WEBVTT - Samunnati: Collective Growth & Collective Prosperity 0:00:06.280 --> 0:00:09.000 I believe the purpose late business has to be more 0:00:09.640 --> 0:00:13.680 aspirational and bold in thinking than being driven by Excel 0:00:13.720 --> 0:00:17.840 shots and numbers. If purpose led businesses apply logic, then 0:00:17.920 --> 0:00:20.840 we don't go anywhere. The purpose led business have to 0:00:20.880 --> 0:00:28.200 be driven by passion. Welcome to Calling Bullshit, the podcast 0:00:28.320 --> 0:00:32.120 about purpose washing, the gap between what companies say they 0:00:32.159 --> 0:00:35.279 stand for and what they actually do, and what they 0:00:35.280 --> 0:00:38.640 would need to change to practice what they preach. I'm 0:00:38.640 --> 0:00:42.040 your host Time Autigue, and I've spent over a decade 0:00:42.120 --> 0:00:46.000 helping companies defind what they stand for their purpose and 0:00:46.040 --> 0:00:48.920 then help them to use that purpose to drive transformation 0:00:49.000 --> 0:00:53.640 throughout their business. In this special episode, we're sharing a 0:00:53.680 --> 0:00:56.520 positive case study where we talk with the CEO of 0:00:56.560 --> 0:01:01.440 a purpose led company who we think is getting it right. Today, 0:01:01.560 --> 0:01:06.560 I'm speaking with a Neil Kumar, CEO of Samunati. He 0:01:06.680 --> 0:01:11.000 shares how humble beginnings eventually led him to refinance his 0:01:11.160 --> 0:01:15.319 home in order to start what would become India's largest 0:01:15.440 --> 0:01:29.559 agricultural enterprise. Farming is a notoriously difficult profession, high risk 0:01:29.840 --> 0:01:34.679 and often low reward. Harvests are subject to unpredictable factors 0:01:34.680 --> 0:01:38.399 like climate and weather and access to capital tends to 0:01:38.440 --> 0:01:42.600 be limited, and for families who grow and sell crops 0:01:42.600 --> 0:01:46.640 on a small scale, known as smallholder farmers, things get 0:01:46.680 --> 0:01:52.280 even more daunting. Their size prevents them from buying equipment 0:01:52.280 --> 0:01:55.880 in bulk, and when you're paying retail prices for seeds 0:01:55.880 --> 0:02:02.680 and fertilizer, machinery and pesticides, things add up fast. Most 0:02:02.960 --> 0:02:08.080 don't even grow enough to make their money back. In India, 0:02:08.600 --> 0:02:12.520 a lot of people are familiar with this struggle. Agriculture 0:02:12.600 --> 0:02:16.200 supports roughly two thirds of the one point six billion 0:02:16.360 --> 0:02:21.400 person population, and the majority of the growers are tenant farmers, 0:02:21.520 --> 0:02:24.320 meaning they don't even own the land they work on. 0:02:25.000 --> 0:02:26.760 You think it's hard to get a mortgage in the 0:02:26.919 --> 0:02:30.679 United States, try getting a loan for a new tractor 0:02:30.760 --> 0:02:34.440 as a tenant farmer in India, banks won't even consider 0:02:34.520 --> 0:02:38.840 you unless you own land, so many farmers buy supplies 0:02:38.880 --> 0:02:43.360 on credit, further raising their overall operating costs and squeezing 0:02:43.400 --> 0:02:48.960 their margins even more. To complicate matters further, often farmers 0:02:49.000 --> 0:02:52.640 are unbanked, which means even if they do receive a loan, 0:02:52.840 --> 0:02:55.920 they get the whole lump sum in cash, and when 0:02:55.960 --> 0:02:59.480 life happens, the money is used for other household needs. 0:03:00.240 --> 0:03:02.480 A lot of them wind up owing money that they 0:03:02.520 --> 0:03:11.000 can't pay back. This economic struggle for farmers can become overwhelming. 0:03:11.600 --> 0:03:17.160 In India saw an average of twenty eight farmer suicides 0:03:17.360 --> 0:03:23.480 a day. But one company is working to change this 0:03:23.600 --> 0:03:30.720 system from the inside, India's largest agritec enterprise, Samonati. Their 0:03:30.800 --> 0:03:35.080 purpose is to create better markets for smallholder farmers across 0:03:35.240 --> 0:03:39.840 every state in India. They began pursuing this purpose in 0:03:40.400 --> 0:03:45.400 six by issuing loans designed specifically for small farmers, but 0:03:45.480 --> 0:03:48.400 they soon realized they needed to be more involved to 0:03:48.480 --> 0:03:52.840 make a lasting impact. Today, the company acts as an 0:03:52.880 --> 0:03:59.680 intermediary between everyone in the agricultural ecosystem, banks, seed suppliers, 0:04:00.000 --> 0:04:07.560 old sailers, and small farmers. Getting this all done is complicated, 0:04:07.760 --> 0:04:13.440 so Samonati takes a three pronged approach. First, they focus 0:04:13.480 --> 0:04:18.520 on aggregation. They facilitate the formation of farmer producer organizations 0:04:19.000 --> 0:04:23.760 f pos or co ops, where individual farmers with similar 0:04:23.800 --> 0:04:27.520 needs can use collective bargaining power to access better prices 0:04:27.560 --> 0:04:32.080 and better markets. Currently, Salmonatti has four thousand fp os 0:04:32.120 --> 0:04:35.000 in their network, each made up of roughly three to 0:04:35.080 --> 0:04:41.720 five hundred individual farmers. Second, they facilitate market linkages, connecting 0:04:41.760 --> 0:04:44.120 farmers directly with the markets that will give them the 0:04:44.200 --> 0:04:48.159 highest prices or market share. They also lend farmers the 0:04:48.240 --> 0:04:51.920 money they need to get things done, offering multiple types 0:04:51.920 --> 0:04:57.040 of loans, all structured with farming households in mind. And third, 0:04:57.520 --> 0:05:01.400 they offer advisory services, helping their customers transition to more 0:05:01.440 --> 0:05:06.440 sustainable methods, create business plans and implement standard operating procedures. 0:05:07.240 --> 0:05:11.200 They call their strategy OMLA A m l A, and 0:05:11.279 --> 0:05:16.240 it's highly effective. Today, Samonati is valued at north of 0:05:16.240 --> 0:05:19.480 a billion dollars and has touched the lives of seven 0:05:19.520 --> 0:05:23.919 million farmers and counting. Their current goal is to impact 0:05:24.040 --> 0:05:28.480 one in every four farmers across the entire country by 0:05:28.600 --> 0:05:35.920 seven The mastermind behind this organization is my guest today, 0:05:36.320 --> 0:05:41.320 Samonati CEO Anil Kumar. He tells us how they weave 0:05:41.400 --> 0:05:45.040 the needs of farmers directly into the fabric of everything 0:05:45.080 --> 0:05:49.960 they do and emphasizes the importance of leading with heart. 0:05:51.120 --> 0:05:53.760 A link to the transcript of the conversation you're about 0:05:53.800 --> 0:05:56.800 to hear is in our show notes or can also 0:05:56.839 --> 0:06:00.719 be found at Calling Bullshit podcast dot com. More with 0:06:00.760 --> 0:06:18.000 a Neil Kumar. Right after the break, Folks, I am 0:06:18.120 --> 0:06:21.599 very excited to introduce the founder and CEO of Samunari, 0:06:21.880 --> 0:06:26.000 Anil Kumar. An thank you for being here and welcome 0:06:26.040 --> 0:06:28.920 to calling Bullshit. Thank you, Tie. It's my privilege as 0:06:28.960 --> 0:06:32.800 well to be part of this program. So let's start 0:06:32.880 --> 0:06:35.240 right at the beginning. Can you talk a little bit 0:06:35.320 --> 0:06:38.880 about where you're from and what your life was like 0:06:38.960 --> 0:06:42.039 growing up in India. Well, I'm a you know, I'm 0:06:42.080 --> 0:06:45.000 a small town boy, so to say. I'm born in 0:06:45.040 --> 0:06:49.159 a place called Kolar, which is known for its gold fields, 0:06:50.080 --> 0:06:54.360 and brought up in places that are close by called 0:06:54.600 --> 0:06:59.760 Anantapur and Bari. Both belong to two different states. So 0:07:00.440 --> 0:07:03.320 bad is part of Karnataka and natur is part of 0:07:03.760 --> 0:07:07.640 and So what that meant for me is I grew 0:07:07.720 --> 0:07:12.080 up in a confluence of two different languages. Both became 0:07:12.120 --> 0:07:16.320 integral to my growing up. So schooling happened there and 0:07:16.840 --> 0:07:21.120 then I joined mechanical engineering as an eighteen year old boy. 0:07:21.160 --> 0:07:24.040 And during my plus two holidays, I had taken the 0:07:24.080 --> 0:07:28.320 Banking Services Recruitment Board exam and I was selected to 0:07:28.600 --> 0:07:33.440 a government bank called Canada Bank. So I I joined 0:07:33.520 --> 0:07:37.120 Kendra Bank as typist come clerk in a rural branch 0:07:37.160 --> 0:07:39.640 of Kenadra Bank, and that's how my baptism into banking 0:07:39.680 --> 0:07:42.680 happened in the rural and agree space. Little did I 0:07:42.720 --> 0:07:45.840 realize what all would manifest over the next thirty years 0:07:45.840 --> 0:07:50.560 of my life in banking. But that's how my journey 0:07:50.600 --> 0:07:55.080 started as a professional. And just just to draw a 0:07:55.160 --> 0:07:59.160 line under something, because I found this very inspiring. You 0:07:59.200 --> 0:08:04.360 come from very beginnings and you've come very for being 0:08:04.360 --> 0:08:08.800 the CEO of, you know, an extremely successful organization today. 0:08:09.920 --> 0:08:11.480 So I wonder if you could just talk a little 0:08:11.480 --> 0:08:14.400 bit about what your experience was like growing up in 0:08:14.440 --> 0:08:17.200 a lower middle class Indian family. Well, we are a 0:08:17.200 --> 0:08:21.080 family of six. I have three elder siblings, all sisters, 0:08:21.960 --> 0:08:26.440 and as a professional, my father used to learn quite handsomely. 0:08:27.160 --> 0:08:31.120 But when I was eight, he lost his job and 0:08:31.200 --> 0:08:35.000 the family crashed landed, so to say, on the economic ladder. 0:08:35.520 --> 0:08:37.840 And that's when my mother took over the charge of 0:08:37.880 --> 0:08:41.760 the house and then she started building the entire family 0:08:41.800 --> 0:08:45.040 from the scratch. So I got to learn a lot 0:08:45.240 --> 0:08:49.480 in this transition of building rebuilding, so to say. Because 0:08:49.559 --> 0:08:53.240 people around us we're all doing well. They were all 0:08:53.280 --> 0:08:55.640 neighbors when we were doing well, but you know, when 0:08:55.679 --> 0:08:58.920 we were not doing well, my mother stitched the entire 0:08:58.960 --> 0:09:02.840 ecosystem to support our family through engagement with the community, 0:09:02.920 --> 0:09:06.520 her engagement with the neighbors. So I realized what is 0:09:06.559 --> 0:09:11.079 social capital. Each of our sisters started working when they 0:09:11.360 --> 0:09:15.360 turned eighteen. But the entire family was spinning their hopes 0:09:15.400 --> 0:09:17.680 on me because I was the only male child in 0:09:17.679 --> 0:09:21.880 the family and they wanted me to know to redeem 0:09:21.960 --> 0:09:24.920 the entire family. It was tough. There were days that 0:09:24.960 --> 0:09:26.959 I still remember where we did not have even a 0:09:27.040 --> 0:09:29.320 penny at home and I made it a point to 0:09:29.360 --> 0:09:33.720 record that day in my head. And so then it 0:09:33.800 --> 0:09:36.600 sounds like you made your way into the banking business 0:09:36.720 --> 0:09:40.960 with a focus on agricultural banking or banking for the 0:09:41.000 --> 0:09:44.760 agricultural industry. Is that correct? Actually? No, I I was 0:09:44.880 --> 0:09:48.840 posted in a rural branch, which meant it is agriculture 0:09:48.840 --> 0:09:52.040 and rural. But I was a typist come cluck, you know, 0:09:52.240 --> 0:09:56.160 and and banks in India usually post youngsters in rural areas. 0:09:56.679 --> 0:09:59.760 So it is my good fortune that my baptism to 0:09:59.760 --> 0:10:01.920 bank thing happened in an area that would become so 0:10:02.120 --> 0:10:06.600 relevant to my journey. I have an instinct that because 0:10:06.640 --> 0:10:12.440 of your background and because of your experience working in 0:10:12.559 --> 0:10:17.880 banking in a rural environment, you have an empathy for 0:10:18.360 --> 0:10:21.800 small family farmers in a way you know the word, 0:10:21.920 --> 0:10:25.600 You understand them and their lives better than a typical 0:10:26.320 --> 0:10:30.640 banking person would. Would you agree with that absolutely? In fact, 0:10:30.679 --> 0:10:34.480 one of the reasons why this entire space looks so 0:10:34.960 --> 0:10:38.600 home natural for me is because I have been there. 0:10:38.679 --> 0:10:42.440 I have lived that life of challenges from access to 0:10:42.520 --> 0:10:46.640 markets and challenges that the external environment presents you on 0:10:46.679 --> 0:10:49.880 which you have you have no control on. I have 0:10:50.040 --> 0:10:53.240 lived that for about thirteen years of my you know, 0:10:53.360 --> 0:10:56.959 my life, from the age of seven to about eighteen 0:10:57.280 --> 0:11:01.160 eleven years. Okay, So for listen orso who might be 0:11:01.360 --> 0:11:06.240 unfamiliar with the agriculture industry in India, can you just 0:11:06.400 --> 0:11:10.840 paint a picture of what that industry looks like. What 0:11:10.960 --> 0:11:15.560 are the major challenges that Indian farmers face today? Well, 0:11:16.800 --> 0:11:21.920 on the statistics diamension Tai, agriculture constitutes about twenty percent 0:11:22.040 --> 0:11:26.439 of the country's GDP right while about sixty of the 0:11:26.480 --> 0:11:30.440 population is either directly or indirectly dependent on agriculture, which 0:11:30.480 --> 0:11:33.400 means there is a vast majority of population dependent on 0:11:33.440 --> 0:11:38.680 agriculture in that a significant portion is small holder farmers 0:11:38.840 --> 0:11:44.160 and farmers who are owning less than two hectares of land. Uh. 0:11:44.200 --> 0:11:48.920 And there is another large majority of people who take 0:11:50.000 --> 0:11:54.199 land on lease and our tenant farmers. So if you 0:11:54.320 --> 0:11:57.520 combine the tenant farmers and you know smallholder farmers, that 0:11:57.640 --> 0:12:05.760 construts about the total total farmers into farming. AH. Majority 0:12:05.840 --> 0:12:10.920 of formal financial institutions are still not in the reach 0:12:11.160 --> 0:12:16.480 for these smallholder farmers on account of not being able 0:12:16.520 --> 0:12:20.360 to fulfill the criteria that the smallholder farmers are supposed 0:12:20.400 --> 0:12:24.720 to for accessing the farmal financial institutions are The definition 0:12:24.760 --> 0:12:27.959 of a farmer is the one who owns land, not 0:12:28.040 --> 0:12:31.800 necessarily the one who does farming, and this requirement of 0:12:31.800 --> 0:12:37.200 an ownership has fostered the fragmentation further. UH. Say, if 0:12:37.240 --> 0:12:40.120 my father had nine hectares of land and we are 0:12:40.200 --> 0:12:44.560 three brothers, for for me to avail of a loan 0:12:44.679 --> 0:12:47.600 from a farmal financial institution, the land has to be 0:12:47.640 --> 0:12:49.640 in my name, which means my father has to split 0:12:49.679 --> 0:12:53.280 this into three and give me the three hectares. And 0:12:53.320 --> 0:12:56.760 if I happened, if I happen to have another three boys, 0:12:57.360 --> 0:12:59.400 I will have to split that into three. So within 0:12:59.440 --> 0:13:02.240 two generals shells, the nine hectors will become one hector. 0:13:03.320 --> 0:13:08.520 Right second, from a sector perspective, agriculture is a huge sector. 0:13:08.559 --> 0:13:11.840 You know, it's it's massive in terms of scale and scope. 0:13:12.160 --> 0:13:14.400 So let us look at what are the major categories 0:13:14.400 --> 0:13:16.600 in agriculture. And now you have inputs as a category 0:13:16.640 --> 0:13:20.080 where everything that goes into cultivation as a process. This 0:13:20.240 --> 0:13:25.400 includes the seats, includes crop protection chemicals, and it includes 0:13:25.440 --> 0:13:28.600 the farm equipment. Now you have the output where the 0:13:28.720 --> 0:13:32.320 post harvest services happen, whether it is sale our store 0:13:32.320 --> 0:13:35.040 and sell, our store, process and sell what what have you. 0:13:35.720 --> 0:13:38.080 Then you have financial services for this. Then you have 0:13:38.200 --> 0:13:41.880 the advisory services. Then you have the research institutions. Now 0:13:42.640 --> 0:13:44.640 if you look at each of them, each of these 0:13:44.640 --> 0:13:48.319 categories are massive. Again, you know, the inputs have seeds 0:13:48.679 --> 0:13:51.320 double click on CITs. Then you have you know, the 0:13:51.360 --> 0:13:55.400 genetically modified hybrid seats, then open pollinated seats and you 0:13:55.480 --> 0:13:58.880 then double click on them. You have individual companies around that. 0:13:59.559 --> 0:14:03.920 Right now. On the crop protection chemicals, you have fertilizers 0:14:03.960 --> 0:14:06.760 which facilitate the growth, and you have you know, pesticides 0:14:06.800 --> 0:14:10.640 and herbicides which kill They both are again two different categories. 0:14:10.760 --> 0:14:13.000 You don't have the same company which works on both 0:14:13.040 --> 0:14:14.959 sides and double click on that. Then you have individual 0:14:15.200 --> 0:14:18.960 manufacturers for each of these products fum equipment, you have 0:14:19.000 --> 0:14:22.000 minor farm equipment and major you know, major ones like 0:14:22.080 --> 0:14:25.160 tractor and the treasure and these kinds of things. There 0:14:25.160 --> 0:14:27.640 are two different entities. You know, you have to click 0:14:27.680 --> 0:14:32.040 on that again. All of these tie would want to 0:14:32.080 --> 0:14:34.960 reach out to these smallholder farmer on their own, and 0:14:35.000 --> 0:14:37.720 the smallholder farmer has less than two hectors of land. 0:14:38.320 --> 0:14:42.120 How they engaged. Now you know that was what inspired 0:14:42.200 --> 0:14:44.840 us to get into this collectivization which I will talk later. 0:14:45.280 --> 0:14:49.800 But the context is smallholder farmer not being able to 0:14:49.840 --> 0:14:53.960 engage with the ecosystem on on the on the dimension 0:14:53.960 --> 0:14:55.920 of strength, but on the dimension of being at the 0:14:55.920 --> 0:15:00.800 receiving end. Right, So very fragmented, very agmented. The market 0:15:00.840 --> 0:15:04.800 is fragmented, landholding is fragmented. Each of these. Again, when 0:15:04.800 --> 0:15:06.760 a farmer goes to buy their inputs, they have to 0:15:06.800 --> 0:15:08.720 go to the retail most part of the value chain 0:15:08.840 --> 0:15:11.880 because that's what he can afford or she can afford. 0:15:12.160 --> 0:15:17.040 So the manufacturer, dealer, distributor retailer is where the farmer 0:15:17.080 --> 0:15:19.440 would go and when they buy their small quantities, that 0:15:19.640 --> 0:15:24.560 price is loaded of all the layers of the product 0:15:24.600 --> 0:15:29.200 moving into the farmer, provided the farmer has cash. If 0:15:29.200 --> 0:15:31.360 it is on credit, then the cost of credit also 0:15:31.400 --> 0:15:35.120 gets loaded on it. M hm. Now then what happens 0:15:35.120 --> 0:15:37.680 soon after harvest? Most of these farmers, on account of 0:15:37.720 --> 0:15:42.680 being smallholder farmers don't have the capability are infrastructure to 0:15:43.440 --> 0:15:46.600 to take the produce two larger markets to sell, because 0:15:46.600 --> 0:15:49.600 you need to have a threshold volume of commodity right 0:15:49.720 --> 0:15:51.880 because the cost of transportation would kill if you have 0:15:52.040 --> 0:15:54.040 a small quantum and you have to hire a large truck. 0:15:54.800 --> 0:15:58.560 So the local large farmers are local aggregators, would basically 0:15:58.640 --> 0:16:02.440 buy out the produce from the farmers they aggregate and 0:16:02.480 --> 0:16:04.680 then they take it to the next market to sell, 0:16:05.200 --> 0:16:08.680 which means there is hardly any scope for primary processing 0:16:08.680 --> 0:16:12.200 our storage because they need liquidity immediately. So if you 0:16:12.520 --> 0:16:15.360 just combine these two dimensions, I think farmer is the 0:16:15.400 --> 0:16:20.280 only person who buys retail sales sales whole sale. Yeah, 0:16:20.320 --> 0:16:23.120 I think that's a great insight, which is like the 0:16:23.280 --> 0:16:27.840 entire margin is squeezed. Yeah, yeah, very tough. You hardly 0:16:27.840 --> 0:16:31.960 get anything for your for your output. So so let's 0:16:32.160 --> 0:16:36.720 let's pivot then to to Samonati and again just for 0:16:36.880 --> 0:16:40.880 listeners benefit, what does the name Samonati mean? Samon Nati 0:16:41.040 --> 0:16:44.720 is a Sanskrit word. It's a combination of two words, 0:16:44.880 --> 0:16:50.560 you know, samma and nati. Sama is collective, all encompassing everyone. 0:16:51.400 --> 0:16:55.880 Unnati is growth, prosperity and elevation. So the word someone 0:16:55.920 --> 0:16:59.360 that he meets collective growth, collective prosperity, and collective elevation. 0:17:00.320 --> 0:17:03.680 It's a great name. So I'd love to hear the 0:17:03.760 --> 0:17:07.639 story of what made you decide to start it and 0:17:07.680 --> 0:17:11.439 a little bit about what seminari does. So first I'll 0:17:11.480 --> 0:17:13.600 tell you what someone that doesn't then come to you 0:17:13.680 --> 0:17:17.520 on how how happened? Because it happened accepually, I would 0:17:17.520 --> 0:17:20.520 say someone that is a value chain enabler. It's an 0:17:20.520 --> 0:17:24.200 open agree network in the agree value chain space, engaging 0:17:24.240 --> 0:17:28.040 with the entire spectrum of agriculture players, starting from the 0:17:28.080 --> 0:17:33.080 input manufacturers to the farmer collectives, to the farmers, to 0:17:33.800 --> 0:17:36.760 the output aggregators all the way to the large processes. 0:17:36.760 --> 0:17:39.040 You know, we are present in the entire value chain 0:17:39.800 --> 0:17:43.359 with the principal expectation and division that how do we 0:17:43.440 --> 0:17:47.160 make markets work for smallholder farmers Because in the narrative 0:17:47.200 --> 0:17:49.399 that I gave you of how the markets are fragmented, 0:17:49.520 --> 0:17:53.640 most of these markets are working off the farmer. Can 0:17:53.720 --> 0:17:56.960 we change the narrative and bring in a dimension of 0:17:57.400 --> 0:18:01.720 making markets work for smallholder farmers? Right? The levers that 0:18:01.800 --> 0:18:06.919 we believe would facilitate this journey are one, increasing the 0:18:06.920 --> 0:18:10.320 throughput in the agree value chains. And also how do 0:18:10.400 --> 0:18:15.320 we bring in the dimension of making the smallholder farmer 0:18:15.480 --> 0:18:19.800 access the larger agree ecosystem and making the agree ecosystem 0:18:20.200 --> 0:18:24.399 access the last mile through a digital connector that someone 0:18:24.400 --> 0:18:26.959 that this building in. So there are three filters that 0:18:27.000 --> 0:18:28.800 we look at in terms of how do we engage 0:18:29.160 --> 0:18:32.280 with the players in the agriculture ecosystem. One is the 0:18:32.359 --> 0:18:35.359 vision of making markets work on smallholder farmers by making 0:18:35.359 --> 0:18:39.600 the agreevolity chains operate at higher equiligreeument increasing the throughput 0:18:39.720 --> 0:18:42.000 with all the players, which also means we work with 0:18:42.040 --> 0:18:46.760 everyone right and then thereby harmonized the engagement between the 0:18:46.800 --> 0:18:50.240 farmer and the agree ecosystem. Right, these are the three 0:18:50.280 --> 0:18:54.280 things that we are working towards, and at this point 0:18:54.320 --> 0:18:57.240 in time, we are present in about twenty three states 0:18:57.240 --> 0:18:59.879 in the country on the FPO gateway that we have 0:19:00.000 --> 0:19:02.879 of which is the entry point for all the farmer 0:19:02.960 --> 0:19:05.639 collectives which you are referred to as FPOs. We have 0:19:05.680 --> 0:19:10.160 about four thousand such apos and an FPO could you 0:19:10.240 --> 0:19:15.120 could you unpack that for us? What is an fpopo 0:19:15.359 --> 0:19:19.080 is a farmer producer organization. It's like a cooperative, it's 0:19:19.119 --> 0:19:23.720 like a collective right. It is member owned, member operated, 0:19:24.440 --> 0:19:28.879 and about you know, three to five farmers come together 0:19:29.440 --> 0:19:32.280 to be part of an FPO, to be of a 0:19:32.320 --> 0:19:37.480 farmer collective. Now, that is where they unlock their collective 0:19:37.640 --> 0:19:42.480 bargaining power right, and that unlocking of collective bargaining power 0:19:42.560 --> 0:19:44.399 is how we engage with them in a framework that 0:19:44.440 --> 0:19:48.879 we referred to as ARMA approach Aggregation, market linkage and 0:19:48.920 --> 0:19:53.840 Advisory services and ARMLA is also Tai is also Indian gooseberry. 0:19:53.960 --> 0:19:56.520 It is the only fruit which has all the six days, 0:19:56.680 --> 0:20:02.760 including tart. That's very interesting, so we look at it 0:20:02.840 --> 0:20:05.280 is when a set of people doing the same economic 0:20:05.320 --> 0:20:09.879 activity come together, their requirements are homogeneous. Their requirements are similar. 0:20:10.000 --> 0:20:13.840 If a hundred sugarcane farmers come together, their requirements are similar. 0:20:13.840 --> 0:20:16.800 When three D patty growing farmers come together, their requirements 0:20:16.800 --> 0:20:19.120 are similar in terms of what they need to buy 0:20:19.160 --> 0:20:22.119 and what side services they need to access. Now, this 0:20:22.160 --> 0:20:26.440 aggregation is meaningful only when there are market linkages. Right 0:20:26.880 --> 0:20:29.160 at the moment you bring in market linkages, two things 0:20:29.160 --> 0:20:32.960 would come into picture. One, your local retailer may not 0:20:33.200 --> 0:20:36.560 have the kind of quantity that you require at an 0:20:36.560 --> 0:20:40.040 aggregated level, and hence as a FPU, as a collective, 0:20:40.080 --> 0:20:43.000 you may want to go one or two steps above, right, 0:20:44.560 --> 0:20:47.680 which also means that the cost of your procurement would 0:20:47.680 --> 0:20:50.240 come down, because now you are you are jumping to 0:20:50.400 --> 0:20:54.120 three levels above. But it also means is you need 0:20:54.160 --> 0:20:57.080 to have access to liquidity because in the retail most part, 0:20:57.080 --> 0:20:59.119 when you went as an individual farmer, you had that 0:20:59.200 --> 0:21:03.200 social capital to take inputs on credit. But now in 0:21:03.200 --> 0:21:06.240 in in the aggregated one, you are not an entity 0:21:06.280 --> 0:21:07.800 that is known. You are not an individual, it is 0:21:07.800 --> 0:21:10.119 a collective on hence you will not be able to 0:21:10.160 --> 0:21:12.240 get this inputs on credit. You have to put cash 0:21:12.240 --> 0:21:15.720 on the table. Right. This is another example I think 0:21:15.760 --> 0:21:20.160 of of just real empathy, right that a farm family 0:21:20.680 --> 0:21:24.080 is a family, not just a farmer. And so the 0:21:24.160 --> 0:21:27.199 way that the loans were structured in the past. I 0:21:27.240 --> 0:21:29.840 think you you refer to something called a bullet loan 0:21:29.920 --> 0:21:34.000 that a traditional bank would make to a farmer, and 0:21:34.240 --> 0:21:38.320 there was downside to that form of of loan. I 0:21:38.320 --> 0:21:41.119 wonder if you could just explain that like sort of 0:21:41.119 --> 0:21:44.560 the way that you changed the way money is being 0:21:45.080 --> 0:21:49.480 made available to smallholder farmers. So there are two ways 0:21:49.520 --> 0:21:54.400 of engaging with the smallholder farmer. One is actor, which 0:21:54.400 --> 0:21:57.280 is the household in the farmer and the actor the 0:21:57.359 --> 0:22:02.600 farming right in in agriculture, the actor and activity are intertwined. 0:22:02.600 --> 0:22:04.920 You know, there are two sides of the same coin. Yes, 0:22:05.680 --> 0:22:09.119 and you cannot dealnk yourself from the actor and engage 0:22:09.160 --> 0:22:11.520 only in the activity because it's a household enterprise. The 0:22:11.640 --> 0:22:15.800 entire household is engaged in the activity. So the way 0:22:15.800 --> 0:22:19.960 most of the traditional lending models focus on is hey, 0:22:20.000 --> 0:22:24.560 I would look at your activity in isolation and structure 0:22:25.040 --> 0:22:29.760 alone are a financial product to not to deliver for 0:22:29.840 --> 0:22:35.840 the activity, and the actor will have to manage, you know, 0:22:35.880 --> 0:22:40.000 the actor's cash flows that household to suit the activities requirements. 0:22:40.359 --> 0:22:44.119 Now and two these are smaller loans and there is 0:22:44.160 --> 0:22:48.280 also the providers opics that comes into picture in terms 0:22:48.320 --> 0:22:51.159 of how do I engage on this product. If you 0:22:51.359 --> 0:22:56.760 take farming as an activity, the way cash flows accrew 0:22:56.920 --> 0:23:02.440 are you invest invest invest are best right? In other words, 0:23:02.480 --> 0:23:05.840 you put smaller moneys over a period and you get 0:23:05.920 --> 0:23:09.720 the entire written when you harvest. So the best way 0:23:09.760 --> 0:23:12.960 to engage in a financial structure for that is, you know, 0:23:13.080 --> 0:23:17.679 you disperse, disperse, disburse, and ask for repayment. Right, that 0:23:17.760 --> 0:23:20.600 would mean multiple disbursements for a smaller loan, which means 0:23:20.640 --> 0:23:26.040 more opects on the provider side. So what providers usually 0:23:26.119 --> 0:23:29.040 do are used to do now technologies helping them to 0:23:29.240 --> 0:23:33.560 structure it differently is to give you know, the entire 0:23:33.640 --> 0:23:37.480 money in one go and expect these smallholder farmers to 0:23:37.680 --> 0:23:41.879 keep aside the money and keep using it at regular 0:23:41.920 --> 0:23:45.800 intervals for the activities, so that the providers opex does 0:23:45.840 --> 0:23:49.439 not get inflated on account of multiple transactions for a 0:23:49.440 --> 0:23:53.080 small loan. But what happens in reality is given the 0:23:53.160 --> 0:23:57.520 multiple demands on the corpus, it gets consumed for something 0:23:57.600 --> 0:24:01.879 else you know, some other family need, right okay, And 0:24:01.880 --> 0:24:06.399 and it usually results in either they're compromising on one 0:24:06.480 --> 0:24:10.439 or two steps in the cultivation, are going for higher 0:24:10.480 --> 0:24:14.600 cost liquidity options. Yes, take care of those one or 0:24:14.640 --> 0:24:18.280 two dimensions in cultivation, both of which have a negative 0:24:18.320 --> 0:24:22.240 impact on the income because if you compromise on one 0:24:22.359 --> 0:24:25.879 or two steps in the cultivation you were, ield gets reduced. Sure, 0:24:26.359 --> 0:24:29.040 you know, you you take higher cost borrowing, then you 0:24:29.119 --> 0:24:32.000 have to repay that and your income gets reduced to 0:24:32.000 --> 0:24:35.639 that extent. Right, So the best way to engage is 0:24:35.840 --> 0:24:38.760 engage with the actor as a household and then provide 0:24:38.840 --> 0:24:42.280 multiple requirements. And the household also requests insurance. The household 0:24:42.280 --> 0:24:46.320 also requires, you know, liquidity support during cultivation. The household 0:24:46.320 --> 0:24:50.439 also requires uh, you know, other other financial products otherwise 0:24:50.520 --> 0:24:53.560 reservices on and so forth. So you saw this problem 0:24:53.720 --> 0:24:56.879 and other problems like it, and obviously you saw some 0:24:56.960 --> 0:24:59.520 kind of an opportunity. But I just love to hear 0:25:00.119 --> 0:25:02.320 made you decide to make the leap, because becoming an 0:25:02.440 --> 0:25:06.880 entrepreneur is non trivial decision in one's career. I realized 0:25:06.920 --> 0:25:09.440 the enormity of it now, but when the addition was made, 0:25:09.560 --> 0:25:13.320 it felt natural. I have never done farming, but the 0:25:13.320 --> 0:25:16.320 way I took to agriculture was like fish taken to order. 0:25:16.400 --> 0:25:17.880 So on a light or not, I keep telling, maybe 0:25:17.880 --> 0:25:20.040 I would have been a cow buffalo in my previous life. 0:25:22.920 --> 0:25:24.840 That's why it's so natural. Or maybe I would have 0:25:24.840 --> 0:25:26.880 been a farmer if I can be gentle to myself. 0:25:29.560 --> 0:25:34.240 Very funny. So you know from Canada Bank, I moved 0:25:34.280 --> 0:25:37.560 to a bank and continue my studies and then within 0:25:38.000 --> 0:25:40.600 a bank. In two thousands four, I took a sabbatical 0:25:40.640 --> 0:25:42.480 went to Money lad to do my master's. Is when 0:25:42.520 --> 0:25:45.840 I got inspired by the financial inclusion and Dr Mohammed 0:25:45.920 --> 0:25:48.480 Uns's life and then I thought, hey, I have got 0:25:48.640 --> 0:25:52.000 so much of exposure. God has been kind to give 0:25:52.040 --> 0:25:54.520 this exposure of the rural and agree to me, why 0:25:54.560 --> 0:25:57.360 why don't I do something in agriculture. Is what made 0:25:57.400 --> 0:26:00.080 me to get into the Rural micro banking and re 0:26:00.080 --> 0:26:02.879 business group of iss A Bank. Two years and I 0:26:03.080 --> 0:26:05.320 is a bank and then the bank deput a new 0:26:05.359 --> 0:26:08.200 initiative called I f M a trust and I was 0:26:08.240 --> 0:26:10.960 given the responsibility of setting up a local financial institution 0:26:11.000 --> 0:26:16.000 model which designed and deployed an in depth engagement with 0:26:16.040 --> 0:26:19.880 a household. So this actor dimension the household dimension and 0:26:19.920 --> 0:26:23.000 as part of that engagement with the household through a 0:26:23.040 --> 0:26:25.720 branch let approach, we used to do the asset liability 0:26:25.800 --> 0:26:31.119