Why the solution to agriculture crisis lies in empowering “middlemen” and not eliminating them

In this article, I will try to explain how the lack of access & discovery for the agriculture community is the most critical bottleneck for Indian agriculture, what's changing, why middlemen will play a pivotal role in solving it and what are some unique insights that could lead to constituting the right solution! The “middlemen” considered here include anyone who’s not actively farming but provides some product/service/information to the farmers. A more accurate definition for these folks would be “enablers” or “SMEs” or “aggregators” since one part of their job involves aggregation or disaggregation. I’ll focus on the post-harvest stage but the underlying principles will tell you that it beautifully extends to the other facets of agriculture as well.

Author’s Introduction - My name is Shashank Shekhar and no, I don’t come from a family of middlemen. I’m an engineer from IIT Bombay (if it matters anymore!) who started his career as a management consultant in 2015 and got exposed to the problems in the Food and Agriculture sector across many geographies in and outside of India. After spending a few years “discussing” about the problems, I wanted to take a shot at solving them myself! Currently, my co-founders and I are trying to build a social marketplace for agriculture community to engage and discover each other. It’s called Gramoday!

1. What’s the problem?

• If you do a simple root cause analysis of most newspaper-level problems in Indian agriculture, you’ll realise that they stem from the fact that Indian farmers (and, even agri SMEs for that matter!) are disconnected and uninformed. Why is that? Because, agriculture in India is highly fragmented (thanks to the land inheritance laws in the country!) and we still haven’t found a scalable and sustainable model of aggregating and disaggregating farmers' interests. This lack of access & discovery of both businesses and information is what leads to a multitude of problems.
• I’d also like to point out that only solving for lack of access & discovery will not solve everything. We’d still need to do better R&D to produce better seeds, better machinery, better farming techniques, etc., but without a strong distribution channel, we won’t be able to go very far
• To run a business as volatile and complex as farming, you need external help and collaboration. You need to be connected to the right trader / commission agent to sell your crop better, right agronomist to cure the plant disease better, right retailer to purchase authentic inputs, etc. Similarly, you need to be informed on weather, market prices, etc. to take right decisions for your farming business
• For centuries, the allied agriculture ecosystem aka middlemen have been providing inputs, machinery, market access, advisory, etc. to the farmers but the progressive fragmentation coupled with vagaries of externalities in agriculture urgently require this allied ecosystem to be given a formal structure and tech tools & platforms to reach a large audience and just be better at their job! FPOs were imagined with this in mind but they would’ve worked much better if we had a solution for the governance problem.

2. What’s changing?

• What got me excited to jump into the topic of agriculture as a fresher general strategy consultant was the sheer size of the problem both in terms of money and number of lives it affected but what has kept me excited over the past 6 years has been the fact that we’re at an inflection point where smartphone and internet has reached rural India and certain business models are now possible which could actually have a much better chance of solving this problem to a large extent
• With around 30% internet and smartphone penetration in rural India, it can be safely assumed that the top-of-pyramid farmers and agri SMEs are now online! All they now need is a digital product that works well for them and until that happens, we’ll have Facebook, WhatsApp and YouTube solve their problems to an extent just like Craigslist used to before startups like AirBnB, okcupid, indeed, etc. came in and provided a 10x better service
• Just before our pivot from our first startup (full stack marketplace for Fruits & Vegetables connecting farmers with mandis and retailers), we were exposed to the “agri” madness on social networks like Facebook, WhatsApp Groups, etc. which gave us unique insights into the needs of the agriculture community and that was the genesis of Gramoday on which I’ll write a different article ??
• The community has already started reconfiguring and reorienting itself using above-mentioned general-purpose social networks such that P2P exchanges happen and the entire agriculture sector can improve. While its true that many of the farmers and SMEs are part of "company-moderated" groups, a larger and more engaged pie is with the "community-moderated" groups
• Here’s a snapshot of some WhatsApp groups that we're a part of. We have hundreds of such groups across Facebook and WhatsApp and we consider them our labs to get or test ideas

3. What could work?

• I’m far from being an expert in the area but I think a sustainable and scalable solution for the lack of access & discovery would include a digital platform with the following features. Just to reiterate, building a small to medium scale agribusiness by not following any of the below mentioned things is definitely possible.

1. Trust & Relationships matter a lot → During the time we spent in farms of UP West, we realised that there was a general sense of mistrust in the agriculture community towards the “educated folks from the city”. One of the reasons for this is that many companies have and continue to fail on the promises they make to the farmers. By the way, this mistrust extends beyond the rural urban divide as well and the primary reason for this mistrust is the inherent “quality risk” in almost every commercial transaction in agri. It takes a certain amount of time & money investment before you realise if you’ve been scammed or not and this requires participants to be extra wary of transacting with new people. We believe that creating deep value in any transaction (even exchange of information!) will require a local or known face that the community can really trust. Therefore, a community driven platform has a much better chance of solving the problem rather than a one-to-many type of mapping.
2. Too many business types in agriculture → A typical farming village has around 8-10 stakeholders other than the farmer, viz., input retailer, machinery dealer, seed breeder, plant grower, agronomist, financier, local government office, trader, mandi commission agent, etc. and these will have to be a part of the equation, depending upon which part of the value chain you're building the platform for. You leave them out and you’ll see yourself become one of them. Learnt this the hard way! This creates a natural problem for Product Managers to decide and define user persona correctly
3. Not all middlemen are good → Currently, the power dynamics between farmers and SMEs (enablers/middlemen/aggregators) favours the SMEs. It’s easy for a trader to hide real market rates and purchase from a farmer at less than market rates, easy for a retailer to push a fake or high margin product which isn’t good for the farmer, etc. Therefore, a platform that allows good middlemen to be incentivised and bad middlemen to be penalised through rating mechanisms or otherwise can solve the problem of ensuring quality for the users.
4. Information is critical → Unlike most other industries, agriculture is exposed to a lot of risks associate with volatile factors such as weather, soil conditions, pests, policy, market prices, etc. High quality information can be a lucrative hook to attract users and can even provide an origin to new transactions. We’re increasingly getting dependent on Google to solve our daily information problems and we expect the farmers to produce high quality output without a service like Google! This problem also creates huge impediments for the farmers who want to try new crops but can’t gather up the courage due to lack of information or hand holding.
5. Data can only solve the VUCA environment - To build a platform for a space as complex as agriculture, a strong data driven nervous system is imperative. Only them you'll be able to target information and people effectively. For example, if you're building a marketplace for Tomato and you get impressed by the chart below, then something is wrong

1. Digital product consumption for rural audience is very different → For a lot of people involved in agriculture, the journey of using apps starts from WhatsApp and then moves to Facebook and YouTube. They’re used to the simplicity of WhatsApp which makes it difficult to distribute varied content without creating confusion. In addition to that, different levels of device OEMs, screen sizes, storage, internet bandwidth, etc. is a challenge. The only way to work around it is to have very strong Engineering, Product and Design teams
2. Farmers are businesses too → Lastly, it's about how we look at farmers. While the debate is on about who our farmers really are and are we counting them correctly or not. This point is more around how to perceive farmers as a potential customer base. In my experience, they behave more like businesses and less like consumers. They take decisions basis the effect that it’ll have on their PnL or BS. I think we can see a lot of improvements in the products/services we design for them if we see each farmer as more of an enterprise rather than a person. Call them a nano enterprise, maybe?

A couple of unrelated points

• For anyone who relishes problem solving, the agriculture sector can provide really complex problems with very high social and economic value and hence, high satisfaction. In addition, this space is at the cusp of high growth rate which is one of the reasons why I'm invested in this space. If you think you're really good at Product, Design, Engineering or Marketing and want to contribute to this space, I'd love to talk to you. I'd also like to quote, Bhavin Turakhia here who says that "it's our moral obligation to make an impact directly proportional to our potential"
• Anyone who's interested to discuss more about this space and its behemothic problems or even better, has opposing ideas, I’m just a DM away.