The irony of blockchain is that it is being touted as the saviour of business in sectors which have the least tech penetration — as a result, much of blockchain’s potential stays just that. With very little effort to understand how tech-shy sectors can leverage high-tech standards such as blockchain, the technology has remained unexplored in any meaningful way.
But Nagpur-based agritech startup is looking to break that cycle with a cross-border blockchain-powered agri-procurement marketplace. Founded in 2016, by Sachin Suri and Girish Sawhney, with Dilip Gupta and Ramakant Jha joining as cofounders in 2017, the startup has pivoted from a risk management and agri-advisory platform to a blockchain-powered marketplace for farmers and buyers called Agriota, besides data-backed advisory and financial services.
Launched in partnership with Dubai Multi Commodities Centre (DMCC) in August this year, the marketplace gives Indian farmers access to the UAE food market, as well as other domestic and international markets.
Under the partnership, CropData connects farmers to 15,000 DMCC companies for a captive trading market. Through Agriota, the startup also offers a range of services such as smart contracts, bid and money management, entity management, accounting, billing, reconciliation, analytics, fraud, risk and regulatory compliance management and more. It connects bulk buyers directly with the farming ecosystem, with an emphasis on neutrality, traceability and trust.
A Multi-Pronged Approach To Agritech
Speaking to Inc42, cofounder Suri said that Agriota fills the gap of an unbiased system for all agri stakeholders, bringing transparency and visibility in price discovery, associated costs and unforeseen risks. Besides also enabling last-mile farmer verification and monitoring for delivery, Agriota offers a proprietary banking system with multi-tier contractual structure for secured money management.
Procurement specifications are customised to local variability, which is estimated based on historical analytics of production from the past few years, thanks to the support from Microsoft Azure and the FarmBeats AI computing platform — the startup was part of the Microsoft agritech startups programme.
The data also allows the company to provide customised advisory services based on local observations of stresses and weather changes, using an advanced crop health decision management system called AgData. Besides Agriota and AgData, its other products and services include Dr. Krishi and Krishico, which are focused towards advisory and providing financial assistance to small and marginal farmers.
Through these, CropData is targetting pre-harvest decision making as well as post-harvest cycle and intervening in advisory and financial aid as well. Combining Agriota with AgData, the startup is looking to significantly reduce the probability of crop failure (partial or complete) in the procurement process and allow vendors to target commodity futures.
“Even if the crop fails, chances are that it’s due to natural causes beyond the farmer’s control. In such cases, verification and monitoring data captured by CropData about the farm and secured by blockchain will provide government and insurance agencies credible proof to avail relief and claims faster,” added cofounder and MD Suri.
As for the revenue generation, the startup charges a small commission for the transactions on the platform, which is paid by the buyer on satisfactory settlement of the contract. In addition to this, CropData also makes revenue from extension services, customised alters and other value added services including trade finance, finance, logistics, packaging and storage. Agriota also brings in value-added services, which includes verification and certification of individual farms, marketing services and other essential services related to packaging, logistics and storage.
Competing With Emerging Agritech Solutions
CropData claims to have a footprint in 30 districts across eight states, with offices in 25 locations. According to the company’s corporate filings, its revenue in FY19 grew by 2.8X to INR 16.9 Cr from about INR 5.9 Cr in FY18. Its expenditures slightly increased from INR 2.08 Cr in FY18 to INR 2.18 Cr in FY19. Its EBITDA also stood positive at 7.10 %.
Bootstrapped at present, it is in talks with international funds and equity advisors to secure capital to accelerate its growth.
“Our model is unique, because these services are provided through a network of laboratories and technicians, which engage and interface with farmers at ground-level. We use structured aggregation to increase farmer’s marketability, escrow banking for hands-off money management and straight through contract settlement in a blockchain environment making it a transparent, traceable and trusted environment for even the smallest farmer,” Suri added.
Competing with CropData in terms of the input models and predictive analytics for crop pricing, Origo Commodities launched a blockchain-powered trading platform called TradeFi with the focus on bringing agri commodities to the capital markets. While Origo looks to bet on physical produce at the warehouses, CropData, on the other hand, seems to be betting big on data from farm level.
All data is collected by CropData through automated capturing tools such as spectral data analysis, dynamic crop calendar, dynamic task scheduler, weather data and image recognition tools. CropData’s Dr. Krishi system also claims to accurately capture the standardized aerial imagery through drones or other imaging equipment. Further, optical character recognition (OCR) algorithms help verify KYC-related documents. Alerts sent to farmers are customised for individual farms based on all this data and dynamically adjusts to other farm applications.
Blockchain And CropData’s Fair Pricing Vision
CropData’s blockchain platform is designed to provide total transparency on specifications, restrictions, compliances, fees, taxes etc, from a neutral position, while providing services on a bundled basis with balanced payment terms giving them the confidence and trust to transact with each other directly.
In addition to this, CropData also said that its state-of-the-art market data analytical engines have the capability to predict forward pricing at any point in time based on region, commodity and variety specific benchmark indices. He said that these are developed using correlation of balance sheet estimations of demand versus supply, to historical prices from commodity specific benchmark markets, which is corrected on a rolling basis, through the price discovery process from the Agriota marketplace.
A proprietary tool called geospatial tile management (GSTM) system generates analytics on 22 regional levels, on a 6mx6m location grid. “This architecture allows us to create regionalised benchmark indices, increasing relevance to local data rather than generic datasets,” explained Suri.
It also allows CropData to visualise information at various levels of geography, enabling calibration of information on the basis of region, crop, stage and stress. Then the startup offers personalised insights to individual farmers, according to their respective crop, location and level of stress vulnerability. The system is powered by location and time-specific dynamic crop calendars that use AI/ML-based analytics to estimate yield and risk based on localised correlations to weather, ground conditions and other factors.
This data is also used to help lenders create alternate credit profiles for farmers, with loans furnished on the basis of productivity-related metrics. The company said it provides constant hand-holding to the farmers at village level in relevant focus areas, once a month. With its Dr. Krishi platform, it said that it employs hundreds of field technicians who visit individual farms and collect health data in a structured way.
“This allows our backend algorithms to provide customised advisories and recommendations using our proprietary dynamic crop calendar engine. This is followed with customised alerts generated based on regional ground-truth observations, indices and also during farmers visits to mobile laboratories,” explained Suri.
But, providing such personalised experience to farmers is easier said than done, given most of the farmers in India still succumb to age old agriculture values and practices. Besides farmer education, the biggest challenge remains the capability of agri stakeholders to invest in technology. With so many competing solutions, there’s definitely a lot of noise to cut through and convince farmers about the potential of the solution.
However, when asked about the cost of its solution that it offers to farmers, the MD did not reveal specific details. This is one of the hurdles for farmers in India — tech adoption does not come for free or cheap and they are already stretched in regards to disposable income. But Suri is confident of solving this by creating alternate data for lending.
He added that the company also said that it is working with some of the largest banks in the country, where it is looking to build a seamless interface which is said to enable farmers to share their credit risk data and also help them provide corresponding services to the farmers, for agri-finance, which is rapidly growing into prominence in light of the cost of agritech.