Agriculture has been the backbone of the Indian economy for decades. Currently, it contributes to 17.4% of India’s GDP and employs 49% of the total workforce in the country. In fact, it is the core livelihood for more than 58% of the rural household. Given its prominent hold over fuelling the growth of India, it is unfortunate that farmers don’t get dues their worth. There are thousands of farmers who are heavily debt-ridden and are forced to commit suicides because they don’t get fair prices. The input costs (seeds, fertilisers, water, fuel, pesticides) are high and the output is comparatively low. Even if they experience a good season, the prices they receive for their products are way below what they deserve. The middlemen walk away with the major pie of the cake.
Farmers are highly reliant on intermediaries for storage and transportation of the produce as they don’t have enough resources such as warehouses, tractors, machines and additional manpower to manage end-to-end processes. The bottom line is that they can’t sell the products at their prices.
But, a Hyderabad-based agripreneur has taken the onus of empowering farmers to earn the dues they deserve through his startup Our Food Pvt. Ltd.
The Man Behind the Startup
Bala Reddy, the brain behind Our Food, drew inspiration to launch his venture from his roots in Telangana. Born into a farmer’s family with unstable income, he had first-hand experience of how his father toiled day and night on the farms to earn every penny. He knew in and out of farming at the back of his hand and aspired to build a career in agriculture. Reluctantly, he appeared for engineering entrance exam and a bright student he was, bagged scholarship to pursue studies from NIT, Warangal.
When Bala was placed as software engineer in a company which paid him well, his family was quite happy for him. But, Bala’s love for agriculture was so strong that he resigned from his job to study agro-business management from IIM-A. He funded his MBA course from a scholarship and an educational loan. Unfortunately, his dreams still eluded him. Apparently, he could not convince his family to give a nod for his entrepreneurial plunge. So, after passing out from IIM-A, he worked for a startup for a year and then, in maternal family business of infrastructure for another 7-8 years.
It was not before June 2016 that Bala eventually gave wings to his vision. He joined hands with his current team members Raghu Prasad M, Co-founder and CTO, and Sashikanth, Head-Infrastructure & Logistics to launch his agri-startup Our Foods. This technology-enabled platform connects farmers and bulk buyers through a chain of low-cost warehouses and processing centres at the farm level, thereby eliminating the need for the middlemen. It aims to help farmers can sell their produce at a better price and let consumers receive the products fresh and in lesser lead time through an integrated supply chain using technology.
The initial idea of Bala and his team was to connect farmers, millers, warehouses, and bulk buyers using technology (Android application). They approached farmers with their idea only to discover that many other entrepreneurs before them had made similar promises to them. None of these predecessors were able to execute the idea, leaving the farmers disappointed. So, winning the trust of farmers became a major challenge for Bala.
Bala also learnt small-scale millers (people who own or work in a mill) were no longer present in the area. There were only high capex millers concentrated in clusters far away from farms. Additionally, the warehouses were run by government and lacked hygienic facilities and practices to store the farm produce.
Bala realized that he had to take a new approach to address these problems. Along with his team, he decided to build a warehouse in one acre land on highways and convince the farmers that they meant serious business. They also tied-up with agricultural universities to research on low-cost food processing equipment. Since the basic designs were available, they customized it to their requirements to manufacture millers that cost even less than 2 lakhs. Going a step ahead, they launched a miller franchise model through which farmers can become millers.
However, Bala had to face post-commencement challenges as well:
- Convince farmers to accept bank transfer instead of cash for produce.
- Maintain uniform quality of produce.
- Encourage rural youth farmers to start their own mills.
- Transport the produce to markets early in the morning for end-consumers.
There was also the fact that venture capitalists weren’t too keen to invest in Our Food’s asset-heavy model.
In spite of all its roadblocks, Our Food business model has evolved in good health. It is firmly focusing on reducing the following inefficiencies and redundancies at multiple levels between the farmers and bulk buyers through:
- Establishment of warehouses nearby farmlands to enable farmers to store or sell their produce.
- Establishment of mini processing centres to help farms convert their produce (especially if in excess) into processed foods. For example, processing of tomatoes into purees and ketchup.
- Aggregation of demand, thereby reducing logistics costs.
- Assessment of quality parameters through scientific equipment and comparing it with the market price for fair and automated price recommendation.
Our Food also offers low-cost franchises and satellite centres to select farmers. Under this facility, the startup assists farmers to build their greenhouses and set up mini cold storages and mini processing equipment. The produced output from these franchises is managed and controlled by Our Food’s hub centre. All its food centres run on renewable energy, a fact which gives it another competitive edge in the market.
At present, Our Food is also training ten unemployed young farmers educated up to 10th or 12th grades to become farmer franchise. The startup is funding 50% of the investment in its rural employment scheme and raising the balance through donations and crowdsourcing platform Ketto.
Incubated in the NASSCOM 10000 Startups program, Our Food has come a long way since its inception. With the support of program mentors, this startup is expected to cross Rs 40,000,000 for the financial year 2017-18. 10,000 Startups provided a launchpad to Bala and mentored him to understand the startup ecosystem, paddle through early stage difficulties and connect with like-minded people and investors.
Our Food opened its first warehouse near Zaheerabad in Telangana in March 2017. The second centre at Pargi in the same state is under construction. The startup also plans to open four new centres across Telangana and Andhra Pradesh.
It has also grown its team size to 15 employees.
Major retailers such as Big Basket, Amazon and Hypercity are now sourcing dals, fruits and vegetables from Our Food. More than 1000 farmers are already transacting through its platform. Many farmers have expressed their interest in the franchise model.
The startup is primarily bootstrapped as of now. It has raised $150k from relatives and Rs1 crore of Rs5 crores debt fund committed by State Bank of India under Startup India.
Our Food does have competition from online marketplaces, bulk buyers and traditional mandis in this space, but its strong ground level logistics, technology and value addition to the supply chain make it rise above the pack.
It has been only 1.5 years since Our Food was launched, but it is swiftly making its mark in the industry.
- Honoured with the Business Excellency Award for Agro and Food Processing Category from Shri Venkaiah Naidu, the Minister for Urban Development, Housing & Urban Poverty Alleviation and Information & Broadcasting, Government of India.
- Won the first prize for its crop price prediction technology ‘Time2Sell’ at ICT4D Data Jam.
- Bala Reddy showcased the startup at ‘Impact Startup Fest’ in The Hague in Netherlands. Here, Our Food secured a second place in the finals of ‘Get in the Ring’, a competition which gives a global stage to startup to connect with investors, corporations and entrepreneurs.
- Selected among the top 10 finalists at Slush Global Impact Accelerator 2017 programme in collaboration with the Ministry for Foreign Affairs of Finland and other international partners.
- Bala Reddy presented a session during “Technology and Business Opportunities in Food Processing for SMEs” event conducted by ICRISAT to the delegation from the African continent.
- Signed a MoU with Ministry of Food Processing at World Food India event held in New Delhi. As per this agreement, Our Food has declared an investment of Rs30 crores spread across three years in four states namely Karnataka, Andhra Pradesh, Telangana and Maharashtra.
- Received ‘The Star Innovator of the Year’ award from Telangana Government and T-Hub Hyderabad.