SHASHANK KUMAR

India,

In India, where approximately 80 percent of farmers work on a small or marginal scale, traditional cropping patterns have proven to be low-yield and risk-intensive while also depleting soil nutrition. Shashank Kumar is helping farmers get away from these antiquated practices through low cost and market-driven interventions that begin at the crop planning stage and end at the sale of produce. Through his interventions, Shashank has been able to maximize farmers’ profits and minimize the cash flow cycles while also improving soil nutrition.

This profile below was prepared when Shashank Kumar was elected to the Ashoka Fellowship in 2013.

INTRODUCTION

In India, where approximately 80 percent of farmers work on a small or marginal scale, traditional cropping patterns have proven to be low-yield and risk-intensive while also depleting soil nutrition. Shashank Kumar is helping farmers get away from these antiquated practices through low cost and market-driven interventions that begin at the crop planning stage and end at the sale of produce. Through his interventions, Shashank has been able to maximize farmers’ profits and minimize the cash flow cycles while also improving soil nutrition.




THE NEW IDEA

The most prevalent interventions in the agricultural value chain system are either at the post-harvest stage or are specific to only one or a few aspects of the agricultural value chain (such as soil testing, input supply services, advisory services, processing/value-addition services or aggregation, and marketing services). While such initiatives continue to positively impact farmers, Shashank believes it is essential to intervene at the initial crop planning stage and to understand the farmers’ profile and risk vulnerability to truly maximize their financial outcomes. 

By studying several factors including market demands, pricing patterns, local farming conditions, nature and size of farmers’ landholdings, soil quality, and cash flow needs, Shashank plans the farmer’s cropping season. This demand-driven crop planning bridges the gap between what the markets want to buy and what farmers can supply. The crop selection process also ensures that crops with shorter cash flow cycles are chosen. In addition, local centers run by rural entrepreneurs assist the farmer throughout the cropping season by providing cost-effective input supplies, advisory information on government schemes, and allied businesses (i.e. poultry and quail farming), post-harvest value-addition and processing, access to cold chains and warehouses, market linkages, and logistics management. Shashank has thus developed a low-cost system where small and marginal scale farmers’ work with a single point of contact during the cycle.

Through such holistic interventions that begin with market-driven crop planning and end with farmers seeing an increase in their profits, ranging from 25 percent to 55 percent, and much shorter and assured cash inflow cycles. By structuring his revenue stream as a small cut from the sale of farmers’ produce, Shashank has also aligned his organization’s interests with those of the farmers. FnF now aims to reach out to more farmers while also adding more services in the processing, storage, and value-addition aspects of the value chain. With a vision to take their services to several North Indian states, FnF aims to reach at least 100,000 farmers by the end of 2015 through 100 local centers.




THE PROBLEM

The majority of Indian farmers produce on a small or marginal scale and their landholdings range anywhere between one and five acres. Approximately 80 percent of their fields are being used to grow conventional cereal crops, such as wheat and paddy. Based on the average annual productivity of wheat and paddy, 2,500 kg and 3,000 kg respectively, and the Minimum Support Price of 12.85 INR/kg (US$.21) and 12.50 INR/kg (US$.20) respectively, an average small farmer generates annual revenue of approximately 70,000 INR (US$1,300). Even with the optimistic assumption of a 50 percent margin for the farmer, a net profit of approximately 35,000 INR (US$650) per year, is not enough to support a family of four or five. Since the crop cycle of such crops ranges between 125 and 160 days, farmers have to wait for four to five months to see their first cash inflow. In reality, the wait is even longer because local traders don’t transact with these farmers on any fixed payment terms. Sometimes, the farmer receives his payment a month after selling his produce. This does not only cause declining profitability, but longer cash flow cycles also creates a higher risk for farmers. Such long and uncertain cash flow cycles also freeze farmers’ money and hinders them from experimenting with alternative forms of income generation. 

Most other initiatives in India that are aimed at increasing the profitability of farmers only focus on one or a few aspects of the agricultural value chain, such as providing information, inputs, or market linkages for the sale of produce. While definitely improving the farmers’ financial outcomes, these interventions continue to face challenges.

Many of the causes of these challenges are rooted in the early stages of the cropping cycle. For example, when an agency works on the post-harvest aggregation, value-addition, and marketing of farm produce of 1,000 farmers in a region, most of the farmers grow the same crop (such as wheat or rice or maize). However, they all grow differing varieties of the same crop produced with inputs of varying quality bought according to their individual purchasing powers. Additionally, the field preparation time for sowing varies, and during the farming cycle individual farmer’s adopt different farming practices, applying numerous varieties of fertilizers at various points in the cycle. These factors result in the difficult marketing and aggregation of their produce. This translates into higher transactional overheads for the intervening agencies, which lowers the farmers’ revenues. Besides, the presence of multiple agencies intervening at different stages of the crop cycle (such as one agency dealing with crop planning services, another agency working with the input supply services, and another providing advisory services) only makes it harder for a small farmer to efficiently leverage the network on his own for better financial outcomes.




THE STRATEGY

Shashank started a pilot project in October 2010 with 13 farmers belonging to three neighboring villages in Vaishali district of Bihar with the aim to work with them throughout the cropping cycle to increase their financial outcomes. The farmers cultivated conventional regional crops, such as wheat, paddy, and mustard. Profiles of farmers were created, their expectations and risk tolerance were understood, and strategies were designed to increase their profits to diversify their crop-related risks and shorten their cash flow cycles. Shashank then promoted the cultivation of rajma (red kidney beans) and marigolds, which require less water and have shorter cropping cycles. While farmers were not willing to convert their entire fields to cultivate rajma and marigold, they grew it on the fringes of their fields (15 to 20 percent of their net sown area) for a season, along with wheat. Shashank assisted with seed selection, input supply, and provided technical advice from agri-scientists. At the end of the season, he took their produce yield and sold it to retailers in Patna; resulting in an increase of 25 to 30 percent in the farmers’ profits and a reduced cash flow cycle (a decrease of 30 to 50 days compared to only growing wheat).

Boosted by the success of the pilot and the enthusiastic adoption of their model by farmers, Shashank set up FnF in 2011. For greater outreach, FnF established local block-level centers run by a rural entrepreneur. FnF’s operational strategy is based on these local centers and the rural entrepreneurs who manage them. The entrepreneurs, who are literate and in some cases farmers, mobilize farming communities from the villages in a radius of 10 to 15 kms from the local center. Information sessions explaining FnF’s model are held to attract farmers to sign up for their services. Farmers are charged a yearly flat subscription fee of 200 INR (US$3.30), which covers farmer profiling (understanding historical cropping patterns, landholding size, financial expectations, and risk tolerance), soil profiling, crop planning, input selection and technical advices. Of the 200 INR, 40 INR (US$65) goes directly to the rural entrepreneur. Once the farmers sign up, they are organized into clusters of 10 to 15, based on farmers’ profiles, landholding type and size, and local conditions. Each cluster has a head that routinely communicates with the rural entrepreneur.

To bridge the gap between what the farmers’ grow and what the markets are willing to buy, Shashank believes that it is imperative to assess the market demand, pricing patterns, and the buyers’ interest in various crops and farm produce (including vegetables and fruits) prior to the start of each cropping season. Toward this goal, Shashank focuses on getting the commitment of different institutional buyers to purchase a predetermined amount of one or many varieties of produce at the end of the season. This near certainty of institutional buyers’ demand helps FnF plan for the upcoming crop season more thoroughly and reduces the logistical complexity. Based on this market demand, the rural entrepreneur’s mobilize farmer clusters to prepare for the cultivation. Once determined, the farmer’s details (i.e. variety of the crop he is cultivating, the date on which seeds are bought, the date on which the soil is prepared for sowing, the date seeds are sown, the expected time of harvesting, and the quantity of expected yield) are tracked to keep the logistics easier and manageable for the collection of the produce. 

FnF also supplies agri inputs to the farmers (with a charge of 3 to 4 percent on the transactional value, of which 75 percent goes to the rural entrepreneur). Input supplies have benefited farmers in two important ways. The farmers receive high-quality inputs at the most affordable price, which also helps them break away from their dependency on local middlemen who would supply seeds for credit with the expectation that the farmer must only sell his produce to him. Once the cultivation season starts, the farmers keep in touch with the rural entrepreneur for various technical inputs they need on farming. FnF is also connected with many local agri-universities whose scientists are willing to freely share their knowledge with the farmers. FnF is now building a repository of farming-related information, such as proactive pest control and the best practices in different aspects of farming, which local entrepreneurs share with farmer clusters.

Once the crop is ready for harvest, FnF educates farmers on simple primary processing techniques which rely on minimal equipment they can carry out from their homes. The produce, ready after primary processing, is sold to the local entrepreneur at the farmer’s discretion. FnF also extends additional processing and value-addition facilities when applicable (i.e. a canning facility for baby corn is available and litchi processing plants are being set up). The rural entrepreneur manages the collection of produce from small farmers and coordinates the logistics to cater to the institutional buyers. For this work, the rural entrepreneur receives 0.3 percent to 0.8 percent of the transaction value. Thus, with diverse and expanding streams of revenues for these local entrepreneurs (which can range anywhere between 50,000 INR to 150,000 INR (US$815 to 2445) per year with a decent scale of farmer outreach), FnF has ensured that local entrepreneurs are adequately incentivized.

Since institutional buyers were hesitant to buy farm produce from a non-profit, Shashank set up the Green Agrevolution Private Limited Company (GAP) in 2012. While FnF focuses on interventions until harvest, which include community mobilization, crop planning, input supply, advisory services, and aggregating produce at the local centers, GAP’s interventions begin where FnF’s end. GAP focuses on arranging the logistics, building the value chain assets, processing facilities, negotiating, and transacting with potential buyers. To align GAP’s growth with the overall mission of increasing farmers’ income, its profitability is linked directly to the profitability of the farmers. Its revenues are structured as a small percentage (between 0.5 to 3 percent) of the value of transactions carried out with the institutional buyer. Once GAP receives a buyer payment, it hands the money to FnF (minus the 0.5 to 3 percent charge) and the profits are eventually passed on to the farmers. Going forward, Shashank intends to decouple the management of both organizations to ensure an alignment in their visions. Thus, in the future, FnF will be free to sell to organizations other than GAP if the terms benefit the farmers. 

Since 2009, FnF has built five local centers and has expanded its work to five districts in Bihar and neighboring states; reaching approximately 2,000 farmers and increasing their profitability 25 to 55 percent. In addition, soil fertility has improved by getting farmers to shift from traditional cropping patterns of wheat and paddy cycles, to cultivate a wider variety of crops, which replenish the nutrient content of the soil. Farmers now work with multiple crops: paddy, mustard, litchi, papaya, baby corn, herbs, pulses, vegetables, maize, and spices. They have also developed a formal program to train local entrepreneurs to set up centers in newer areas. Shashank aims to open 100 local centres and reach at least 100,000 farmers by 2015 while also focusing on building repositories of knowledge on various processes and practices. Realizing the value of shorter cash flow cycles with shorter turnarounds, he encourages farmers to get into allied businesses such as poultry, livestock, and quail farming, to name a few. Shashank is working with agri-entrepreneurs from different states to create an exchange in knowledge and systems. FnF’s sustainably proven model has begun attracting medium- and large-scale farmers from other states to work with them.




THE PERSON

Shashank is the youngest sibling in a lower middle-class family in rural Bihar. His father worked for the government and mother was a school teacher. His parents sent him to a boarding school from Grade 6. The school was modelled as a Gurukul and accepts approximately 35 students of 50,000 applicants after four levels of entrance examinations. It was here that Shashank learned many of his skills and values—working hard, building empathy, and above all, leading teams.

In 2004, Shashank was admitted into the prestigious Indian Institute of Technology. His skills of multitasking, positively influencing people, and motivating teams toward common goals helped him become the captain of the hockey team and led him to represent his college in six different sports. Shashank has also held many positions of leadership at the college/hostel level. During his time at IIT, he consistently demonstrated his ability to build motivated and efficient teams. Although Shashank was keen to start something of his own, he was not clear about what he wanted to do. He worked at a consulting firm specializing in value chain strategies for FMCG firms. This experience, while short-lived, helped him see beyond the business and economic sides of many seemingly simpler transactions such as seeing how a potato grown by a farmer in Bengal can end up as the French fries on his plate at McDonald’s). Shashank also realized that while FMCG companies were raking in millions of dollars in profits, the farmers supplying their produce as raw materials were toiling for their daily bread and butter. This is where his conviction to start an agriculture-related enterprise working with grassroots farmers grew. In many ways, this began Shashank’s apprenticeship in agriculture.

In 2010 Shashank started visiting the Delhi wholesale market where he volunteered on weekends with a big wholesaler. He started to understand the many layers in the supply chain and the role of various middlemen (from the village-level aggregator to wholesale level trader). To understand the different facets of agriculture and the many challenges farmers face, he travelled and met farmers from different parts of India. Meeting more than 3,000 farmers and players in the agri-value chain over 6 to 9 months, Shashank recognized that the challenges most farmers faced began at the pre-cultivation stage. Despite pressure from his family to pursue a high paying job, Shashank quit his job in September, 2010 to pursue his passion.