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Kamatan — Impact Brief

Introduction

In India, as in many developing countries, the supply chain from the farmgate to the point of consumption for agriproducts –whether consumption, processing, retail or export –is fragmented and often has between 3-7 intermediaries. This results in an inefficient marketing system where farmers do not realize the right value for their produce, there is rampant wastages at each stage of the supply chain and little incentivization for quality improvement and value addition.

Kamatan is building a transparent, inclusive, and efficient supply chain for marketing agriculture commodities in India by linking farmer cooperatives to institutional buyers while creating capacity and tools for quality enhancement and standardization of the farm produce close to source. Kamatan works with farmer produce organisations (FPOs), over 10,000 of which have been setup in India with Government support, to source produce for direct supply to agricultural enterprises, processors, and retailers. Kamatan helps FPOs in procuring, storing, quality control and logistics of agricultural commodities. Kamatan also assists farmers and FPOs with the implementation of best practices in grading and sorting as well as value-adding activities like drying, cleaning, and packaging, which can help reduce wastage and match the demands of institutional buyers to enable farmers to realise a significantly higher value for their produce.

Use of GIF Funds

GIF’s equity investment of $1.1m was to enable Kamatan to expand its operations to more FPOs and institutional buyers, further develop its technology stack and to develop rural business hubs to bring in further value-added services such as agricultural inputs, financial linkages, storage and quality certification for the farmers/FPOs.

Investment Objectives

GIF’s investment in Kamatan can help build an organized backend marketplace and supply chain for procurement of agriculture produce and bring in best practices in sorting, grading, quality assurance and traceability which are essential ingredients for building further farm infrastructure and investment in value added services.

  1. Create awareness, demand and incentives for sorting, grading and other quality enhancing activities at the FPO level.
  2. Increase effective price realization of farmers by 5-10% through premium paid for quality and reduction in costs -from lower transport, wastage and eliminating or reducing other transaction costs in traditional marketing.
  3. Pilot the farmer app and strengthen the ERP system for integration with other stakeholders – credit providers, warehousing and logistics solutions providers.
  4. Company scales the model to 50+ FPOs from 11 currently directly reaching 50K+ producers
  5. Company demonstrates sustained relationship and growth with existing FPOs increasing offtake to >10% of total production

Impact to Date

Since inception Kamatan has worked with around 150 FPOs, with a farmer membership of over 100,000, directly or indirectly, whether to enable access credits, access to markets, or some other service. In 2020, Kamatan directly worked with 29 FPOs sourcing over 10,000 tons of produce from the 15,000 plus network farmers. These FPOs have been equipped with digital weighing scales and moisture meters to carry out a transparent assessment of quality and quantity.

Kamatan works with leading institutional buyers and has been able to deliver quality certified produce consistently with <1% wastage and rejection rates. Farmers on average receive better pricing for their quality than neighbouring Mandis (market yards) and also save on transportation costs and overheads by selling close to farmgate, improving their profits by up to 10%.

In addition, they have been able to provide technical advisory and farm demonstration services to over 45,000 farmers and their farmer mobile application which was formally launched last year already has over 42,600 active users receiving daily price updates, weather information and technical advisory. Six FPOs have so far been equipped with and trained on a specially developed ERP system called Kamatan turbo which will allow them to digitally record transactions, manage their accounts and communicate with their farmer base directly.

Besides the direct impact of Kamatan there are early signs of indirect impact on the sector. Since Kamatan was founded more than four years ago, the idea of using FPOs as the natural aggregation of products and services for farmers has become more mainstream. Institutions such as non-banking financial institutions and other agricultural technology start-ups are setting out to solve other problems such as localised weather information, maintaining soil moisture, and quality control of crops, in partnership with FPOs. The more FPOs business capacity and volumes are strengthened, the easier it would be for them to absorb additional services.