India holds enormous potential to become the ‘next destination’ for AgriTech platforms propelled by government initiatives, adaptability, and mobile penetration. With growing demand patterns, the industry is expected to see a huge demand for AgriTech platforms.

In conversation with Mr. Anand Chandra, Executive Director of Arya Collateral 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 give an overview of the supply chain process and working of Arya?

If a farmer must receive greater value for their produce, they need to store till the price are right. However, this was not possible without immediate access to finance and the lack of an integrated solution covering aggregation, quality assurance, storage, financing, and market linkages.

Working towards this, Arya.ag offers end to end solutions for its users. Arya.ag, integrates warehouse discovery, financing and market linkages to create an integrated digital platform that is accessible across the value chain from the small hold farmers to large corporates.  Arya.ag connects sellers and buyers of agri-produce with complete assurance on quantity, quality, and payments. We are accessible to the small hold farmers as much as to large corporates providing all our users with trust, transparency and efficiency.

In recent times, major technological advancements have automated a lot of processes but a lot of the physical work involved in the process of movement from the production centre to the warehouse still remains. Our aim here is to reach as close to the production centers as possible and tap into that space. One, the tertiary market is highly concentrated with well-established players which poses as a problem for us. In order to scale up our own business, the option with us is to reach out to smaller locations and territories with business opportunities which have not being tapped yet. Second, if we are to truly impact smallholder farmers, we need to be closer to them.

Standalone warehousing is not profitable as the transaction cost is extremely high, hence we have a cluster-based approach where we provide services at every level to gain some profits in each segment and become profitable overall. This has been our approach at Arya for both primary and secondary markets.

Now, coming to the crucial phase when stock reaches the warehouse. This is when AgriTech and Fintech come into place. The core of Arya.ag's strategy lies in the digitization of stored produce.
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The process of quality assessment is very important for agricultural commodities as the products receiver are of different standards. Meaning, there is no standardization for agricultural products in the country. We use a grid system for each commodity which helps us to determine a value for the commodity. The quality check is now being automated. We have started using AIBS tools to give out a quality report instantly. The process of manual checking has been eliminated. Post the process of this quality check, the entire quantity balance (checked for quality) gets transferred electronically to the account of the customer. Now, the consumer has an electronic balance in the account. At Arya, the consumer can avail a loan for this amount, through ‘Aryadhan’ (our NBFC), if he/she wishes to do so by logging into his account and approving the pricing of the commodities offered. The entire process of lending is now automated. We have developed a machine learning system, wherein to sanction the amount of the loan, we approach a customer’s KYC details. These are then tracked for his/her records and the system can sanction or reject the request within 5 minutes.

To summaries, Arya.ag converts each bag of the farmer’s commodity into an electronic balance that can be stored, offered as security for a loan, or be sold at the click of a button.

 So to summaries the entire process, a consumer walks into the warehouse, approves of the pricing and quantity of the commodity, and submits his /her KYC details. In the meantime, the loan is sanctioned while the product is unloaded through the machine learning tool. Due to automation, the entire process has been fast tracked by multiple folds.

Q2) What are some of the recent trends and developments in this sector?

The most prominent trend has been the automation of the entire financing process. Another development has been facilitation of the selling of the product from the warehouse. In the offline world, if you are a farmer or a trader, in order to sell your product you will have to first pay off your loan and at the same time connect your product to a buyer. The entire process involves arranging money from one source to pay off another. This means, you will most likely have to sell at a lower price, take an advance against the stock, pay to the banker and then deliver the stock.

The greatest differentiator for Arya.ag has been its ability to embed innovation and technology in the here and now of Indian agriculture. Be it concentrating on the near farm primary and secondary markets or innovating on the first of its kind price risk mitigation model for FPOs or deployment of hermetic storage technology, Arya.ag’s emphasis has always been on solving the most basic problems using technology. The platform looks at constant innovation to create transparency and efficiency be it India’s first ever First Single-Click Agri-Loan Product or One click loan repayment and commodity discharge, Buy now, Pay Later Services or a credit wallet in the Agri commerce space.  The platform’s Price Intelligence mechanism combined with immediate access to the farmers’ stocks – loaned and otherwise, enables them to make  prompt & informed decisions on commodity sales. With Arya’s Marketplace Search engine that connects sellers to buyers across the country and its embedded logistics service, users can now seamlessly reach buyers in no time. Our integrated model services the smallest of the stakeholders in the most cost-efficient manner, while at the same time being sustainable for us. That makes us India’s largest Agritech Startup and that too a profitable one.

Q3) Could you explain the working of the tie-ups between ‘Arya Collateral’ and other third party banks/NBFCs (other than Arya Dhan)?

Arya has tie-ups (currently has about 20 institutional tie-ups) with third party banks or NBFCs for the lending process. We issue a storage receipt which indemnifies the quantity and quality of the product (based on the grid system mentioned above). This receipt gets online transferred to any bank or NBFC with which we have tied up for a certain amount of capital.

Q4) In your opinion, what are the demand patterns in the industry? How do you identify and address the target market from whom you can gain maximum demand? Is there any process you follow?

We have been in this business for 16 years which has given us a fair idea of the demand trends in the industry. Production is the biggest criteria followed by availability of storage space. Both of these factors are directly proportional to the demand in the market. It is also important to note that demand comes linked to the commodity prices. In certain geographies, such as Uttar Pradesh and Bihar, a disparity between the demand and supply can be witnessed (meaning the infrastructure is not keeping up with the demand). On the other hand, the availability of warehousing infrastructure is the highest in Madhya Pradesh, Rajasthan and Maharashtra. I wouldn’t say there is a particular demand pattern. The overall industry is seasonal and the demand pattern follows the same seasonality.

Q5) Please comment upon the positioning of Arya amongst its competitors in terms of strengths and market standing.

Our primary focus is to increase our own business in our through segment operations. We want to increase the market we capture, build on it and for that we constantly strategize. We hold about 20 to 25 lakh metric tones of stock with us. We want to leverage on that stock we hold, with the main aim in sight being the sale of these commodities. On the other hand, most of the other players are focusing on connecting the buyers and sellers. Our USP is quality assurance. If the stock is being delivered from our warehouse, we give a certain quality assurance, using all of our automated processes. The trust of a customer is of utmost importance. Arya.ag has been able to quickly build a legacy spanning presence in 21 states across 425 districts with our digital platform providing visibility to over USD 2.0 billion of stored grains across 10,000 commodity storage points with footprint of over 100 million sq ft. Our platform seamlessly embeds financing, and we facilitate over USD 700 Mn of finance annually to maximize value for both sellers and buyers.  We are associated with more than 500 FPOs with a reach to over 6.5 lac farmers. More than 8000 agri enterprises use our platform.

Q6) How has the growth been in the past few years? How the market is likely to grow in coming years and what will be the growth drivers?

The industry was impacted largely due to COVID-19. All manual operations were highly affected. Manual operations are the very backbone of this industry. The opportunity for growth in India is immense. As a country, our core competency is agriculture and we have never really focused on that which leave a lot of room for growth and invention. Where we lack (country level) is that we have a production driven approach and I believe we need to change to a market driven approach. For example, India currently does not control what it produces. If we start controlling the produce we can automatically control the prices. If farmers get the data of how much produce of which category is actually needed then it can be more profitable for everyone. This will lead to a demand linked production. Getting data metrics into place will benefit the industry by huge amounts.

At an overall level, the industry is growing at a growth rate of 2% to 3% (YoY). In the coming years the growth is likely to grow at double digits.

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