E-Agro initiative of eKutir¹ and The Grameen-Intel Social Business

Background

The small farmer household forms a very large (~50%) of the developing world’s population, and while their well being is important if not critical to all our well-being, the sad fact is that their very existence and therefore that of the entire food supply chain is being threatened – directly impacting the big picture, presenting a bleak picture of the future of the planet: with the alarms of the food security situation, depleted rural livelihoods, rural poverty, rural to urban migration etc.

The endeavour is to provide convenient and cost-effective ways and means for the farmer to increase his earnings, by

1. Improving his productivity (thru a hassle free, localized, single-window interface providing appropriate knowledge (advisory on better agro growth practices, climate updates, pest/disease management etc), transactional capabilities(eg price-discovery, buy, sell, credit, insurance..), and leveraging powers of aggregation),

2. Bring in risk mitigation practices that help reduce his damage/costs, increase the quality, quantum & value of his produce, equipping him with appropriate & timely info to combat his various pest/disease associated risks and

3. Integrating him cost-effectively with the various agro-ecosystem silos (ag univ experts, soil scientists, weather bureaus, genuine seed suppliers, pesticide & fertilizer suppliers, micro-finance/insurance providers, market players, logistics.)

The farming cycle typically is such that the farmer (mind you, he is a small farmer with annual income in the region of $ 350, ie $ 1/day) is required to be equipped with various capabilities: eg.

• assessing the state of the soil,

• the soil nutrient status and gaps,

• the choice of fertilizer supplements and application methods & supplier contacts,

• identifying the best crop (that suits the soil, geo climatic zone and market saleability), sources for genuine seeds, and best growth practices

• the issues of managing/control of pests/diseases,

• timely access to suitably tailored finance to seed the crop cycle and fund his input and working capital.

• accessing multiple market info, logistics and transactions

These are just a sample list of things he has to undertake, all of these if at all available are at remote unfamiliar mostly urban locations- each of these activities currently requires the farmer to undergo loads of hassles- running around from pillar to post, with little knowledge of how long each cycle would entail, uncertain about costs and unsure whether his effort would ever bear fruit and compensate for his efforts. While he is worrying about all of this, who is to till his land- which he should otherwise have been doing as a first priority activity?

Our effort is to harness the existing capabilities of these islands of expertise, knowledge, transactions etc and bring these together to the farmers village in a sustainable manner that holistically addresses his various needs causing the least of disturbance or inconvenience to him.

Eagro Initiative In Orissa

As a live pilot, we’ve set up several rural village entrepreneur driven outposts (agro service) hubs (in different remote geo-climatic zones for the diversity) that provide the farmer with various essential, much needed and cost effective services in a manner that is hassle-free, single window and localized at the village level. Each of the hubs caters to farmers within a 5km radius, and is manned by a carefully selected local social entrepreneur who knows the agro domain, has the language and relationship skills and the drive and risk taking capacity to co-invest thru his time and in cash and kind.

Our idea from a commercial breakeven standpoint for this initiative was to reduce the upfront investment burden and keep it barebones and minimal, to examine, demonstrate and convince one and all about the soundness of the business case. So, for the ICT part, we initially used the bare minimum…at each location –there is a netbook equipped with a digital camera and a fixed broadband connection(where available)/dialup broadband (eg. via Reliance’s CDMA datacard). The application that we initially built for the pilots have been pretty rudimentary using MS Access database and MS Groove. This has really served the initial purpose of managing the agro service oriented operations for a limited scale of upto about 10-15 hubs/entrepreneurs. The application is now being augmented to a more robust and scalable web-based system in a modular manner, to serve the individual and collective needs of the various stakeholders in the agro ecosystem.

Salient Features

The salient features of the eKutir approach is that it is :

1. A small farmer centric individualised portfolio management approach which captures his entire (static and ongoing dynamic) details of assets (his land), the cropping patterns, the growth & risk mitigation practices, his interactions with financers, suppliers, marketeers and advisors, the cost of his various transactions, the parameters of returns/productivity –such as qty of produce, sales value, net income. Net-Net: It is a great tool for assisting the farmer plan his livelihood and monitor his own performance. A good basis for Micro Finance Institutions to evaluate credit worthiness of the farmer, and later his performance vis-à-vis their loan/investment.

2. ICT enabled (for its adaptability, replicability and scalability: enabling bridging of various divides and bringing facilities and knowledge from various agro related sources far and wide to the convenience of the farmer),

3. driven by a local village social micro-entrepreneur (who has the drive, energy, motivation and local connects and context to facilitate service access to his farmer customers) and

4. and most importantly, it is participatory in approach (with small-farmers being the central focus- getting them organized into collectives for the benefits of aggregation and scale, becoming empowered and gaining control over their destiny, vs. being helpless bystanders to the unscrupulous middlemen. The key aspect is that the farmers through their involvement in the biz, are actually scripting the business rules themselves, and therefore automatically bringing their buy-in, so fundamental to sustainability).

Results and Findings

We are happy to report that the business case has been very successful-even though, we chose the backward parts of Orissa (the least developed of constituencies in India) as the site for our projects- within a short period of 4-5 months, each of the hubs have operationally achieved break-even…and are now at a stage where each hub earns a net income of about Rs 6-10k/month. And, this is despite the fact that we are still only operating at ¼ capacity, addressing only about a 100 out of the 400 odd farmer base/hub, and only with a fraction of the full portfolio of services.

Impact On The Agriculture Ecosystem Stakeholders

Besides the financial success achieved in a short time, the real measure of success has been the interest and enthusiasm of the farmers and other stakeholders like the agro university domain experts, genuine seed suppliers, fertilizer and pesticide cos, large-scale marketeers such as Reliance Fresh and small localized markets (mandi’s) in towns have all been phenomenal and gratifying to note- it is because of the increased livelihood impact: new income and additional potential as also the efficiencies that such an IT solution brings to all of them- letting each to operate without disturbing their comfort zone and yet providing them the ability to reach a large no of potential users/customers/sellers, the ability to aggregate/leverage/bargain/transact at beyond the minimal threshold level, plus the level of transparency it has brought and the ability to circumvent inefficient processes & unethical practices.

Example Quality Seeds supply- thanks to our service, the farmer has been able to get seeds and practical advice directly from the “genuine” seed seller- thereby increasing the germination rate from the abysmal 20% (thru the existing spurious seed suppliers) to a guaranteed 80% or more figure! For the seed seller- this direct connection to the farmer and accessing the latters’ demographic data (land holdings, types of crops, type of land, soil type..) is crucial to break into the hitherto stranglehold of the “unscrupulous” pirate type middlemen, and provides them the opportunity to actually connect with farmers, advise them on best practices and also get the required feedback from the individual farmer, who can then be a secondary source of future non-contaminated seeds.

Now, an agro expert in Pant Nagar or financier (say NABARD) in Mumbai or soil scientist in Bhubaneswar or sales agent in Kolkata, can all have one-to-one sessions (online chat: choice of text, audio, video) or many to one conference calls with the farmer in rural Orissa, or even with each other thru our entrepreneur-moderated service, so distances can be bridged, expertise and knowledge can be shared and a feeling of oneness is created across.

In essence, our service is akin to a personalized portfolio management system that is offered by banks to high net-worth individuals…only here, it is an advisory & transaction system that is farmer centric and spans / connects all the stakeholders in the agriculture chain, in a seamless manner delivering the various enabling services that a small farmer needs, conveniently and cost-effectively!

Impact Om Microfinance And Access Of Cost-effective And Timely Funds For The Farmer

The micro-financer, unfortunately hitherto deemed the small farmer as being too risky and not-credit-worthy (and in the process missing out on the largest chunk-over half the population of the country)…Now, with access to the comprehensive demographic information of the farmer: the data on his holdings, the crop distribution pattern, the past income and ability to foresee the future income, the soil type, the water availability, the linkage to the weather info, access to mechanized interventions, the supply of quality seeds and inputs, the involvement and advice of experienced agro researchers and professors, the increased price potential due to aggregation and leverage of better products and services…all of this is of huge value to the financer, who can now form a basis for providing credit and also then providing a mechanism for monitoring the progress of the farmer, and eventual success of the loan. Moreover, from a macro perspective, this helps the financer structure the appropriate products for credit and insurance bringing access to financial service to this large segment of populations and really opening the sector up for unprecedented growth.

Impact On Agro Domain Experts

Agriculture subject matter experts at agriculture universities and research organizations now get to productively and conveniently interact in an individualized and personalized manner with a very extended farmer-base, without having to incur the time and expense trying to visit farms to diagnose and address real agricultural issues at the grass-roots, rather than imaginary ones emanating out of their glass-houses. This renewed “appropriate connectivity” has ensured there is an alignment between the research work that is undertaken, and the problems and needs of the farmer at the grass roots level.

Impact On The Small Farmer

Just to understand the impact of the above farmer centric innovations on the small farmer. The 50%- 300% increase in net returns for one crop cycle, has translated into money becoming available to the farmer to fund his next crop cycle- removing his dependence on the nasty moneylender who operates on obscene interest rates; or the ability for him to invest in “quality of life” spends…on education, food, health, travel or consumer goods. All causing a heart-rending smile to permeate across the faces of the farmer household and the infectious enthusiasm and confidence to spread.

The impact on the social entrepreneur (Mr Prasantha) is illustrated below which depicts the financial transactions he has made over the first 12 months since he took up the eAgro initiative. Before he took up the initiative, he was a village trader earning at best, about Rs 24,000/- p.a. On taking up this eAgro service business, he incurred a capital expenditure/ initial investment of about Rs 36,000/- . Thru his service revenues and commissions, he achieved break-even on his operating expenditure within the first 4 months itself, and was able to be net positive on his CapEx after 6.5 months itself! An extremely phenomenal result, considering the seemingly Himalayan endeavour of reversing the perceived negative trends of agriculture traditions.

This case of Prasantha is not isolated- since then this trend has continued with the other hubs also following suit, becoming net-positive and posting healthy growth, while delivering on all the set customer oriented Quality of Service norms.

Overall Impact At A Community Level:

The scope of the current successful eKutir Grameen-Intel’s project has been through the experiences gained at the 7 hubs (serving a hinterland of ~3000 small farmer households, directly impacting ~25,000 people).

The Social Entrepreneurial interventions are emerging as great replicable engines for growth and development, providing additional livelihood opportunities and employment with potential to impact all sectors of farm ecosystem (farmers, suppliers of seeds, fertilizer, chemicals, organic products; academia, research, organised retail, wholesale merchants and markets, microfinance, equipment leasing etc), at a macro level. Eg.

• Empowerment of small farmers through concerted group participation and resultant collective collaboration and action to deliver productivity gains, reducing their fragmentation/ isolation and wresting control of their lives and livelihoods.

• Becoming apparent to the rural community at large that ICT has potential to change Lives and Livelihoods of Rural Citizens, providing additional funds to redeploy into improving their family health, education and other self-actualization needs.

• Despite the limited context of the project currently, the resultant rural prosperity and job creation has created enough of an impact to arrest migration: In the face of adverse realities for the rural farmer, his ability to surmount the various challenges -enabled by his increased integration with the Agro ecosystem, bringing back prosperity to the families and communities, making for a healthy and happy community- quite the reverse of the existing alarming situation of unviable farming resulting in massive rural-urban migration.

• Removing inefficiencies in the system: Transparency innate to ICT bringing much value to farmer as well as suppliers (eg supply of genuine seeds & fertilizers by connecting the consumer to the producer) , end-marketeers (better terms for farmer, market aggregator and consumer) and financers (bringing capital, credit and insurance to the village)

• Optimal utilization of hitherto underused knowledge resources, expertise & dissemination of best practices to large multitude of poor farmers with hitherto noc such access, resulting in maximization of yield and productivity.

• Access to multiple markets for pricing information discovery & fulfillment empowering the farmer, and giving him better market choices. Empowering small and medium size farmers with their collective bargaining power for both the buy- and sell- side.

• Simple, yet effective interventions, upleveling the economic status of the farmer and potentially bringing him out of poverty.

Current State Of The Eagro Initiative

We are now embarking on creating a far more integrated, robust and scalable IT application that will enable the eAgro biz to grow, scale to hundreds of such profitable hubs, facilitating the seamless link up with the adjacent micro-finance area (linking finance to livelihoods and entrepreneurship is key to opening up a huge opportunity for inclusive growth), and we are examining / welcoming “friendly” parties who can bring the funds and other synergies to the block to accelerate this hugely transformational exercise, that can be replicated and scaled and applied in various other parts of the developing world.

With the farmer’ wallet being enriched by the described empowering initiatives that are bringing them back into the centre of the rural and food-supply ecosystem, they now seek to redeploy this money for the betterment of their quality-of-life!

The trust that has been built up between the community and ekutir has resulted in the former almost asking or expecting the latter to advise them on other various possible applicable developmental interventions…such as access to affordable health (incl. access to primary health, qualified doctors, pharmacy/medicines, and also associated interventions such as supply of safe water, better sanitation practices), appropriate vocational training etc.

In parallel with and as a result of the e-agro work, we are engaging with healthcare and education providers to experiment with and extend low-cost and appropriately tailored quality services (as above) in their respective sectors to our registered farmers.

Adjeacent And Interrelated Initiatives

Agro Vocational Training: On the anvil is an agriculture vocational training initiative for small farmers, where videos of agriculture best practices are being showcased to farmers, through the social entrepreneur route. This is very similar to the centrally web hosted youtube service. The agro training provider accesses a library of Best Agro Practice Videos through the internet broadband, these videos are structured as short clips that can be downloaded on demand and shown. Just like the YouTube video viewing experience-The farmer can view and assimilate the agro content (at no cost) and can interactively post his queries (thru the literate training host) and in time will receive feedback from the many agro-experts who are virtually available through the web.

The business/ revenue model for this is through targeted advertisements, and monies collected through lead generation and commissions for products and services sold at the eAgro hub as a result of this educational experience. Eg. if a farmer were viewing a video on “Importance of Soil Testing”, the revenues associated with this could be the targeted web advertising from suppliers of seeds and fertilizers, and, if the farmer is convinced on going ahead with the soil testing, then there would be additional revenues gained from the forwarded leads as well as commissions on sales of seeds, fertilizers and soil testing services.

Access to Finance & Bridging the N/S divide: One of the other forth coming plans is to leverage the power of the internet to create a zone for individualized North-South partnership, a theme called “Each one, Reach one”…where some of the caring folks who constitute the wealthy (but who do not know how to help), can partner with a farmer or a bunch of farmers, perhaps understand one-another’s material and self-actualization needs and help each other out in the process…eg. to a small farmer, the timely availability of just $ 250 at the relevant time (along with all the other support that we can provide at the hub) is an issue of life and death, of survival itself- this reasonably small amount, if it can be spared by the “urban haves”, can really spur the growth of his families livelihood and all round development…providing handsome returns (part of which, he can return as annual interest, clean green food direct from the farm..) that he can share back with his benefactors, and create a few wide smiles that can be the result of our pipedream of bridging the various divides (North/South, Urban/Rural, Supplier/Marketer, Digital Divide).