Agriculture employs more than half of India’s population and generates the majority of income for most rural families. While India leads the globe in the production of spices, pulses, milk and fruit, the sector contributes merely 18 per cent to the GDP. Most Indian farmers lead a fraught existence with just one crop failure standing between them and utter disaster. They are caught in a tricky situation. A bumper crop crashes the prices while bad harvest leaves the farmer with nothing to sell. Weather unpredictability and opportunities available in urban centers make it even more challenging to stay in farming. The farmer operates on fragile working capital and needs to quickly sell as much of his crop as possible to fund his next crop cycle. This situation can change dramatically if the farmers can safely store their produce and sell when the time is right.
As part of the effort to change this paradigm, the government is actively encouraging horticulture amongst farmers. It seems like a good plan as horticultural products are more profitable than more traditional agricultural products. However, farmers still prefer to cultivate grains instead of fruits and vegetables. The reason isn’t a mystery, and the culprit is PHL or Post Harvest Losses. The farmer loses over a third of the horticultural produce because it is perishable, and there is no access to a cold chain. To the sector, this situation represents a loss of almost $16 billion annually.
Only 10% per cent of horticultural producers have only partial access to cold chain infrastructure. It is also concentrated in specific geographies and focuses on the crop of potato. Farmers with smaller acreages have almost no access to these facilities and suffer heavy PHL. The design of existing cold chain products – buying, running and maintaining – is prohibitively expensive. The erratic power supply in rural areas doesn’t help either, leaving conventional cold storage systems only partially functional.
The sector needs a cold storage chain designed to serve the India farmers and the nuances of their cashflow, says, Anurag Agarwal, CEO and MD of New Leaf Dynamic. New Leaf is trying to address it using GreenCHILL. It is a vapour adsorption cycle-based refrigeration system meant specifically for small-scale enterprising farmers. GreenCHILL is ideal for small farmers, either on or near-farm, with capacities ranging from 10MT, 15MT to 20MT. Instead of electricity or fossil fuels, it is powered using farm waste or biomass. The Green Refrigerant it utilizes makes GreenCHILL environmentally sustainable.
For Anurag, the advantages of GreenCHILL offers are best epitomized by Shambulal, a farmer from village Neemuch in Madhya Pradesh. Shambulal grows oranges and harvests them twice a year. His produces fetches Rs 16-20 per kg near the harvest time. However, during the off- season, he can sell his cold-stored lemons for Rs 40-55 per kg. His income has increased exponentially and proven the concept to neighbouring farmers.
The decision to design and produce a system specifically for small farmers came from Anurag’s personal experience of growing up in a village seeing the farmers battle severe pitfalls. He recalls farmers would borrow his bicycle or ask for a ride to the evening market so they could quickly sell their perishables. He observed that the situation was no better, even after decades. Anurag is determined to conquer this hopelessness with not just a well-designed product but a well-intentioned full-fledged cold storage solution. Alongside the product that adapts to user-requirement to include pre-cooling and other customizations New Leaf Dynamics supports the farmer with debt and subsidy access while raising their Purchase Order, and provides them with necessary market linkages to fetch a better price for their produce. With affordable cold storage in their arsenal, farmers can stay profitable, store it efficiently and sell it at the right time and better prices. Eventually, they can move past the struggle for basic survival and come up with innovations that enhance their crops and their lives.
“80-85% farmers in developed economies in Western Europe and the US have access to cold chain network. Given that only 10% Indian farmers have such access, there is a great opportunity to bring this product to Indian farmers. The demand for cold chain technologies, especially the near-farm type, is set to grow at 15-20% CAGR”, says Anurag.
Why have we invested New Leaf Dynamics
In New Leaf, Social Alpha found a combination of technology innovation and market opportunity. The solution goes beyond a low-cost, environment-friendly product and addresses the customer’s core needs – to gain flexibility and better price for their produce, and necessary financing for the purchase. The team has demonstrated an ability to survive the initial years of product development and have been judicious in arranging for investments at just the right junctures. The product is now recognized on a global scale as New Leaf Dynamic has won the Engineers Without Borders – Chill Challenge 2019, and is a finalist for the Keeling Curve Prize 2019, along with forging R&D ties with Georgia Tech Research Corporation.
The Investment due-diligence process, which included several on-field installation visits pointed to a very crucial aspect – apart from the increase in the earnings for the produce, the flexibility and convenience of operating the cold storage was particularly appreciated by the farmers. The quick and on-demand ramping up rate, intuitive, and ergonomic controls are no doubt a result of a massive user-centric engineering effort. This re-affirms our investment thesis that quality products that focus on enhancing user experience can be provided to the rural consumer at an affordable price.