or product (anything at all in the entire ecosystem and process which the farmer needs from day to day) to the farmers by being the digital first ecosystem for farmers. We want to become a one-stop shop for the farmers so they do not have to look anywhere else for their needs in the entire process beginning from pre-harvest to post-harvest. We want to build a digital ecosystem available to all stakeholders and act as a market linkage platform.
Q11) What are the methods of financing in the AgriTech market?
We have the organized markets which support farmer lending through NBFCs, banks and individual entities. NBFCs only lend to institutions and not individual farmers (very few FPOs). Only banks lend to individual farmers and FPOs. This is because of the requirement called KCC (Kissan credit card). Only banks can give these KCC loans. Loans are usually based on the acres of land. Typically one acre of land gets about 1 to 2 lakh INR credit. Up to a certain limit (Rs. 80,000) there is no collateral but after a limit the land needs to be given as collateral.
For any queries or feedback, reach out to the author at Namit@kenresearch.com
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