Speaker 1: I believe the purpose late business has to be more
Speaker 1: aspirational and bold in thinking than being driven by Excel
Speaker 1: shots and numbers. If purpose led businesses apply logic, then
Speaker 1: we don't go anywhere. The purpose led business have to
Speaker 1: be driven by passion. Welcome to Calling Bullshit, the podcast
Speaker 1: about purpose washing, the gap between what companies say they
Speaker 1: stand for and what they actually do, and what they
Speaker 1: would need to change to practice what they preach. I'm
Speaker 1: your host Time Autigue, and I've spent over a decade
Speaker 1: helping companies defind what they stand for their purpose and
Speaker 1: then help them to use that purpose to drive transformation
Speaker 1: throughout their business. In this special episode, we're sharing a
Speaker 1: positive case study where we talk with the CEO of
Speaker 1: a purpose led company who we think is getting it right. Today,
Speaker 1: I'm speaking with a Neil Kumar, CEO of Samunati. He
Speaker 1: shares how humble beginnings eventually led him to refinance his
Speaker 1: home in order to start what would become India's largest
Speaker 1: agricultural enterprise. Farming is a notoriously difficult profession, high risk
Speaker 1: and often low reward. Harvests are subject to unpredictable factors
Speaker 1: like climate and weather and access to capital tends to
Speaker 1: be limited, and for families who grow and sell crops
Speaker 1: on a small scale, known as smallholder farmers, things get
Speaker 1: even more daunting. Their size prevents them from buying equipment
Speaker 1: in bulk, and when you're paying retail prices for seeds
Speaker 1: and fertilizer, machinery and pesticides, things add up fast. Most
Speaker 1: don't even grow enough to make their money back. In India,
Speaker 1: a lot of people are familiar with this struggle. Agriculture
Speaker 1: supports roughly two thirds of the one point six billion
Speaker 1: person population, and the majority of the growers are tenant farmers,
Speaker 1: meaning they don't even own the land they work on.
Speaker 1: You think it's hard to get a mortgage in the
Speaker 1: United States, try getting a loan for a new tractor
Speaker 1: as a tenant farmer in India, banks won't even consider
Speaker 1: you unless you own land, so many farmers buy supplies
Speaker 1: on credit, further raising their overall operating costs and squeezing
Speaker 1: their margins even more. To complicate matters further, often farmers
Speaker 1: are unbanked, which means even if they do receive a loan,
Speaker 1: they get the whole lump sum in cash, and when
Speaker 1: life happens, the money is used for other household needs.
Speaker 1: A lot of them wind up owing money that they
Speaker 1: can't pay back. This economic struggle for farmers can become overwhelming.
Speaker 1: In India saw an average of twenty eight farmer suicides
Speaker 1: a day. But one company is working to change this
Speaker 1: system from the inside, India's largest agritec enterprise, Samonati. Their
Speaker 1: purpose is to create better markets for smallholder farmers across
Speaker 1: every state in India. They began pursuing this purpose in
Speaker 1: six by issuing loans designed specifically for small farmers, but
Speaker 1: they soon realized they needed to be more involved to
Speaker 1: make a lasting impact. Today, the company acts as an
Speaker 1: intermediary between everyone in the agricultural ecosystem, banks, seed suppliers,
Speaker 1: old sailers, and small farmers. Getting this all done is complicated,
Speaker 1: so Samonati takes a three pronged approach. First, they focus
Speaker 1: on aggregation. They facilitate the formation of farmer producer organizations
Speaker 1: f pos or co ops, where individual farmers with similar
Speaker 1: needs can use collective bargaining power to access better prices
Speaker 1: and better markets. Currently, Salmonatti has four thousand fp os
Speaker 1: in their network, each made up of roughly three to
Speaker 1: five hundred individual farmers. Second, they facilitate market linkages, connecting
Speaker 1: farmers directly with the markets that will give them the
Speaker 1: highest prices or market share. They also lend farmers the
Speaker 1: money they need to get things done, offering multiple types
Speaker 1: of loans, all structured with farming households in mind. And third,
Speaker 1: they offer advisory services, helping their customers transition to more
Speaker 1: sustainable methods, create business plans and implement standard operating procedures.
Speaker 1: They call their strategy OMLA A m l A, and
Speaker 1: it's highly effective. Today, Samonati is valued at north of
Speaker 1: a billion dollars and has touched the lives of seven
Speaker 1: million farmers and counting. Their current goal is to impact
Speaker 1: one in every four farmers across the entire country by
Speaker 1: seven The mastermind behind this organization is my guest today,
Speaker 1: Samonati CEO Anil Kumar. He tells us how they weave
Speaker 1: the needs of farmers directly into the fabric of everything
Speaker 1: they do and emphasizes the importance of leading with heart.
Speaker 1: A link to the transcript of the conversation you're about
Speaker 1: to hear is in our show notes or can also
Speaker 1: be found at Calling Bullshit podcast dot com. More with
Speaker 1: a Neil Kumar. Right after the break, Folks, I am
Speaker 1: very excited to introduce the founder and CEO of Samunari,
Speaker 1: Anil Kumar. An thank you for being here and welcome
Speaker 1: to calling Bullshit. Thank you, Tie. It's my privilege as
Speaker 1: well to be part of this program. So let's start
Speaker 1: right at the beginning. Can you talk a little bit
Speaker 1: about where you're from and what your life was like
Speaker 1: growing up in India. Well, I'm a you know, I'm
Speaker 1: a small town boy, so to say. I'm born in
Speaker 1: a place called Kolar, which is known for its gold fields,
Speaker 1: and brought up in places that are close by called
Speaker 1: Anantapur and Bari. Both belong to two different states. So
Speaker 1: bad is part of Karnataka and natur is part of
Speaker 1: and So what that meant for me is I grew
Speaker 1: up in a confluence of two different languages. Both became
Speaker 1: integral to my growing up. So schooling happened there and
Speaker 1: then I joined mechanical engineering as an eighteen year old boy.
Speaker 1: And during my plus two holidays, I had taken the
Speaker 1: Banking Services Recruitment Board exam and I was selected to
Speaker 1: a government bank called Canada Bank. So I I joined
Speaker 1: Kendra Bank as typist come clerk in a rural branch
Speaker 1: of Kenadra Bank, and that's how my baptism into banking
Speaker 1: happened in the rural and agree space. Little did I
Speaker 1: realize what all would manifest over the next thirty years
Speaker 1: of my life in banking. But that's how my journey
Speaker 1: started as a professional. And just just to draw a
Speaker 1: line under something, because I found this very inspiring. You
Speaker 1: come from very beginnings and you've come very for being
Speaker 1: the CEO of, you know, an extremely successful organization today.
Speaker 1: So I wonder if you could just talk a little
Speaker 1: bit about what your experience was like growing up in
Speaker 1: a lower middle class Indian family. Well, we are a
Speaker 1: family of six. I have three elder siblings, all sisters,
Speaker 1: and as a professional, my father used to learn quite handsomely.
Speaker 1: But when I was eight, he lost his job and
Speaker 1: the family crashed landed, so to say, on the economic ladder.
Speaker 1: And that's when my mother took over the charge of
Speaker 1: the house and then she started building the entire family
Speaker 1: from the scratch. So I got to learn a lot
Speaker 1: in this transition of building rebuilding, so to say. Because
Speaker 1: people around us we're all doing well. They were all
Speaker 1: neighbors when we were doing well, but you know, when
Speaker 1: we were not doing well, my mother stitched the entire
Speaker 1: ecosystem to support our family through engagement with the community,
Speaker 1: her engagement with the neighbors. So I realized what is
Speaker 1: social capital. Each of our sisters started working when they
Speaker 1: turned eighteen. But the entire family was spinning their hopes
Speaker 1: on me because I was the only male child in
Speaker 1: the family and they wanted me to know to redeem
Speaker 1: the entire family. It was tough. There were days that
Speaker 1: I still remember where we did not have even a
Speaker 1: penny at home and I made it a point to
Speaker 1: record that day in my head. And so then it
Speaker 1: sounds like you made your way into the banking business
Speaker 1: with a focus on agricultural banking or banking for the
Speaker 1: agricultural industry. Is that correct? Actually? No, I I was
Speaker 1: posted in a rural branch, which meant it is agriculture
Speaker 1: and rural. But I was a typist come cluck, you know,
Speaker 1: and and banks in India usually post youngsters in rural areas.
Speaker 1: So it is my good fortune that my baptism to
Speaker 1: bank thing happened in an area that would become so
Speaker 1: relevant to my journey. I have an instinct that because
Speaker 1: of your background and because of your experience working in
Speaker 1: banking in a rural environment, you have an empathy for
Speaker 1: small family farmers in a way you know the word,
Speaker 1: You understand them and their lives better than a typical
Speaker 1: banking person would. Would you agree with that absolutely? In fact,
Speaker 1: one of the reasons why this entire space looks so
Speaker 1: home natural for me is because I have been there.
Speaker 1: I have lived that life of challenges from access to
Speaker 1: markets and challenges that the external environment presents you on
Speaker 1: which you have you have no control on. I have
Speaker 1: lived that for about thirteen years of my you know,
Speaker 1: my life, from the age of seven to about eighteen
Speaker 1: eleven years. Okay, So for listen orso who might be
Speaker 1: unfamiliar with the agriculture industry in India, can you just
Speaker 1: paint a picture of what that industry looks like. What
Speaker 1: are the major challenges that Indian farmers face today? Well,
Speaker 1: on the statistics diamension Tai, agriculture constitutes about twenty percent
Speaker 1: of the country's GDP right while about sixty of the
Speaker 1: population is either directly or indirectly dependent on agriculture, which
Speaker 1: means there is a vast majority of population dependent on
Speaker 1: agriculture in that a significant portion is small holder farmers
Speaker 1: and farmers who are owning less than two hectares of land. Uh.
Speaker 1: And there is another large majority of people who take
Speaker 1: land on lease and our tenant farmers. So if you
Speaker 1: combine the tenant farmers and you know smallholder farmers, that
Speaker 1: construts about the total total farmers into farming. AH. Majority
Speaker 1: of formal financial institutions are still not in the reach
Speaker 1: for these smallholder farmers on account of not being able
Speaker 1: to fulfill the criteria that the smallholder farmers are supposed
Speaker 1: to for accessing the farmal financial institutions are The definition
Speaker 1: of a farmer is the one who owns land, not
Speaker 1: necessarily the one who does farming, and this requirement of
Speaker 1: an ownership has fostered the fragmentation further. UH. Say, if
Speaker 1: my father had nine hectares of land and we are
Speaker 1: three brothers, for for me to avail of a loan
Speaker 1: from a farmal financial institution, the land has to be
Speaker 1: in my name, which means my father has to split
Speaker 1: this into three and give me the three hectares. And
Speaker 1: if I happened, if I happen to have another three boys,
Speaker 1: I will have to split that into three. So within
Speaker 1: two generals shells, the nine hectors will become one hector.
Speaker 1: Right second, from a sector perspective, agriculture is a huge sector.
Speaker 1: You know, it's it's massive in terms of scale and scope.
Speaker 1: So let us look at what are the major categories
Speaker 1: in agriculture. And now you have inputs as a category
Speaker 1: where everything that goes into cultivation as a process. This
Speaker 1: includes the seats, includes crop protection chemicals, and it includes
Speaker 1: the farm equipment. Now you have the output where the
Speaker 1: post harvest services happen, whether it is sale our store
Speaker 1: and sell, our store, process and sell what what have you.
Speaker 1: Then you have financial services for this. Then you have
Speaker 1: the advisory services. Then you have the research institutions. Now
Speaker 1: if you look at each of them, each of these
Speaker 1: categories are massive. Again, you know, the inputs have seeds
Speaker 1: double click on CITs. Then you have you know, the
Speaker 1: genetically modified hybrid seats, then open pollinated seats and you
Speaker 1: then double click on them. You have individual companies around that.
Speaker 1: Right now. On the crop protection chemicals, you have fertilizers
Speaker 1: which facilitate the growth, and you have you know, pesticides
Speaker 1: and herbicides which kill They both are again two different categories.
Speaker 1: You don't have the same company which works on both
Speaker 1: sides and double click on that. Then you have individual
Speaker 1: manufacturers for each of these products fum equipment, you have
Speaker 1: minor farm equipment and major you know, major ones like
Speaker 1: tractor and the treasure and these kinds of things. There
Speaker 1: are two different entities. You know, you have to click
Speaker 1: on that again. All of these tie would want to
Speaker 1: reach out to these smallholder farmer on their own, and
Speaker 1: the smallholder farmer has less than two hectors of land.
Speaker 1: How they engaged. Now you know that was what inspired
Speaker 1: us to get into this collectivization which I will talk later.
Speaker 1: But the context is smallholder farmer not being able to
Speaker 1: engage with the ecosystem on on the on the dimension
Speaker 1: of strength, but on the dimension of being at the
Speaker 1: receiving end. Right, So very fragmented, very agmented. The market
Speaker 1: is fragmented, landholding is fragmented. Each of these. Again, when
Speaker 1: a farmer goes to buy their inputs, they have to
Speaker 1: go to the retail most part of the value chain
Speaker 1: because that's what he can afford or she can afford.
Speaker 1: So the manufacturer, dealer, distributor retailer is where the farmer
Speaker 1: would go and when they buy their small quantities, that
Speaker 1: price is loaded of all the layers of the product
Speaker 1: moving into the farmer, provided the farmer has cash. If
Speaker 1: it is on credit, then the cost of credit also
Speaker 1: gets loaded on it. M hm. Now then what happens
Speaker 1: soon after harvest? Most of these farmers, on account of
Speaker 1: being smallholder farmers don't have the capability are infrastructure to
Speaker 1: to take the produce two larger markets to sell, because
Speaker 1: you need to have a threshold volume of commodity right
Speaker 1: because the cost of transportation would kill if you have
Speaker 1: a small quantum and you have to hire a large truck.
Speaker 1: So the local large farmers are local aggregators, would basically
Speaker 1: buy out the produce from the farmers they aggregate and
Speaker 1: then they take it to the next market to sell,
Speaker 1: which means there is hardly any scope for primary processing
Speaker 1: our storage because they need liquidity immediately. So if you
Speaker 1: just combine these two dimensions, I think farmer is the
Speaker 1: only person who buys retail sales sales whole sale. Yeah,
Speaker 1: I think that's a great insight, which is like the
Speaker 1: entire margin is squeezed. Yeah, yeah, very tough. You hardly
Speaker 1: get anything for your for your output. So so let's
Speaker 1: let's pivot then to to Samonati and again just for
Speaker 1: listeners benefit, what does the name Samonati mean? Samon Nati
Speaker 1: is a Sanskrit word. It's a combination of two words,
Speaker 1: you know, samma and nati. Sama is collective, all encompassing everyone.
Speaker 1: Unnati is growth, prosperity and elevation. So the word someone
Speaker 1: that he meets collective growth, collective prosperity, and collective elevation.
Speaker 1: It's a great name. So I'd love to hear the
Speaker 1: story of what made you decide to start it and
Speaker 1: a little bit about what seminari does. So first I'll
Speaker 1: tell you what someone that doesn't then come to you
Speaker 1: on how how happened? Because it happened accepually, I would
Speaker 1: say someone that is a value chain enabler. It's an
Speaker 1: open agree network in the agree value chain space, engaging
Speaker 1: with the entire spectrum of agriculture players, starting from the
Speaker 1: input manufacturers to the farmer collectives, to the farmers, to
Speaker 1: the output aggregators all the way to the large processes.
Speaker 1: You know, we are present in the entire value chain
Speaker 1: with the principal expectation and division that how do we
Speaker 1: make markets work for smallholder farmers Because in the narrative
Speaker 1: that I gave you of how the markets are fragmented,
Speaker 1: most of these markets are working off the farmer. Can
Speaker 1: we change the narrative and bring in a dimension of
Speaker 1: making markets work for smallholder farmers? Right? The levers that
Speaker 1: we believe would facilitate this journey are one, increasing the
Speaker 1: throughput in the agree value chains. And also how do
Speaker 1: we bring in the dimension of making the smallholder farmer
Speaker 1: access the larger agree ecosystem and making the agree ecosystem
Speaker 1: access the last mile through a digital connector that someone
Speaker 1: that this building in. So there are three filters that
Speaker 1: we look at in terms of how do we engage
Speaker 1: with the players in the agriculture ecosystem. One is the
Speaker 1: vision of making markets work on smallholder farmers by making
Speaker 1: the agreevolity chains operate at higher equiligreeument increasing the throughput
Speaker 1: with all the players, which also means we work with
Speaker 1: everyone right and then thereby harmonized the engagement between the
Speaker 1: farmer and the agree ecosystem. Right, these are the three
Speaker 1: things that we are working towards, and at this point
Speaker 1: in time, we are present in about twenty three states
Speaker 1: in the country on the FPO gateway that we have
Speaker 1: of which is the entry point for all the farmer
Speaker 1: collectives which you are referred to as FPOs. We have
Speaker 1: about four thousand such apos and an FPO could you
Speaker 1: could you unpack that for us? What is an fpopo
Speaker 1: is a farmer producer organization. It's like a cooperative, it's
Speaker 1: like a collective right. It is member owned, member operated,
Speaker 1: and about you know, three to five farmers come together
Speaker 1: to be part of an FPO, to be of a
Speaker 1: farmer collective. Now, that is where they unlock their collective
Speaker 1: bargaining power right, and that unlocking of collective bargaining power
Speaker 1: is how we engage with them in a framework that
Speaker 1: we referred to as ARMA approach Aggregation, market linkage and
Speaker 1: Advisory services and ARMLA is also Tai is also Indian gooseberry.
Speaker 1: It is the only fruit which has all the six days,
Speaker 1: including tart. That's very interesting, so we look at it
Speaker 1: is when a set of people doing the same economic
Speaker 1: activity come together, their requirements are homogeneous. Their requirements are similar.
Speaker 1: If a hundred sugarcane farmers come together, their requirements are similar.
Speaker 1: When three D patty growing farmers come together, their requirements
Speaker 1: are similar in terms of what they need to buy
Speaker 1: and what side services they need to access. Now, this
Speaker 1: aggregation is meaningful only when there are market linkages. Right
Speaker 1: at the moment you bring in market linkages, two things
Speaker 1: would come into picture. One, your local retailer may not
Speaker 1: have the kind of quantity that you require at an
Speaker 1: aggregated level, and hence as a FPU, as a collective,
Speaker 1: you may want to go one or two steps above, right,
Speaker 1: which also means that the cost of your procurement would
Speaker 1: come down, because now you are you are jumping to
Speaker 1: three levels above. But it also means is you need
Speaker 1: to have access to liquidity because in the retail most part,
Speaker 1: when you went as an individual farmer, you had that
Speaker 1: social capital to take inputs on credit. But now in
Speaker 1: in in the aggregated one, you are not an entity
Speaker 1: that is known. You are not an individual, it is
Speaker 1: a collective on hence you will not be able to
Speaker 1: get this inputs on credit. You have to put cash
Speaker 1: on the table. Right. This is another example I think
Speaker 1: of of just real empathy, right that a farm family
Speaker 1: is a family, not just a farmer. And so the
Speaker 1: way that the loans were structured in the past. I
Speaker 1: think you you refer to something called a bullet loan
Speaker 1: that a traditional bank would make to a farmer, and
Speaker 1: there was downside to that form of of loan. I
Speaker 1: wonder if you could just explain that like sort of
Speaker 1: the way that you changed the way money is being
Speaker 1: made available to smallholder farmers. So there are two ways
Speaker 1: of engaging with the smallholder farmer. One is actor, which
Speaker 1: is the household in the farmer and the actor the
Speaker 1: farming right in in agriculture, the actor and activity are intertwined.
Speaker 1: You know, there are two sides of the same coin. Yes,
Speaker 1: and you cannot dealnk yourself from the actor and engage
Speaker 1: only in the activity because it's a household enterprise. The
Speaker 1: entire household is engaged in the activity. So the way
Speaker 1: most of the traditional lending models focus on is hey,
Speaker 1: I would look at your activity in isolation and structure
Speaker 1: alone are a financial product to not to deliver for
Speaker 1: the activity, and the actor will have to manage, you know,
Speaker 1: the actor's cash flows that household to suit the activities requirements.
Speaker 1: Now and two these are smaller loans and there is
Speaker 1: also the providers opics that comes into picture in terms
Speaker 1: of how do I engage on this product. If you
Speaker 1: take farming as an activity, the way cash flows accrew
Speaker 1: are you invest invest invest are best right? In other words,
Speaker 1: you put smaller moneys over a period and you get
Speaker 1: the entire written when you harvest. So the best way
Speaker 1: to engage in a financial structure for that is, you know,
Speaker 1: you disperse, disperse, disburse, and ask for repayment. Right, that
Speaker 1: would mean multiple disbursements for a smaller loan, which means
Speaker 1: more opects on the provider side. So what providers usually
Speaker 1: do are used to do now technologies helping them to
Speaker 1: structure it differently is to give you know, the entire
Speaker 1: money in one go and expect these smallholder farmers to
Speaker 1: keep aside the money and keep using it at regular
Speaker 1: intervals for the activities, so that the providers opex does
Speaker 1: not get inflated on account of multiple transactions for a
Speaker 1: small loan. But what happens in reality is given the
Speaker 1: multiple demands on the corpus, it gets consumed for something
Speaker 1: else you know, some other family need, right okay, And
Speaker 1: and it usually results in either they're compromising on one
Speaker 1: or two steps in the cultivation, are going for higher
Speaker 1: cost liquidity options. Yes, take care of those one or
Speaker 1: two dimensions in cultivation, both of which have a negative
Speaker 1: impact on the income because if you compromise on one
Speaker 1: or two steps in the cultivation you were, ield gets reduced. Sure,
Speaker 1: you know, you you take higher cost borrowing, then you
Speaker 1: have to repay that and your income gets reduced to
Speaker 1: that extent. Right, So the best way to engage is
Speaker 1: engage with the actor as a household and then provide
Speaker 1: multiple requirements. And the household also requests insurance. The household
Speaker 1: also requires, you know, liquidity support during cultivation. The household
Speaker 1: also requires uh, you know, other other financial products otherwise
Speaker 1: reservices on and so forth. So you saw this problem
Speaker 1: and other problems like it, and obviously you saw some
Speaker 1: kind of an opportunity. But I just love to hear
Speaker 1: made you decide to make the leap, because becoming an
Speaker 1: entrepreneur is non trivial decision in one's career. I realized
Speaker 1: the enormity of it now, but when the addition was made,
Speaker 1: it felt natural. I have never done farming, but the
Speaker 1: way I took to agriculture was like fish taken to order.
Speaker 1: So on a light or not, I keep telling, maybe
Speaker 1: I would have been a cow buffalo in my previous life.
Speaker 1: That's why it's so natural. Or maybe I would have
Speaker 1: been a farmer if I can be gentle to myself.
Speaker 1: Very funny. So you know from Canada Bank, I moved
Speaker 1: to a bank and continue my studies and then within
Speaker 1: a bank. In two thousands four, I took a sabbatical
Speaker 1: went to Money lad to do my master's. Is when
Speaker 1: I got inspired by the financial inclusion and Dr Mohammed
Speaker 1: Uns's life and then I thought, hey, I have got
Speaker 1: so much of exposure. God has been kind to give
Speaker 1: this exposure of the rural and agree to me, why
Speaker 1: why don't I do something in agriculture. Is what made
Speaker 1: me to get into the Rural micro banking and re
Speaker 1: business group of iss A Bank. Two years and I
Speaker 1: is a bank and then the bank deput a new
Speaker 1: initiative called I f M a trust and I was
Speaker 1: given the responsibility of setting up a local financial institution
Speaker 1: model which designed and deployed an in depth engagement with
Speaker 1: a household. So this actor dimension the household dimension and
Speaker 1: as part of that engagement with the household through a
Speaker 1: branch let approach, we used to do the asset liability
Speaker 1: income expenditure of the household in a scientific manner, in
Speaker 1: a structure that is called wealth management approach for low
Speaker 1: income households because usually wealth management is associated with people
Speaker 1: who have who are wealthy, right, but one decision going
Speaker 1: wrong in the life of a low income household would
Speaker 1: would would be a disaster, right, so it is much
Speaker 1: more critical for them to manage their wealth. And hence
Speaker 1: we as providers should have a framework of managing their
Speaker 1: wealth because a two D expenditure could be a rounding
Speaker 1: of error for a wealthy individual, but this could be
Speaker 1: a life changing when they could push them into party
Speaker 1: back to poverty. So that that is a kind of
Speaker 1: understanding of the household that we did for about seven
Speaker 1: and a half years. Whereas a group CEO, we had
Speaker 1: set up about two branches, We had about eleven hundred
Speaker 1: people in this initiative. We had one point a million
Speaker 1: insurance policies. All of that the facult of this initiative,
Speaker 1: I started realizing that while an in depth understanding of
Speaker 1: the household is important, the household is not operating in vacuum.
Speaker 1: The household is operating in an ecosystem, and that ecosystem
Speaker 1: is dependent on one or two major agree value change.
Speaker 1: So if you have to engage with the household in
Speaker 1: a constructive manner, you have to go one or two
Speaker 1: levels above because a volatality of that value chain would
Speaker 1: have an impact on the household household incomes because their
Speaker 1: intertwined that there is a positive correlation between both of them.
Speaker 1: Right is when the idea of someone that they as
Speaker 1: a value and enabled to germinated. That's the idea came in.
Speaker 1: And then I said, why not I take a leap
Speaker 1: of faith because I have had the benefit of setting
Speaker 1: up an entity from scratch, understanding the space, and my
Speaker 1: wife permitted me to take the entrepreneurial plunge. So I
Speaker 1: took a loan on my house and my entire provident
Speaker 1: money from my previous employer and someone that they started
Speaker 1: as as a as a journey as an entitive. As
Speaker 1: you rightly said, now I feel how did it make
Speaker 1: such a big leap of faith? But at that point
Speaker 1: in time time it felt natural. If natural, that's great.
Speaker 1: So when you talk about samonati and its purpose, how
Speaker 1: do you talk about it? How do you artaiculate the
Speaker 1: purpose of samonati? So there are two dimensions of how
Speaker 1: you know, we engage while the core purpose remains markets
Speaker 1: working for smallholder farmers. That is the you know, the
Speaker 1: reason for our existence. So we thought, while our goal
Speaker 1: is to impact smallholder farmers, the way to achieve it
Speaker 1: is through the value and so we engage with agree enterprises.
Speaker 1: We engage with the processors, We engage with the small
Speaker 1: time dealers, distributors, we engage all the way with multinational
Speaker 1: procurement agencies. Everyone. We are working with the entire value chain,
Speaker 1: and hence you also see in our in our numbers
Speaker 1: and balance sheet, there is a significant portion that is
Speaker 1: with the agree enterprises, not to the smallholder farmers, not
Speaker 1: with their collectives. But that that is the you know,
Speaker 1: that is the highway that we are building so that
Speaker 1: we bring the demand side of the value chain towards
Speaker 1: the supply side. Right, and how old is the company?
Speaker 1: When did you found it? It was founded in two
Speaker 1: November is when we started our journey. We got our
Speaker 1: first investor in two thousand fifteen. So once we started lending,
Speaker 1: that happened in May two sixteen, So I would say
Speaker 1: scaled operations happened from May two sixteen onwards, and within
Speaker 1: one and a half years of that we realized that
Speaker 1: in agriculture the best way to engage with the players
Speaker 1: is by being an internal player, by being a partner,
Speaker 1: not just being a lender on the fringes. An internal
Speaker 1: in the valuation is embedded in the activity, you know,
Speaker 1: is part of the highs and lows of what happens
Speaker 1: in the value. An external player in the valuation is
Speaker 1: someone who is sitting on the fringes, on the edges
Speaker 1: and takes collateral and property as as security to protect,
Speaker 1: but is not part of the activity per se. Yes.
Speaker 1: So we also looked at the entire informal markets in agriculture.
Speaker 1: Most of them are internal players. The ones who are
Speaker 1: lending in agriculture were actually ones who are part of
Speaker 1: the agree ecosystem. So that's when we got into market
Speaker 1: linkages and set up someone at Thiago as a subsidiary.
Speaker 1: Within one and a half years and customers were talking
Speaker 1: about market linkage as being equally important, if not less,
Speaker 1: you know, in addition to the financial services. Finance is important,
Speaker 1: but not sufficient. Finance is a lubricant, it can facilitate
Speaker 1: things happen. It cannot be the end. It is a
Speaker 1: means right. Market linkages are much more critical. Very interesting. Yeah,
Speaker 1: and can you describe the dimensions of the business today?
Speaker 1: How big have you grown so far? So between both
Speaker 1: these engines, we have done about one point seven billion
Speaker 1: dollars of put you know, finances, about sixty of it
Speaker 1: is the commerce side, and the aspiration is how do
Speaker 1: we take it to about fifteen billion dollars in the
Speaker 1: next five years. Wow, that's incredible. What we're also looking
Speaker 1: at is in these four thousand far more collectives that
Speaker 1: we work with on the FBO gate where they're collective
Speaker 1: membership is in the range of about seven mill and
Speaker 1: smallholder Farmers has about hundred million smallholder families, So how
Speaker 1: can we touch one every four farming families in the
Speaker 1: next five years is the goal that we are pursuing,
Speaker 1: so that we are about this cohort, this universe and
Speaker 1: touching does not mean we lend to them or buy
Speaker 1: from them because at a collective level time we also
Speaker 1: engage in their institution building. We do their digitization, we
Speaker 1: build their teams, we train them on the business activity.
Speaker 1: We we also conduct training programs for the CEOs, We
Speaker 1: bring in the spies for the risk and audit framework.
Speaker 1: All all these are not charged we do it from
Speaker 1: two dimensions. Because one dimension is as a lender, I
Speaker 1: am as strong as my borrower. Right, if the borrower
Speaker 1: is strong, is when I get my money back. Second,
Speaker 1: I can only grow if my partner is strong. So
Speaker 1: by building capability in them as an institution, they're able
Speaker 1: to grow, gets accentuate it, and hence I will grow
Speaker 1: with them. Yes, which is what collective growth is, which
Speaker 1: is what someone that is. Yeah. When I hear you
Speaker 1: say those words, they sound extremely obvious, but it's also
Speaker 1: if you look around the business world, how rarely those
Speaker 1: words are practiced in business. It makes me reflect that
Speaker 1: if we could foster more of that kind of thinking
Speaker 1: in business, particularly in the States, the better off people
Speaker 1: would be. Because you know, in and I know you
Speaker 1: know this, in traditional capitalism, it's very I guess the
Speaker 1: phrase here would be dog eat dog, or there are
Speaker 1: winners and losers, And this idea of building an ecosystem
Speaker 1: where there is collective success is very rarely practiced, I
Speaker 1: would say in traditional capitalism. It's it's perhaps also a
Speaker 1: dimension of the sector where we are operating. You know,
Speaker 1: agriculture is humongously large, uh humorously large that we don't
Speaker 1: need to compete and Diffe can just borrow the phrase
Speaker 1: it's it's like a blue ocean. You know, you are
Speaker 1: insignificant as a player in relation to the potential of
Speaker 1: the sector. So I keep saying, even after five years
Speaker 1: someone at from a quantum perspective, fifteen billion is still
Speaker 1: a rounding of error. That's why we also engage with
Speaker 1: large number of AGREE startups and ecosystem players, because there
Speaker 1: is so much to do. Collectively, we work with about
Speaker 1: three to four hundred startups in the AGREE space in
Speaker 1: terms of being their lender, you know, in terms of
Speaker 1: giving our distribution network to them for their proof of
Speaker 1: concept and then structuring their product for our customers, whether
Speaker 1: it is quality of saying, or whether it is storage,
Speaker 1: or whether it is drone monitoring or satellite imagery, what
Speaker 1: have you. Yes, collaborate and collaborate. And so in the States,
Speaker 1: my observation would be there used to be many, many
Speaker 1: small family farms here also, and we took a very
Speaker 1: different path. It appears that we decided to actually aggregate
Speaker 1: at the ownership level. And so there are these giant
Speaker 1: agriculture businesses, these giant industrial farming operations in the States,
Speaker 1: and I guess. I have a couple of questions underneath
Speaker 1: that observation. One is why has that not happened in India?
Speaker 1: In other words, it feels to me like you got
Speaker 1: to the market just in time to make sure that
Speaker 1: that actually and your focus on helping small family farmers
Speaker 1: go it alone and continue to be independent has been
Speaker 1: a real aspect of your success. But has there been
Speaker 1: a movement to aggregate farmers to buy out, buy up
Speaker 1: all the farmers in India? The dimension of collectivization has
Speaker 1: been around for centuries in India. Yeah. Uh, the forms
Speaker 1: have changed, but the principle of collectivization has remained. I
Speaker 1: agree with you on the timing part, because a lot
Speaker 1: of things are coming together. One is the dimension of technology.
Speaker 1: India is a large country with a huge population and
Speaker 1: the majority of them remote and infrastructure was a challenge.
Speaker 1: Now you see last last you know, ten years, the
Speaker 1: amount of development that has happened on the physical infrastructure
Speaker 1: like roads and rails and transportation, on the communication infrastructure
Speaker 1: in terms of the optic fiber and the wireless, and
Speaker 1: most importantly the entire smartphone dimension, where the tools that
Speaker 1: are required to bring markets and people closer are available.
Speaker 1: Now number one, right now number two. We stumbled into
Speaker 1: this space in two thou fifteen accidentally, uh, you know,
Speaker 1: into this FPO space collectivization. You know, in two thousand
Speaker 1: nine in the government made an announcement of setting up
Speaker 1: additional ten thousand new collectives as an initiative, and that
Speaker 1: gave a shot in the arm for the entire ecosystem.
Speaker 1: Everybody started looking at how do we participate in this dimension.
Speaker 1: So the entire policy framework and the policy environment has
Speaker 1: has got a huge filip in the last ten years. Uh.
Speaker 1: And and one of the things that we are also
Speaker 1: witnessing here is the entrepreneurial energy. Many youngsters are now
Speaker 1: taking up to agree startups and acted companies, and the
Speaker 1: entire startup world is abus with youngsters trying out and
Speaker 1: every other day a unicorn germinating from this lot. Then
Speaker 1: there is a lot that is happening, which was not
Speaker 1: the case, you know about thirty years ago when when
Speaker 1: I was a youngster at that point in time, it
Speaker 1: was like you study to get a job, and you
Speaker 1: settled down in a job and you don't take risk.
Speaker 1: The entire dimension on masslows Hiderar cafinets is basic and safe.
Speaker 1: Nobody looked at self actualization and eco center. The the
Speaker 1: millennials are not that, you know, they are ready to explore,
Speaker 1: They're ready to take risk. So many things coming together
Speaker 1: for the Indian agriculture to unlock the potential. And given
Speaker 1: the compounded annual growth rate that we are witnessing, agriculture
Speaker 1: would be a trillion dollar dimension in India in the
Speaker 1: next five years. Imagine that that would be fantastic too.
Speaker 1: From a food deficit nation as late as you know,
Speaker 1: the late sixties, now India is actually export and the
Speaker 1: largest producer of several lugury products. You know, we are
Speaker 1: a surplus nation which also exports to many countries. And
Speaker 1: ily believe that we can work with many smaller countries
Speaker 1: which don't have landmarks to cultivate, you know, for their
Speaker 1: food security. India can play that role. Okay, So there
Speaker 1: is a lot that is coming together that there is
Speaker 1: a confluence of technology, private capital flowing. In mind you
Speaker 1: not all is being funded by grants and donations, you know,
Speaker 1: they are private capitain flowing and entrepreneurial spirit backing the
Speaker 1: capital and fusion. Mhm. It's this wave that's very inspiring
Speaker 1: and I hope we can learn a bit from the
Speaker 1: Indian culture of cooperation and collaboration and also of your
Speaker 1: success at Samonardi here and apply some of that. How
Speaker 1: do you think about climate change and the potential effects
Speaker 1: of that on both the smallholder farmer and on your business.
Speaker 1: So it's it's up very important aspect that we cannot
Speaker 1: ignore anymore. It is moving from I would say an
Speaker 1: important bucket to the gent bucket. Uh something that needs attention.
Speaker 1: And one of my my key takeaways when I started
Speaker 1: working very closely with farmers is they are aware of
Speaker 1: what is sustainable agriculture time, but how can you and
Speaker 1: hold the transition from traditional farming methods which are not
Speaker 1: climate resilient. Are climate smart right? Fertilizers and pesticides pesticide
Speaker 1: also you know flood irrigation to rep irrigation, you know
Speaker 1: choices of crops mono crop to multiple crops. All of
Speaker 1: that there is awareness. What they don't have is the
Speaker 1: hand holding because the vulnerability of a failure would mean
Speaker 1: losing one season, that would mean in a family starving,
Speaker 1: so food on the table to retaining that piece of
Speaker 1: land for the next generation. The choice is obvious. So
Speaker 1: the way someone at the end. You know, some of
Speaker 1: us who have been part of this journey believe is
Speaker 1: we have to convert this awareness into an action by
Speaker 1: hand holding them and providing a safety net to them
Speaker 1: for the fall. We have to bring in the dimension
Speaker 1: of insurance. We have to bring in the dimension of
Speaker 1: market linkages and the forward linkages in the agreegence so
Speaker 1: that the farmer can can confidently walk and say has
Speaker 1: taken baby steps in that. You know, we started working
Speaker 1: with Rubber Bank on a guarantee program along with the
Speaker 1: sc I D and U s DFC on climate smart
Speaker 1: agriculture and agro forestry where they provide a guarantee and
Speaker 1: we provide the market linkages and finance. Of our overall engagement.
Speaker 1: So far in this one point five billion has been
Speaker 1: climate smart complainant assets. We also have issued green bonds
Speaker 1: now and the idea is how can we bring in
Speaker 1: the dimension of green and that again is a category.
Speaker 1: The moment you unwrapped that you have prevention of food
Speaker 1: laws as one, efficient use of energy as the second one,
Speaker 1: and responsible usage of pesticides and fertilizers are chemicals to
Speaker 1: retain the vitality of the soil, will retain the vitality
Speaker 1: is an aspiration, but how do we infuse life into
Speaker 1: the soil? Yes, and we have a dedicated team of
Speaker 1: about fifteen people working exclusively on that. So it's it's
Speaker 1: not a good to have debate anymore. Climate patterns have changed,
Speaker 1: the rainfall patterns have changed, so we need to address it, agreed.
Speaker 1: So I want to pivot and just talk a little
Speaker 1: bit about you as a leader and hopefully share some
Speaker 1: of your wisdom for entrepreneurs or other CEOs of even
Speaker 1: nonpurpose led businesses who are beginning that transition. So all
Speaker 1: purpose led businesses tend to have or consider the needs
Speaker 1: of many more stakeholders than shareholders alone. And one of
Speaker 1: the things that I wondered about is how do you
Speaker 1: think about all of the stakeholders that you are serving
Speaker 1: at at Seminardi as the leader, and do any of
Speaker 1: those stakeholders needs ever come into conflict? Right? So I
Speaker 1: don't know if I have an advice for the new entrepreneurs,
Speaker 1: but all that I would say is I can share
Speaker 1: my journey how how that has been being led by
Speaker 1: heart has been a hallmark of my journey so far.
Speaker 1: When I look back, you know, as I mentioned the
Speaker 1: decision of setting up someone that by taking a loan
Speaker 1: on my house and my proud and front money at
Speaker 1: the age of forty two did not appear to be
Speaker 1: a crazy decision because everybody were surprised that somebody is
Speaker 1: looking at lending to agriculture, because lending in agriculture was
Speaker 1: considered to be an oxymoron. Uh. And then going back
Speaker 1: to my own life, you know, leaving a government job
Speaker 1: and joining a private sector organization. When I was doing well,
Speaker 1: I left there and went to college because I never
Speaker 1: had a college life. I was a school dropout, then
Speaker 1: from college dropout, coming back and then being a founder
Speaker 1: of you know, financial inclusion initiative called Life and a Trust.
Speaker 1: And when I was a group CEO, leaving that and
Speaker 1: setting up someone that I think there is there is
Speaker 1: one significant factor that enabled this journey, which is the
Speaker 1: investment that I made in myself. I got into a
Speaker 1: system of meditation when I was twenty one that was
Speaker 1: stumbled into a system called artfulness, which is a twenty
Speaker 1: five minute investment that I made every day in meditating
Speaker 1: on myself. In terms of how do I build my life?
Speaker 1: You know, it was not about how do I become rich?
Speaker 1: It was not about how do I compete with others
Speaker 1: at the cost of you know, others. This investment for
Speaker 1: about thirty years now has helped me immensely to decide
Speaker 1: things based on what the heart says, not what the
Speaker 1: mind says, Because if I had done some financial calculation
Speaker 1: and analysis, you know, no, no one would want to
Speaker 1: risk the entire family, you know well, So one thing
Speaker 1: that I certainly would tell the fellow entrepreneurs is when
Speaker 1: you are a purpose led business, it is important that
Speaker 1: you are anchored inside and that it's important to have
Speaker 1: an investment in yourself so that you make right choices
Speaker 1: on the stakeholders dimension. We have been fortunate to have
Speaker 1: an aligned set of people all through, starting from Leva,
Speaker 1: which believed in in the story of agriculture, and not
Speaker 1: because somebody spoke to them. They have invested in two
Speaker 1: thousand and twelves. They actually went around seeing agriculture and
Speaker 1: the pharma collectivization and two fifteen when I spoke about collectivization,
Speaker 1: it was not new to them and they knew the
Speaker 1: space and why this has so much of potential. So
Speaker 1: an investor who understands the impact spaces an important dimension.
Speaker 1: You know, we got axcel, We've got responsibility, We've got
Speaker 1: moving in all of them, fundamentally interested in impact from
Speaker 1: a scale dimension with the customer and ambiguously being the
Speaker 1: one that we have to work with. UH are not
Speaker 1: two different vehicles saying, hey, you do business but also
Speaker 1: take care of impact. No, you are in the business
Speaker 1: of impact. Impact defined us. Who is your customer segment?
Speaker 1: Who do you work with? When that is clearly defined,
Speaker 1: the scale happens because the primary customer segment that you
Speaker 1: are working with is the same for our customers. You
Speaker 1: know that the way we engage with our smallholder farmers
Speaker 1: in their collective. We don't directly work with them. We
Speaker 1: work always with their collective. We don't take collaterals and
Speaker 1: we don't believe in collaterals when engaging with them. There
Speaker 1: is a lot of the commitment to them is when
Speaker 1: you are united, we are committed with you. So light
Speaker 1: or not. I keep telling people that how do you lend?
Speaker 1: We say no, we believe, look into the land and
Speaker 1: then pray right. Well, it seems to have worked out
Speaker 1: so far. It seems to have worked out so far.
Speaker 1: The cost of risk in our business is about two
Speaker 1: that's has come back so prayers do work. But on
Speaker 1: on a serious note, the risk management philosophy and someone
Speaker 1: that is, how do you address the risks of the customers? Yes,
Speaker 1: when their risk is addressed is when my risk is addressed.
Speaker 1: And the risk of not having the institution capability to
Speaker 1: handle the business is a risk to me, So how
Speaker 1: do I address the business? So the risk management philosophy
Speaker 1: for us is manage the risk of your client, and
Speaker 1: hence your risk is automatically managed. So that's how we
Speaker 1: engage with the stakeholders. We have a wonderful team at
Speaker 1: someone about seven people, you know, all aligned to the purpose.
Speaker 1: So every meeting that we have, whether it is a
Speaker 1: smaller important meeting or a town hall on zoom these days,
Speaker 1: with all seven hundred people, we start with what we
Speaker 1: call as a connection. We offer a you know, a
Speaker 1: minute prayer, which basically says, all of us pray that
Speaker 1: whatever we discuss, whatever we do, we do for the
Speaker 1: larger good of the humanity. That is a ritual, nothing
Speaker 1: to do with any particular form of eight, religion or cast.
Speaker 1: Those reiterations help us ground it. I love that answer,
Speaker 1: and it also gives me a little view into the
Speaker 1: culture seminary, which I appreciate. Do you think that being
Speaker 1: purpose led as a as a for profit business means
Speaker 1: that you have to have more modest financial goals as
Speaker 1: a business? Actually no, if you see the the audocity
Speaker 1: with which we are talking about numbers, I believe the
Speaker 1: purpose let business has to be more aspirational and bold
Speaker 1: in thinking than being driven by Excel sheets and numbers.
Speaker 1: If purpose let businesses apply logic, then we don't go anywhere.
Speaker 1: The purpose let business have to be have to be
Speaker 1: driven by passion and passion My view is not is
Speaker 1: not limited by numbers. That's that's a beautiful answer. I
Speaker 1: love it. Okay, So my last question for you today
Speaker 1: sadly because I'm so enjoying this conversation, but but I
Speaker 1: realized that you have a business to run in a
Speaker 1: life to lead, So I calling BS. On this show,
Speaker 1: we define b S as the gap between word indeed,
Speaker 1: and we have a tool called the B S Scale
Speaker 1: where we rate organizations zero being the best zero BS
Speaker 1: and on being the worst total BS. And taking into
Speaker 1: consideration the fact that no business is perfect right, every
Speaker 1: business is on a journey. Where would you rate samin
Speaker 1: Atty on that scale? Today? I I would hazard, I
Speaker 1: guess I would say about thirty. We have covered significant
Speaker 1: distance in terms of what do we have to pursue.
Speaker 1: That is direction. Then there is scale that we have demonstrated.
Speaker 1: The TV is in place, that the tools that we
Speaker 1: have to impact on place. But it is still a
Speaker 1: journey and this is a moving post. You know, after years,
Speaker 1: if we talk and I would still say, we are
Speaker 1: still about thirty, right, so that aspiration would have changed
Speaker 1: because we are looking at farmer as an actor. I
Speaker 1: would say in activity we have we are zero, but
Speaker 1: you know, still the household needs to be impacted, so
Speaker 1: I will still have about that. I would say about Yeah,
Speaker 1: you may be even being a little hard on yourself,
Speaker 1: which is totally totally fine, but you've certainly proven the
Speaker 1: model and it's incredibly impressive what you've achieved. So thank
Speaker 1: you for being on the show today and thank you
Speaker 1: for the work that you're doing. Um, it has been
Speaker 1: a pleasure to spend time with you. Thank you. It
Speaker 1: has been my privilege to have interacted with you and
Speaker 1: shared my journey. Thank you for the opportunity. Alright, folks,
Speaker 1: it's time to give Samonari a PS score. The company's
Speaker 1: purpose impacts millions of people in a positive way. Samonati
Speaker 1: looks beyond their immediate customers. They exist to change the
Speaker 1: entire agricultural ecosystem, which makes things better for everyone. It's
Speaker 1: an enormous job, full of ambition, and the vast scale
Speaker 1: of their aspiration is evident in the score of thirty
Speaker 1: that a Neil gave himself. That score shows just how
Speaker 1: much more potential he feels there is yet to fulfill.
Speaker 1: But I think a lower score is fairer in this case,
Speaker 1: not because there isn't upside for Samonati, but because I
Speaker 1: think their words aligned so well with their deeds that
Speaker 1: they just deserve a better score. So I'm going to
Speaker 1: cut a Neil score in half and give Samonati an
Speaker 1: extremely impressive fifteen. And if you're starting a purpose led business,
Speaker 1: or if you're thinking about beginning the journey of transformation
Speaker 1: to become one, here are rethings you can take away
Speaker 1: from this episode. One, lead with your heart. Empathy and
Speaker 1: understanding for all of your stakeholders is a key aspect
Speaker 1: of building a successful purpose led business. Empathy doesn't appear
Speaker 1: in a lot of NBA programs, and it's hard to
Speaker 1: find in a spreadsheet, and yet it is the secret
Speaker 1: sauce that is driving the success of conscious capitalism. Two.
Speaker 1: Pick a problem you understand and really care about. A
Speaker 1: Nil's humble beginnings in India gave him a unique perspective
Speaker 1: on the plight of smallholder farmers, one that traditional bankers
Speaker 1: couldn't see or understand. Your personal experiences and struggles are
Speaker 1: where you may find your own purpose led unicorn. Three.
Speaker 1: It's not a zero sum game. The best purpose led
Speaker 1: businesses don't create winners and losers. They create win win
Speaker 1: win scenarios in which a complex web of stakeholders improve
Speaker 1: each other's lives and finances. They create Samonati, you know,
Speaker 1: collective progress. I want to thank our guest today a
Speaker 1: Neil Kumar, the team at Samonati and the team at
Speaker 1: l of Our Equity for helping to make this episode possible.
Speaker 1: And if today's episode inspired you to lift up our ecosystem,
Speaker 1: subscribe to the Calling Bullshit podcast on the I Heart
Speaker 1: Radio app, Apple Podcasts, or wherever you listen to people
Speaker 1: speaking to your ears and friends. I'd like to ask
Speaker 1: for your help. If you enjoy the Calling Bullshit Podcast,
Speaker 1: take a second to rate us on Apple podcasts or
Speaker 1: on your preferred platform. It helps more listeners find the
Speaker 1: show and thanks to our production team Hannah Beal, Amanda Ginsburg, Ds,
Speaker 1: Moss Hailey, Pascalites, Parker Silzer and Basil Soaper. Calling Bullshit
Speaker 1: was created by Co Collective and is hosted by Me
Speaker 1: Tai Mounting you. Thanks for listening. H