India holds enormous potential to become the ‘next destination’ for AgriTech propelled by digitization, increased awareness, and the spread of technology. With growing demand patterns, the industry is expected to see a huge demand for AgriTech.
In conversation with Mr. Balaya Moharana, Head of Technology at Dehaat, 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) Could you highlight some of the challenges that the AgriTech industry faces as a whole?
One of the key challenges is that the industry has just started with the entire process of digitization and is in a very beginning stage. The market is still immature and in its initial stage. Secondly, the requirements from both the famers and business stakeholders differ. There are multiple stages and verticals in this entire industry. For each vertical, segment, and stage, each entity has different requirements and demands which may get tough to cater to at times. Thirdly, for a farmer in India, using digital technology as part of daily decision making for his livelihood is still not a familiar concept. This being said, things are slowly making progress through digitization.
Q2) As you mentioned, digitization and farmers do not go hand in hand. With this issue in sight, how do you identify and hence on-board farmers? Who is your target audience?
To accelerate adoption of technology in farming - Firstly, We need to demonstrate value of the technology to the farmers on a continuous and sustained basis. We have DeHaat Kisan App that provides a range of features including a cropping calendar we call “Khetibook™” that provides daily task planner for a given crop – provides detailed step by step advisory designed by our agronomists, personalized for the farm soil type, the crop and the season. The next thing we want to do is build online community of farmers where they can share ideas and problem resolutions in well-targeted forums. The last factor could as well be a simple function of time. For example, platforms like GooglePay, Paytm, and PhonePe were not popular 5 to 6 years back. However, now, almost everybody in the country uses it with ease.
Our target audience is the entire farming community. Wherever there is a farmer in this country, we want them to be the users of DeHaat Kisan App. We want to have the farmer wake-up in the morning and look-up Khetibook™ on his smartphone on what tasks to complete on that day in his farm.
Q3) For the purpose of our research, we have identified 4 main segments. Could you help us understand the areas out of these in which Dehaat operates and also explain the supply chain?
As a company, Dehaat operates in all 4 segments. We have our input supply segment followed by the agri advisory segment. We help farmers to understand how farming can be done and provide solutions. We have access to the market and create linkages between the source of the produce and buyers. Then, lastly, we have financial solutions to the consumers. In our input segment, we provide seeds, fertilisers, and pesticides. We are not fully into the equipment business within the input segment. The sourcing of inputs such has seeds have their own government regulations. Based on these regulations we directly tie-up with manufacturers to procure sources. We distribute these inputs through our franchise channels present at different locations. We have warehouses for storing the inputs from where they are dispatched to the farmers. So it goes from the manufacturer to warehouses to the farmer. This is the most common distribution channel. The other channel is where we directly supply the inputs from the manufacturer to the farmer without any storage in between. In the entire supply chain, the farmers are charged for only the physical soil testing. Other testing such as satellite testing is free of cost. The subscription to the application is free, however, some services within the app are charged for.
Q4) Could you help us understand the regions which you cater to for the inputs that you deal in?
Let’s first talk about the inputs. As mentioned, we deal in seeds, fertilisers and pesticides. Dehaat also has its own brands for fertilisers and seeds. Out of these three, seeds receive the maximum demand. Fertilisers have a larger market but are government regulated. The regions that we cater to for these inputs (based on demand not sourcing) are Bihar, Uttar Pradesh, Madhya Pradesh, Jharkhand, and a few more.
Q5) How do you operate the market linkages at the post trade level?
We have direct linkages with about 160 large players in the commodity market such as Reliance fresh, ITC, Nestle etc. We have warehouses for dry commodities (fully owned output/commodity warehouses) and other facilities for our fresh produce. The linkage of the farmer to the buyers is primarily demand driven based on parameters such as season, region etc. We come up with the demand aggregation through our technology and create a linkage between the buyer and the seller.
Q6) In the entire process, where does the Agri Fintech come into the picture?
There are two parts where the financing plays a role. Firstly, providing financing in our input segment. Secondly, retail financing to the farmers. We have direct franchises which help move the produce forward. We help them finance their inventory through our financing solutions. We have tie-ups with NBFCs for this entire process of financing and are also in talks with banks for the same. In this process we have our own margins for facilitating the linkage between the NBFCs and farmer/franchise.
Q7) In your opinion, what would be the future plans for Dehaat in the coming years?
Our aim would be to expand geographically not only in the North but the West (Maharashtra side) and South as well. We aspire to be a company present all over India in terms of certain services we provide.
For any queries or feedback, reach out to the author at Namit@kenresearch.com