E-Paper
Startup: Empowering farmers through Agribid
Digital marketplace ‘Agribid’ had started connecting stakeholders within the commodity value chain including farmers, commodity traders, brokers, government departments, commodity forwarders and food processors, to ensure competitive bidding and best price discovery for agri-commodities
PUNE Two years back when farm laws were being introduced in India amidst resistance from commodity traders and brokers, a silent revolution was taking place in some parts of the country. Farmers and commodity traders, brokers were realising that they will have to embrace technology and new-age platforms to stay relevant in the evolving agricultural market. Digital marketplace ‘Agribid’ had started connecting stakeholders within the commodity value chain including farmers, commodity traders, brokers, government departments, commodity forwarders and food processors, to ensure competitive bidding and best price discovery for agri-commodities. This startup founded in 2020 by three agri-commodity traders Manoj Suvarna, Chetan Suvarna and Ashutosh Mishra is making a social impact by empowering farmers and connecting them to a broader market with transparent price discovery.
In the beginning…
Manoj and his two cofounders have worked together for almost 15 years and have an individual work experience of 20 years into various aspects of commodity trading, including but not limited to commodity derivatives, global and local exchange-based trading, hedging, commodity financing, commodity disposal for banks and commodity auctions. All three founders have worked with large corporate houses, banks and MNCs. Ashutosh is BSc Agri graduate while Manoj and Chetan have done their MBA.
Manoj said, “I have worked in the commodity segment throughout my career of more than 19 years. Although we were on the exchanges or derivatives side, we were aware of the commodities trading field. We traded in Indian and global exchanges in metals as well as agri-commodities. We three worked together for 11 years in a company and finally decided to leave our job and start our own company. With our collective experience in the commodities market, we conceptualised Agribid.”
“In our previous jobs, we had observed several inefficiencies in the commodity value chain. When we visited ‘mandi’s, the commodity traders or brokers were our clients. However, we realised that the farmers had very little bargaining power in the traditional setup. Farmers were in a way exploited as they did not get a good price for their produce and they were at mercy of the organised people in ‘mandi.’ Another statistic which forced us to brainstorm on this issue was that more than 85 per cent of farmers across India are small landholders (having less than 2.5 hectares of land under cultivation). Small land holdings meant they had lesser quantities of produce. A farmer growing two or three tonnes of produce does not have any choice and does not fit in the economies of scale. These small farmers could not put forth any terms to the buyers (traders) and they had only limited options of going to a local aggregator or the ‘mandi’ people.” Farmers also had to pay brokerages and taxes at the ‘mandi’ and despite that, they were either cheated or forced to accept delayed payments,” says Manoj.
Farmer friendly
After identifying key issues and problems in the agricultural commodities value chain, Manoj, Chetan and Ashutosh incorporated Agribid in October 2020 and did a few pilot trades from January to March 2021.
Says Manoj, “We had envisioned a farmer-friendly B2B marketplace operating in India and specialising in the sale and purchase of agri-commodities involving participants throughout the agribusiness produce value chain right from the farmers, traders and corporate consumers and global buyers.”
Chetan said, “Agribid’s model is distinct from the existing models and aims to perform as an inclusive system where each participant of the value chain can participate and aid in a better price discovery through a competitive bidding process allowing better price/cost realisation and avoiding any conflict of interest. Technology here is an enabler of market efficiency rather than a competitive edge over other similar actors in the ecosystem.”
“Our model also prioritises the farmer as they realise the importance of enhanced gross capital formation at the farm level for investment into land improvement and soil productivity, which is a must for achieving the sustainable development goals and meeting the national requirements of adequate food production for generations to come. It is important for us to encompass the farmers and make them the ultimate beneficiary to enable gross capital formation at the source of the value chain,” Chetan stated.
Further explaining Manoj said, “We are aggregating farmers with an average production output of two or three tonnes. That comes to around 30 to 40 tonnes produce collectively which is equivalent to two truckloads and this generates interest in bigger buyers. Farmers too, get a wider market where buyers are coming to them at the produce is sold at the farm gate at a pre-determined price. Farmers no longer need to come to any mandi to sell the produce.”
Listing farmers
Farmers and buyers (traders/brokers) are listed on Agribid platform where the bidding takes place. This listing is free of cost for all farmers while the traders pay a small fee (0.5 per cent) towards brokerage for the marketplace.
Manoj said, “Agribid has also partnered with India Post, enabling them a deeper rural reach to every small and marginal farmer household. This initiative enables the remotest farmers to access to the national marketplaces in order to sell their commodities online with the help of post office staff on its platform. The farmers and buyers bid on our platform and then the produce is auctioned. Farmers may get a higher price than the listed price on the marketplace while the payment is done immediately at the farm gate. This arrangement is convenient for farmers and traders as it does not burden them in any way.”
“Besides attracting a large segment of farmers onto the platform, we are networking and reaching out to large institutional buyers and sellers comprising various banks, government institutions and private entities for procurement and disposal of agri-commodities,” added Manoj.
Future growth enablers
India’s agriculture sector, which is worth ₹30 lakh crore, continues to remain the main source of livelihood for over 40 per cent of the population and contributes 19.9 per cent (FY 2021) to the national GDP. Indian agriculture needs technology-aided modernization, backed by resilient reforms – this is where agritech is expected to play a significant role.
“After the fundraiser, we are expanding our geographical presence and hiring more members in our team. At present we have a 21-member team on the field and we are operating in three states. We intend to expand operations to 11 states across India. Agribid is also in advanced-level discussions with central and state government departments to increase GMV and the bottom line. Agribid has also started its global business and has already booked its USD revenues and is expecting to grow this business by entering food security procurement at the government level. We are aiming for ₹3000 crore volume business increase in next few years, says Manoj.
Onion market
Agribid has done around 200-tonne businesses from the onion market near Otur in Pune district. These onions were sold in Bengaluru, informed Manoj. He said, “We also have a tie-up with the MahaFPO to enrol more such FPOs in future. Apart from Otur, Lasalgaon is also a market we have tapped recently. This year we are again reaching out to farmers next month. We aim to do a business of 5-tonne minimum this year.”
“Our big trades are mostly in non-perishable or semi-perishable items like food grains and as a strategy, we are not touching the perishable commodities market at present. Our experience is that farmers are very receptive as they get an alternative to the traditional mandi. Even if one farmer gets listed on the marketplace and sells his produce through the platform, he or she helps with the word of mouth encouraging further adoption. Traders too feel that this is the future. They are aware that someday this shift will happen and they are also looking for alternatives, especially after the farm laws incident. The traders will have to adapt to online marketplaces in case mandis are banned,” shared Manoj.
Agritech ecosystem
The agribusiness ecosystem comprises the business activities undertaken from farm to fork, covering the entire value chain, from the supply of agricultural inputs to the production and transformation of agricultural products, and their distribution to final consumers. This ecosystem has further expanded to segments, such as e-commerce and hyperlocal, propelled by factors like swift urbanization, diet diversification, evolving consumer preferences, and expansion of food markets. However, it remains largely unorganised and fragmented, with the existence of multiple levels of intermediaries and middlemen across the agriculture value chain. While 86 per cent of the small and marginal farmers remain the primary providers of food and nutrition to India, they remain constrained by issues like extremely small landholdings of less than two hectares and limited access to technology, inputs, credit, capital, and market etc.
Commenting on the ecosystem and market opportunity, Manoj stated, “Agritech innovation can plug these challenges, such as lack of infrastructure, supply chain inefficiencies, and low digital adoption, which have historically held back the sector from performing to its full potential. Private equity investors have also focused on systemic issues in the agri-tech industry and its sustainable development. The overall agri-tech ecosystem witnessed revenue growth of approximately 85 per cent during FY 2019-20. An Ernst & Young 2020 study pegs the Indian agri-tech market potential at US$24 billion by 2025, of which only one per cent has been captured so far.”
