Pune and Maharashtra have become the highly reputed market for the supply of good quality exotic vegetables driven by the consistency and controlled agritech practices-Ken Research
Agricultural practices in India
have a very deeply rooted meaning for most farmers. Changes in the existing
practices will require a lot of time and awareness programs to enlighten the
farmers about the benefits of technology integration. There are many
apprehensions associated with the new practices. Still, over time, it is expected
that techniques such as Hydroponics or controlled open field cultivation will
become a significant part of the increasing demand. Many players are operating
and delivering their products in the Cities such as Pune and Mumbai by using
these modern techniques and targeting B2B and B2C customers.
In conversation with Mr. Sanket
Mehta, CO- Founder and an Agri preneur at Nutrifresh,
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. How did
you plan to enter in the agritech market?
Before establishing Nutrifresh, I
used to work as a credit manager in a Government Owned Bank in Pune, where most
of the Proposals I received were in the Agriculture segment. I used to get many
business Proposals in sectors like sugarcane, dairy, and poultry. It has
generated an interest in me to work and expand the horizons of the agriculture
segment.
When I was staying in Mumbai, the
quality of the fruits, vegetables, and the dairy products that we used to
receive at our household was not good in comparison to what we saw at the farm
level. The difference was not just restricted to quality but quantity and
availability as well. It gave us an idea if we go a little farther from the
city, it might be possible that the parameters may even get worse. It was the
time that we identified a huge gap in the agriculture supply chain.
Q2. What has been the
journey for NutriFresh in the market?
Initially, we thought we
would start as a fintech company, but eventually we entered into core
agriculture. With the help of my friend we started Nutrifresh from a 4 Acre
land by cultivating sugarcane. Farmers have many apprehensions for new
agricultural practices, and we wanted to overcome this myth and prove that
using technology can bring about some revolutionary change. By implementing our
techniques, we managed to get 120 Tonnes/acre sugarcane compared to the usual
production, which is 70-80 Tonnes/acre. This actually boosted our confidence,
and we started expanding segments with expertise in floriculture and other
verticals.
During this time, organic farming
became very popular. Nutrifresh implemented the government initiatives to
support organic farming with the help Maharashtra government by leasing 250
Acres of land for open field cultivation for 10 years. Since then, we kicked
off cultivating Watermelon, Baby corn, Sweetcorn, Maize, Sugarcane, Brinjal,
Chillies, Okra and more.
Q3.What were
the government initiatives that supported your growth?
Hydroponics does not have any
specific grants from the government, since it is a high capital investment
technique. However, Controlled Environment Cultivation has many state-level
subsidies for seeds, fertilizers, electricity, and more. For example,
electricity in Mumbai and Pune is usually Rs 10-11 per unit but for
agriculture, it is Rs. 3 per unit.
Q4. What has
been a growth driver for your company?
Most of the agricultural land in
India lacks tech support, technological literacy, and awareness. This has
resulted in poor quality of the final product. This lack of technology became
our growth driver. Our farms are well equipped and highly regulated with
advanced technology.
Q5. What are
the challenges faced by Nutrifresh?
Our operation is highly dependent
upon the quality and production volume. This technique in a controlled
environment is called Hydroponics. Hydroponics has many associated problems.
Open field cultivation has to deal with many abiotic stresses such as varying
climatic conditions followed by risks of pests and diseases from the nearby
poorly maintained farms.
Seed, Nutrients, Labour, and
Climatic condition are the four major components that support the yield for any
type of crop. A balanced proportion and quantity of these components help in
producing a good yield. Out of the above-mentioned components the least we
could control was the climatic condition. This is where the tech integration
helped us achieve scalable growth.
Q6. How are
your operations different from other players in the market?
We produce 42 different SKUs
which have given us ample depth in each product. Therefore, going further,
depending on demand and supply, if Nutrifresh has to grow a single product at
scale, it will be easier for Nutrifresh to expand because of the Knowledge bank
it holds.
Q7. What are
the geographies that you are covering? Considering the techniques are highly
climate sensitive, why are we only operating in Maharashtra and Pune?
We are currently only operating
in Pune and Maharashtra local market mandis. First reason is the logistic
issue, since it costs ~40% of the overall operations. Secondly, target market
should be near the farm area. It helps in controlling the logistic as well as
wastage cost drastically. It also helps the provider to control the lowest
selling prices and better margins.
We have selectively distributed
to Ahmedabad, Chennai and Delhi as well.
Q8. How is
technology playing a part in your current operations?
Nutrition has executed dosing,
pumping, and similar techniques were a critical part of the cultivation
process. We automated these practices with the help of previously recorded
data. It helped us to reduce human intervention in the process and lower the
chances of error. All the techniques were well understood and were selectively
implemented in the hydroponic farm.
Polyhouse farms have a very
controlled setup. The temperature, humidity, and other factors outside will be
automatically adjusted. If the temperature is inappropriate, the automated
water system will be used to balance 25 degrees Celsius temperature, which is
conducive to the plant growth. Similarly, all other parameters are
IoT-dependent and have a very controlled supply system.
Q9. Do you
think hydroponics will become the future of Indian Farming?
Yes, previously the production
was highly dependent on the climatic condition of a particular region. Now,
since we have control over the most critical parameter, it may help us achieve
seasonal crop benefits.
For example, coriander which is
required 365 days but cannot be grown during the rainy or peak summer season
due to varying temperature and climatic conditions. To combat the current
demand, hydroponic holds a very promising future in India.
Q10. Is
there any demand pattern that you observed during the course of your business?
The hydroponic technique can help
you grow any kind of crop, but the products that give high commercial benefits
are the exotic vegetables and not the normal crops. Any other Tech induced Agri
player or farmer is still controlling 60% of the climate while we are
controlling almost 90%, which comes with more capital expenditure. Considering
this, we only have commercially viable crops. The exotic product category has
50-60 products out of which Nutrifresh started with 42 different varieties. Considering
the deep research on the growth, distribution, demand, marketing and sales
these products were selected.
Q11. How do
you source and supply your products in the market? Do you have any specific
partnerships?
Nutrifresh is indulged in
industry partnerships for the input supplies for regular goods production. Some
of the commodities are highly demand-driven or contractual based for example
beefsteak tomato. If Beefsteak Tomato has a contractual demand for 100 Tonnes,
then we would grow 200 Tonnes. 100 tones are directly moved to the contracted
party, for the remaining 100 Tonnes we identify the market and move the
product.
For local supply, we have our
tempos and cars to deliver these products. For the last mile delivery to B2C
consumers and certain B2B clients, we have appointed Porters and Dunzo. If the
product has to be delivered to other parts of the country it is done via rail
or bus transportation. We generally prefer to move our items during the
overnight journey.
Q12. How do
you identify your addressable market and what is the value proposition of
Nutrifresh? Are we also targeting giant food processors for bulk supply?
Addressable market are mostly the
ladies across Pune and Mumbai market. However, the demand is very much
fluctuated during different seasons. In winters we only cater to people who are
into high value income groups because they want consistency in the quality but
during the summers and rainy season it is mostly all the people looking for
food which is ~3.4 Cr people. Even if we consider catering to 10% of the
overall population, the area required under cultivation is going to be huge.
For eg. we have to consider that a 10 acre production can only address 15,000
people at once. This is self-explanatory that the market opportunity is huge in
Pune and Maharashtra. Our USP for the B2C audience is the consistency.
To identify B2B audience we look
for other hydroponic players whose portfolio has limited commodities. Value
proposition for B2B players is the “bulk quantity purchase from one place”. The
problem of getting connected to a large scale food processor is the limit of
production. Retail chains such as McDonald’s have a requirement of 3 Tonnes of
Tomato/day for this >40 acres of land will be used to produce one type of
commodity. Farmers with the land area of 10 acres, will not be entertained by
these giant companies because the sourcing would become critical and
unmanageable for them.
Q13. How do you manage
your waste? Do you have a provision to park both grade A and Grade B products?
We have industry partnerships to
support the supply of both types of food quality produce. We are currently
supplying grade A products to big food retail chains such as Mcdonald's
however, the entire Horeca industry purchases Grade B products. In B2B business
we are connected to local aggregators.
Q14. How has
COVID impacted your company?
COVID helped us accelerate the
growth. Earlier, our model planned to target only the Horeca industry. We had
agreements with JW Mariott, Taj Hotels, Big Bazaar, and more. After the advent
of COVID, all these agreements got cancelled under the “act of god” agreement
clause. Initially, we saw tonnes of vegetables getting wasted. After this, we
realized, we need to reach out to other B2B clients, and other aggregators and
also cater to B2C consumers to sustain this downfall. The change in the
existing business model turned out to be very beneficial for us.
Q15. What do
you think is the future for Nutrifresh in the Market?
Nutrifresh wants to overcome the
price war and benefit from the 100% dependency after a few years. We will
gradually use skimmed pricing policy for our high-quality products. We are
planning to expand our model by firstly building a knowledge platform for the
42 crops we are well versed with and secondly, owning and developing
agricultural lands and growing and selling the produces across.
We are planning to capture at
least 40% market share in the coming 5 years. After this, we might look upon
expanding to other geographies such as Surat and Ahmedabad.
For any
queries or feedback, reach out to the author at Namit@kenresearch.com
To Find More
on India Agritech Market Research Reports, refer to this link:-
Contact Us:-
Ken Research
Ankur Gupta, Head Marketing & Communications
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