Tech driven supply chain can cut off middlemen in agri-trade
In India, farmers get a very small amount for their produce and about 80 per cent is pocketed by middlemen who control the agri-trade. This is where an agri-tech startup like Farmpal Technologies can bring about a revolutionary change through its technology-driven integrated supply chain - by cutting off the middlemen, and connecting the farmers directly to the markets
Incorporated in October 2017, Indian agri-tech startup Farmpal launched its operations in January 2018. Till now Farmpal has onboarded 1000+ farmers in Maharashtra, has five collection centres across the state and two distribution centres in Pune. It supplies to all big supermarkets – More, Star Bazar, Big Bazar, Big Basket, and has 300+ retail / kirana customers in Pune.
“Farmpal’s mission is to organise the post-harvest supply chain so farmers have better access to alternate markets, improved incomes by receiving a fair price for their produce and more broadly, reduce inefficiencies across the supply chain so all stakeholders are benefitted,” says Puneet Sethi, Co-Founder, Farmpal.
The company connects farmers directly with end consumers in the urban areas, and uses technology as an enabler to manage the end to end supply chain including all logistics. “A mobile app at the front end connects with the farmers and our customers. This is backed by a powerful ERP solution at the backend that helps us streamline inventory management, order cycles, supply-demand forecasts and analytics for all other functional areas,” states Sethi.
Speaking about how they are helping farmers, Sethi says, “When we started work on Farmpal, our key promise to farmers was to offer them a premium price for their product and help them avoid or minimise wastage. We are able to offer them premium prices because technology eliminates at least four to seven middlemen from farm to fork.” He explains that in the traditional model, post-harvest supply would take 36 to 40 hours to reach the table, incurring 25 to 30 per cent wastage. “We have been able to reduce that to 12 to 15 hours, with close to zero wastage as we have built Farmpal Collection Centres located within five kilometres of their farms as opposed to travelling long distances to the markets. This reduces time and wastage, which in turn helps them sell more produce at a better cost,” adds Sethi.
In addition, the technology helps them forecast demand accurately which helps with planning for supply accordingly. “This in turn enables us to guarantee a certain demand to our farmers, at pre-specified quality. Farmers receive a better price, and also save costs on transport, logistics, commissions, etc., by avoiding selling in the mandis,” points out Sethi.
With higher penetration of data connectivity in rural areas, Farmpal is able to connect farmers directly to urban consumers through its platform. “With technology, there is an added transparency across the entire process,” asserts Sethi.
He reminds that earlier middlemen had access to all the information – both supply and demand which they used for their benefit. By making this information easily available to both farmers and customers, including price information, the role of middlemen is eliminated to a great degree. “In addition, with technology, supply chain and logistics operations’ for a vast sector like agriculture are better tracked and managed which again helps stakeholders and minimises any middlemen role. The whole process – order generation, inventory, logistics, infrastructure, storage etc., being run using tech enables a far higher degree of efficiency across the whole supply chain, with reduced or even zero dependency on middlemen,” he further explains.
Highlighting the challenges, Sethi states, “Agri is a vast sector and so far probably the most unorganised. Technology adoption is slow, farmers incomes are low and access to credit for most farmers is still not a reality. A lot of the agri space is also very regional in the sense of farmer issues, capability; climate conditions and then customer buying behaviour. It takes time, effort and a lot of resources to achieve results that bring about a meaningful change in the agri supply chain and its most important stakeholder, the farmer.”
He believes that the situation in India is improving; the process of organising the agri sector is underway as a lot of startups and established companies are targeting agri as the next big push, with plenty of opportunity. Sethi feels that with additional Government intent and assistance, things should look up a lot more in coming years.
Farmpal’s first step, as a company, was to build out tech that enables automating it’s key functions, namely: farmer and customer onboarding. “We realised early on the stakeholders in the agri sector are not the most tech savvy. So while we invested in tech, we also ensured it is intuitive and very easily usable. Mapping certain activities to complement the tech was essential as well. Over time we have we continuously focused on innovating in tech, be it through use of cutting edge ERP solution, advanced analytics and payment gateways,” says Sethi, adding that moving forward, they are looking at ML/AI type of technologies, route planning, IoT and RFID integration etc., in the tech roadmap.
“Through our platform, we want that farmers are able to analyse crop risks, revise their sowing and harvest cycle and manage the entire crop inventory. Hence, in the future, we plan to add features like information about modern farming technologies, ways to increase yield, weather updates and related-crop risks, to the app,” says Sethi. The company also wants to use machine learning / artificial intelligence technologies to better predict demand and map supply, which will further help them forecast requirements to the farmers.
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