We are excited to welcome CropIn Technologies to the BSP Fund portfolio. CropIn is a Bangalore-based software startup that makes farm operations efficient, transparent, and traceable. The software collects data from the field and makes it available to assist agri-businesses and farmers to improve productivity and sustainability. The cloud-based solution simplifies complex farming operations, especially those common to contract farming, an area ripe for technology innovation.
Contract Farming in India
Contract farming is an agricultural production arrangement that is carried out based on an agreement between a buyer (usually a food processing company) and a farmer. The agreement determines the conditions for the production of a farm’s products and establishes a set of quality standards that, when met by the farmer, commits the buyer to purchasing the product.
Change in Regulation
Since 2003, 15 Indian states have lifted restrictions on where farmers can sell their crops, creating an opportunity for contract farming relationships between food processors or distributors and India’s large population of smallholder farmers. Today 7 million acres in India are engaged in contract farming operations. This segment is growing at a rapid rate alongside the food retail industry in India. According to the Indian Brand Equity Foundation, the $518 billion USD Indian retail industry has seen double-digit growth over the last ten years, 60% of which is in food and grocery.
Farming is the livelihood for 600 million Indians, according to the latest National Agricultural Census. Eighty percent of them work less than two hectares of land and yet they produce 41% of the country’s food-grains according to the FAO. Despite their importance to the Indian economy, many of these farmers have difficulty moving beyond self-sustenance. Low yields from a lack of fertilizer, blight, and poor-quality inputs is just part of the problem. Access to a reliable, fair marketplace is another. However, with the growth of contract farming in India, farmers have the opportunity to gain guidance and inputs along with a guaranteed market outlet. Buyers are happy to provide these resources in order to ensure high quality outputs and predictable yields.
Problems in Practice
Given the importance of buyers’ requirements, transparency and good communication are critical but difficult to achieve because of the smallholder nature of farmers in India. Despite the positive impact contract farming could have in theory, buyers must still rely on manual data entry and physical visits to manage their operations. In practice, contract farming requires seamless communication and data management. This is where CropIn comes in.
How CropIn Makes Contract Farming More Efficient
Without technology, buyers engaging in contract farming must rely on supervisors to physically visit each farmer to provide inputs and directions, answer questions, and collect performance data. Supervisors are inherently limited by the dispersed geography of the farmers they manage. With CropIn, farmers can report problems to their supervisors in real time and receive advice on remedying the problem immediately. Supervisors can send out reminders to the farmers under their management to remind them to perform key tasks (i.e. spread fertilizer today before it rains).
By collecting data with CropIn on each farmer’s individual site and activities, buyers gain real time, localized insight into projected yields. With more information, buyers can fully understand their supply chain even when they are remote. Buyers can electronically update best practice information, weather alerts, and production information to seamlessly communicate with the farmer.
Without CropIn, farmers can fall through the cracks and problems can be overlooked. By tracking activities, progress, and site information with CropIn, buyers and farmers alike can easily trace a product’s history. Enabling traceability ensures that there is a sustainable and productive supply chain.
As India’s middle class continues to grow and organized food retail becomes more common, we will see a bigger demand for the smallholder farmer population to be included and productive. Contract farming enhanced with business intelligence and communication technology can bring us a long way, and we’re excited to be behind CropIn supporting this movement.