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2020/05/11
Lockdown: How agritech ventures are trying to fix the food supply chain
During the pan-India lockdown, with no transport and bare minimum labour, the pandemic has disrupted
operations for the food sector.
BY NAINI THAKER, Forbes India Staff
10 min read
PUBLISHED: Apr 22, 2020 04:21:13 PM IST
UPDATED: Apr 22, 2020 04:42:29 PM IST
Dinesh Tomar had been pacing around in his 500 sq ft house in Tauli Bhud, Uttarakhand, since 9:45 am on April 14,
2020. In about 15 minutes, Prime Minister Narendra Modi was to address the nation about the coronavirus
pandemic. While, at the back of his mind, the wheat farmer knew that an extension of the lockdown was much
needed, he couldn’t help but wonder how badly this would affect his crop. “This [April] is the most crucial period
for us. Poore saal ki kamai abhi milti hai [we earn for the entire year now],” he says. The pandemic has proven to
be a great challenge. With no transportation and bare minimum labour, he adds, “if the pandemic continues, my
fear is our wheat will stock up, and eventually rot”. As expected, Modi announced an extension of the lockdown till
May 3, with an ease in some guidelines from April 20.
Although there are guidelines in place, the current disruption in the supply chain has most farmers like Tomar
worried. With bare minimum sale taking place since the lockdown was announced on March 24, what will
farmers do with the excess supply? And not just farmers, most of the others in the supply chain—be it
wholesalers or retailers—are struggling with either a complete stock-out, or oversupply.
Bengaluru-based agritech venture Krishihub reckons it has a solution: A non-commercial crowdsourced
dashboard that brings together sellers, buyers, agri-machinery providers, ambient and cold-storage providers,
logistics service providers, pan-India, by location. The dashboard, called Essential Commodities Exchange, has
been created along with SatSure, a data analytics company helping farmers be financially secure and have crop
insurance, Numer8, a data-science company, and ThinkAg, a platform for agri and food innovation “This enables
stakeholders to know what is available in which location and with who, and acts as a public good in helping
reduce shortages and wastage during the lockdown,” says Jyotiska Khasnabish, co-founder and CTO of
Krishihub, a B2B platform that enables farmers to sell their crops directly to businesses at a better price. “For
certain perishable crops, farmers are selling their harvest at a loss in order to clear their inventory. We have
also seen the news of grape farmers dumping their harvests in the ground,” he adds, highlighting why a
dashboard like Essential Commodities Exchange is necessary under the current circumstances.
Like Krishihub, a clutch of agritech startups are working on different parts of the supply chain, and trying to
streamline the process. One that is looking at the basics—delivery of inputs to the farmer’s doorstep—is Pune-
based AgroStar. Founder Shardul Sheth points to another challenge. “The sowing for the kharif crop is to begin
soon, especially in Rajasthan and Haryana. But due to the pandemic, farmers are paranoid, and refuse to leave
their homes. So there is no sowing happening.” That impacts AgroStar, which is currently working at about 50
percent of its total capacity. In the last two weeks, Sheth has managed to get permissions from state authorities
to begin operations in Maharashtra and Rajasthan. “So far there has been a 20 percent dip in demand for inputs
from farmers, but we are doing our best to get operations up and running so that we can reach as many farmers
as possible,” adds Sheth.
While Agrostar caters to farmers’ input needs, Bengaluru-based Ninjacart goes a step further, and helps farmers
connect directly to retailers by placing their orders on the Ninjacart app. The company’s first priority was to
strengthen the existing engine, but it quickly realised they had to do more because of consumers’ limited
movements. Some of the solutions that Ninjacart came up with within a span of 48 hours, points out Vasudevan
Chinnathambi, co-founder, Ninjacart, “include taking our trucks directly to apartments and setting up a mobile
store. Over the last two weeks we have tried to make the experience a lot smoother.”
If the good old kirana stores are turning out to be the saviours for many during the lockdown, it’s also the efforts
of grocery-focussed business-to-business (B2B) ecommerce players that are helping keep the shelves of these
mom-and-pop shops stacked. One such venture is the Bengaluru-based Jumbotail, which works with over
25,000 kirana stores across Bengaluru and Telangana.
In the current crisis, Jumbotail has identified about 500 SKUs (a stock-keeping unit is a distinct item type for sale
with a unique code), out of its 3,000+ SKUs as absolutely essential items, and are working with suppliers to make
them available. The company claims to be working at full capacity despite the challenges. Co-founder Ashish
Jhina says this is because of the five-year-old startup’s robust supply chain, driven entirely by artificial
intelligence and machine learning technologies, which allows them to serve about 5,000 households daily. “At a
time like this, as we are in control of our supply chain, we have the ability to make changes quickly and redeploy
resources,” adds Jhina.
At a time when most companies are facing a shortage of labour, Jumbotail has managed to rope in workers
from non-essential services. “We are working with non-essential services companies to utilise their workforce to
ramp up delivery capacity. Our fully automated in-house supply chain is designed for quick onboarding with
just 1 to 2 hours of training and we are leveraging this to bring in more pickers and delivery executives into our
system,” adds Jhina.
Agritech startups have been doing their bit in terms of innovating, but existing grocery delivery players such as
BigBasket, Grofers and Amazon have seen unprecedented growth in the past few weeks. Not only has BigBasket
started hiring executives to meet this demand, they have also tied up with Uber to deliver essential services
across India. Other online ventures like Cure.fit, Zomato and Swiggy have also extended their services to deliver
essential commodities to customers.
Thousands of kilometres away from the sporadic bustle outside grocery stores in the cities, Shaukat Khan takes
stock of his harvest in Kupwara in Kashmir. Since the pan-India lockdown began Khan, who harvests walnuts,
almonds and apples, has been sitting on a pile of last year's crop that is steadily rotting away in his backyard.
“Wheat and a number of other grains are a part of the minimum support price (MSP, a price the government
guarantees farmers for their produce), and so those farmers have the benefit of the government buying their
crop, no matter what,” he explains. The harvest season for his current crop begins in June, and the impact of the
ongoing lockdown will severely affect the next season’s sowing due to lack of liquidity. “We will have to sell at
extremely low prices once things get back to normal,” says Khan, adding that he hopes for some ease in the
lockdown for farmers like him.
Khan is not the only farm worker living on hope. Since the 21-day lockdown was announced, the entire food
supply chain has been disrupted. Since mid-April, there has been a relaxation for grocery and general stores,
food transportation, food processing industries outside municipal limits and those engaged in harvesting,
procurement and markets. Still, normalcy in supply may be some time away.
Hemendra Mathur, Venture Partner at Bharat Innovation Fund, an early-stage venture fund that invests in agri
innovation startups (among other sectors), believes there’s enough supply but it is the supply chain that needs
to be fixed. “The stock is not moving, which is why we have seen much reduced arrivals over the last two weeks,”
adds R Ramakumar, Nabard Chair Professor, School of Development Studies, Tata Institute of Social Sciences.
Krishihub’s Khasnabish says demand for his venture has fallen as “many of our customers—restaurants,
hotels—have shut down indefinitely. So we had to move our focus to grocery stores, apartment blocks and
housing societies.”
With the demand-supply equation going awry, pricing has taken a hit. Mathur states that given the restrictions
on movement, “the prices of fruits and vegetables will be much lower, if they are sold closer to the location of
production. And in other places, where there is demand but restrictions on movement, prices will increase.”
According to data provided by the government’s Agricultural Marketing Information Network, prices of potatoes,
for instance, have increased across states. In Uttar Pradesh, for instance, they had risen from `1,208.72 per quintal
in March to `1,449.51 per quintal by April. The reason for the price rise: Disruptions in the supply chain, which would
take a few more weeks to normalise. “It is not the farmer that is benefitting out of this price rise,” adds Mathur.
“It would be one of the front-end players in the supply chain.”
Lack of labour during the lockdown is one big reason for the supply chain disruption. This has had a direct effect
on both transportation and harvesting, where mechanisation levels are low. Workers are also needed at the
processing units and factories.
CRITICAL PERIOD AHEAD
For wheat merchant Umeshbhai Radadiad of Junagadh-based Om Wheat Process, like wheat farmer Tomar,
these few months are extremely crucial. “Unfortunately, our business is currently running at 25 percent capacity
because instead of a staff of 50 to 60 people, we have only 10 people,” he explains, reiterating that the farmers
would be most affected. “They might sell their stock at whatever price they get.” However, over the last few weeks
farmers are finding ways to address the lack of labour: By swapping labour, or getting workers from other
non-essential sectors like blacksmiths or relying on the migrant workers who managed to leave the big cities.
Transporters too, at the time of writing this article, were running at minimal capacity in the absence of drivers,
and not enough produce (except for essential commodities) to ferry. Parth Vaghasia, owner of the Junagadh-
based Parel Transport, says, “Currently we have two to four trucks moving as opposed to 40 to 50 trucks we had
earlier.” Most of his truck drivers have gone back to their villages, fearing the pandemic. Vaghasia adds, “Even to
transport agricultural goods [that are categorised as essential commodities], we have to convince our drivers to
go. We assure them of their safety by providing them with sanitisers, masks and gloves as precautionary
measures.” Vaghasia’s trucks are currently transporting essential goods to Delhi, Rajasthan and Maharashtra; at
each district border the drivers are stopped for checking. While Vaghasia agrees it is a necessary measure,
according to reports, there were 5 lakh trucks stranded on highways and at state borders as of April 2, 2020.
Like agritech, social entrepreneurs are also doing there bit to help streamline the supply chain, especially for
farmers. Nupur Agarwal, who set up the Kiwi Kisan Window (KKW) in 2017, is now working with farmers directly to
generate employment by procuring fruits, vegetables and grains from them. She then processes these at a unit
in Vikasnagar, Uttarakhand, and sells the produce via the KKW retail outlets. KKW is providing its 3,500 farmers
seeds and fertilisers in these tough times, says Agarwal. “Their [farmers'] biggest fear is who will buy their
produce, since logistics is not easy at the moment.”
The April 15 guidelines address a lot of pain points of farmers. However, Tiss’ Ramakumar warns, “These
[guidelines] maybe look good on paper. But there may be multiple bottlenecks that arise in the supply chain at
the ground level.”
He adds that the state governments need to fine-tune the guidelines as per their conditions, and iron out new
bottlenecks that arise every day. For instance, in some parts of the country, like Mumbai, despite what the
guidelines state, vegetable and fruit vendors continue to remain shut due to the severe impact of the pandemic.
Local authorities also need to be in tune with the new guidelines. “For instance, if trucks are full of goods then they
are allowed [into cities]. But once they unload the goods and go back empty, they are stopped and harassed.”
Getting the agri supply chain moving again will go a long way in the long haul journey of reviving the economy,
particularly the rural part of it. These are, however, still early days and eventually it is how much worse the
pandemic will get before it gets better that will determine the fortunes of the various links in the agri supply
chain.
source :
https://www.forbesindia.com/article/coronavirus/lockdown-how-agritech-ventures-are-trying-to-fix-the-food-supply-chain/58955/1