4-9-17 Analytical Article no. 22
Promoters of ‘Ergos’
a Bengaluru based startup were concerned about age old pain which Indian
farmers are facing from generations. Most of the times, Indian farmers do not
get what they deserve for their harvest. They are forced to sell their Agro-products
as early as possible after harvesting for one major reason. Agro-products are perishables,
consequently quality reduces as the time passes, resulting in reduction in realizable
price. There is another problem which takes away profit from the farmers, if in
a particular year farmers get bumper crop, they get low price because of
abundant supply at once.
Ergos foresaw an
opportunity here and came up with a concept called micro-warehousing. The plan
was simple. Reach to farmers, communicate with them about benefits and connect
them with the scheme at a very low price 6-12 Rs. per quintal (100 kg) per month (that is 6 to 10 paisa per kg). They offered
two main benefits -1. Warehousing 2. Price- Advisory. The plan worked, thousands of farmers have
joined the scheme. Instead of selling their product immediately after harvesting
at low cheap prices farmers now wait for right time. Till then, they warehouse
(provided by Ergos) their harvest. When the prices shoot up they sell their
product and make handsome profit; Sometimes even double. With proper warehousing farmer can store their
products and sell when the price moves up.
To make the scheme
more practical and transparent Ergos is using a mobile phone app which list out
the stocks held by farmers in warehouses and current market price of the
product. Thus the farmer always remains in touch with market trend. It works like shares in Demat form. Once the farmer warehouse grains, they
are graded and detail is placed in the app. The post sale payment to farmer is
done within a week.
In case farmer needs
money he can get loan upto 75% of value of his stored product for which a
tie-up has been made with IDBI and SBI.
The company has
implemented a new model; the company does not need brick and mortar
infrastructure for procurement. It does not need to buy Maize/wheat lorry wise
and go through the hassles of quality checking, weighing, etc. every
time. Under the model implemented by the company where in farmers
themselves deposit stock in company’s managed warehouse. At the time of
depositing stock, the quality and weight is checked. Thereafter, based on
procurement order, the company just concludes the deal with the farmer.
The ‘micro
warehouses’ at village level is a low cost format but capacity utilization of
the warehouses is higher. Based on stock data, the company is able to negotiate
with the buyers to discover the highest possible price.
On the other hand,
farmers using such micro-medium warehouses have experienced themselves
that through scientific warehousing, the quality of food grains can be
maintained and moisture, fungus, broken, shriven, etc. can be controlled. This
translates into higher price realization and low wastage.
Q.1 Which types of plan used by Ergos?
Q.2 How many functions of marketing is performed at Ergos?
Read more
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