Who does not want to set up a farm in their backyard and get fresh vegetables daily for healthy intake of resources? Or better, would it not be great if we could get fresh vegetables directly from the farm, as per our demands and delivered within a day? It is like taking a big step towards a healthier and hassle-free lifestyle, avoiding even stepping out of the house, while still getting the freshness straight from the farm delivered at doorsteps. Crofarm is doing just that.
This agri supply chain start-up buys fresh fruits and vegetables directly from the farmers and supplies them to the online and offline retailers in a cost effective manner.
Crofarm: The Necessity of a Direct Farm-to-Fork Supply Chain in India
The agricultural sector in India, even though being massively unorganised, employs around 50 per cent of the workforce of the country and accounts for 18 per cent of the gross domestic product (GDP). It is still astonishing to see that due to the absence of transparency, more than 90 per cent of the agricultural produce is eaten up by the middlemen who are well entrenched in the system, leaving very little for the farmers. Additionally, 20 metric tons of the harvest is lost due to an inadequate supply chain.
In 2017, India ranked 100 in the Global Hunger Index (GHI) out of 119 countries. This also results in the wastage of about 7 per cent of the total food produced in a year – which is worth about Rs 58,000 crore. When we understand that farmers are indeed the backbone of society and agriculture is the biggest sector of the economy, farmers’ plight due to the layers of intermediaries denying them a fair price for their produce becomes more visible.
Due to these reasons, Varun Khurana and Prashant Jain took the responsibility onto their shoulders and started towards solving the problem by streamlining the supply trade, removing the middlemen and establishing an efficient trade relation between farmers and retailers by incorporating Crofarm in May of 2016.
To ensure a better price for both sides, Crofarm serves as a platform to form a relation between the farmers and the retail market, building direct trade. Also, by reducing wastage and offering better value of their produce to the farmers, Crofarm is friendly and meaningful for both the farmers and the retailers. By optimising the logistics of supply chain management using AI-enabled proprietary tools, Crofarm supplies to big retail chains like Big Bazaar, Reliance Retail and online stores like Big Basket, among others.
In 2020, Crofarm shifted from a farm-retail business to become a B2C platform using Otipy, which is a community-based platform that helps connect the farmers directly to the consumers, bringing the freshness directly to the doorsteps. After this new strategy and integrating WhatsApp to their business structure, the company gained more authenticity and helped the farmers and consumers build a direct connection removing the need of retailers as well.
The Founders: Bringing Crofarm to Life
The problem and the inefficiency of the ‘mandi system’ always bothered founders Varun and Prashant. This made them start their previous business venture in 2014 – Greenbox – which was a smartphone-based grocery delivery platform. Later, the platform was acquired by Grofers which was building a supply chain directly from the mandi to consumers. Varun joined as the Chief Technical Officer of the app while Prashant was the Vice President of Operations.
While working at Grofers, they understood the problems of the supply chain system and wanted to create a direct link between the farm and retail entities. Therefore, after leaving Grofers, Varun and Prashant spent time across the major farming states like Haryana, Uttarakhand and Uttar Pradesh meeting vegetable and grain merchants, understanding their problems and figuring out the inefficiencies of the supply chain that gets their fresh harvest to the public. Through all the research, they were able to build the platform, Crofarm, with the aim of eradicating the problem and hassles of a mandi.
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Crofarm helps farmers get their fair share by removing the middlemen and also by providing the retailers with freshness from the farm.
How Crofarm Brought in Much-Needed Innovation of the Supply Chain
The revenue model of the business is pretty simple – procure the fresh fruits and vegetables directly from the farmers and deliver them to retailers or consumers, with the company getting their commission for the delivery. This direct trade makes the system transparent and easy for both the farmers and the consumers. On every sale it makes, Crofarm is able to get a commission ranging from 15-20 per cent depending on the quality of the produce.
Starting with a $1.5 million seed funding from Pravega VC and a couple of angels including Rajan Anandan (MD, Google India) and Jitendra Gupta (MD, PayU India), the founders have been able to raise around Rs 15 crore in the venture. In 2018, the company raised Rs 5 crore pre-series A round from Factor[e] Ventures and other existing investors, and planned to raise another round soon. Since its integration with WhatsApp, the company has been able to cater over 5,000 daily orders from over one lakh registered customers across NCR.
During the fiscal year 2019, Crofarm, after directly serving the consumers, managed to grow its sales by nearly 2X to around Rs 11.26 crore compared to fiscal year 2018 when they posted a top line of Rs 6.7 crore. In FY20, the new business model showed its true efficiency, when the company was able to raise a little over Rs 24.4 crore which is nearly 2.2X of their sales in FY19.
The company had to expense around Rs 30.72 crore in total in FY20, growing by 86.8 per cent from the total expenditure in FY19 of Rs 16.4 crore. Since the demand for their services increased, the majority of these expenses, around 72 per cent, incurred in collecting farm produce, which grew by 2.15X from Rs 10.31 crores in FY19 to Rs 22.15 crore in FY20.
Expansion and Consumer Satisfaction
Focusing on the growth of the employees is also the biggest target of a company. Crofarm’s employee benefit expenses grew 47.4 per cent from Rs 2.5 crore in FY19 to nearly Rs 3.7 crore in FY20. The company also incurred around Rs 4.44 crore in operating expenses during the same period.
With current supply in cities like Gurgaon, Noida, Mumbai, Bengaluru and Delhi, Crofarm is also planning to raise $10 million this year to expand Odipy, the farm-to-fork chain, more in tier II and tier III cities of the country. The company had already raised $2 million in 2020 from Inflection Point (IP) Ventures and the Smile Group.
Not just driven by economic motives, Crofarm also helps in supporting social causes. In 2020, the platform was able to produce a robust fresh produce category supporting over 2,500 women and stores as resellers. This group earns a commission of more than 9% of all group sales, which is the highest across all social commerce brands in the country.
With the use of AI powered engines for better traceability, transparency and hassle-free designs, Crofarm has been able to make its place known in the agricultural industry of India as the most trusted and reliable brand. The growth of a company is always dependent on factors like employee satisfaction, economic growth and satisfaction of the customers, and Crofarm has been able to provide a surplus of these values in their venture.
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In 2020, the platform was able to produce a robust fresh produce category supporting over 2,500 women and stores as resellers.
How Crofarm Dealt with Maintaining Quality and Its Place with the Competitors
India being one of the largest producers of fruits and vegetables, maintaining the quality of the farm produced freshness is a challenge that all agricultural sector companies face. Around 30 per cent of the wastage of the produce happens because of inadequate logistic support and inefficient supply chains. One of the biggest advantages that Crofarm was able to take was using cold storage for perishable vegetables and protecting them from moisture. While commodities like potato and onion can have a higher shelf life, leafy vegetables like spinach, methi etc., require a certain moisture level to ensure maximum life.
The Food and Agriculture Organisation (FAO) stated that due to the lack of good refrigerated storage space, vegetables and fruits worth around $8.3 billion, which is about 40 per cent of the total produce of the country, get wasted. Additionally, if the commodities have to get transferred through various vendors, middlemen, mandis, the amount of food wasted is increased substantially. In NCR, Crofarm promises to deliver vegetables from farm-to-fork within 12 hours. This makes sure that there is a lesser need for storing commodities and delivering them fresh.
With major competitors like Bijak, BlueCart, Agrowave and AgroCenta, Crofarm is constantly applying new technology and techniques to keep up with the increasingly competitive market. Keeping in mind the separate requirements of each part of the supply chain, five separate engines have been created to help in the efficiency of the supply chain.
Here are some of the technologies that Crofarm employs:
Procurement Engine: It is made for the farmers for better traceability of the produce and its quality. This app also helps farmers in complete transparency of their POs and payments.
Distribution Centre Engine: It uses AI-based demand prediction based on historical data-efficient procurement. It also helps in tracking the shelf life of the vegetables by alerting in case of aging inventory.
Transport Engine: Providing optimal routes to reduce delivery time and real-time tracking of the delivery vehicles.
Reseller App: Uses AI powered CRM enabling better communication and tracking customer orders and deliveries, while also earning incentive on sale.
Consumer App: It is filled with catalogues and offers a simple interface to place orders and track delivery.
With the introduction of AI based technology, Crofarm has been able to take big leaps ahead of its competitors, therefore, building its proper place in the market.
Crofarm: the Present and the Future
After recently extending services in Bhiwadi, Crofarm is constantly taking big steps to cater to more and more cities of India. With the introduction of the new farm bills by the Indian Government, which present farmers with an alternative platform to sell directly to a retailer without going through mandis, Crofarm’s Odipy will work with the farmers to create a level playing field. With the asymmetrical information system of the agricultural sector, where the farmers had no knowledge of the price of their produce, now with the help of these new emerging agritech platforms, they will be able to negotiate well with their customers. Moreover, by the elimination of the gulping middlemen, the farmers can now establish their own stand in the chain.
Varun and Prashant’s aim to provide a solution to the plight of the farmers by incorporating Crofarm and giving them a platform of their own now seems to be taking big steps in every part of the country. By giving the farmers an assured price, bringing efficiency into the supply chain and reducing wastage of the commodities, the company has already proven to be a contributor to the ‘Atma Nirbhar Bharat’.
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