Noida-based agtech and post-harvest services firm Arya.ag has launched a blockchain technology that will help its customers to monitor commodities they store in its warehouses on a real-time basis, the company’s co-founder and CEO Prasanna Rao has said.
There are three aspects to this. One, we have a digital platform on which any entity, be it a farmer or farmer producer organization or any other aggregator or entity at the farmgate can select any of our warehouses,” Rao told businessline.
The entity or aggregator can see where warehouses exist and look at their different parameters such as height, capacity or any other storage point that can be found on the platform itself.
Second, Arya.ag uses hermetic storage technology that is IoT-enabled. “We can set up a warehouse at a location where there is no structure at all in less than 24 hours and it is IoT-enabled to provide information such as temperature, carbon dioxide content and humidity,” he said.
The company has deployed AI-enabled cameras to detect any unauthorized movement. “We are putting ₹20,000 crore worth of commodities stored on balance with the technology. This provides complete assurance such as what truck came or left with a particular commodity; when it arrived and in what condition. All of these are available on the blockchain at this point,” Rao said.
Seller, buyer assurance
Arya.ag is digitizing farms, too, of all its 600 FPO partners it is working with now. This will help the company to provide information on storage and finance to farmers and their organisations.
We then finally connect them to buyers. And when they connect, we make sure that there is 100 per cent assurance of payment to the farmer. The buyer gets assurance on quality, quantity and delivery,” Rao said.
Arya.ag, which has listed 10 per cent of warehouses across the country on its platform, offers similar assurance on other services such as finance and commerce too. “In terms of volume, we have 3-4 per cent of India’s total storage. These storages have digital identification,” the company’s CEO said.
Arya.ag can set up storages that can store commodities for three years without any fumigation or chemical application, he claimed.
On setting up steel silos, Rao said they may not be cost-effective since the company looks at storing commodities at places near the farm gate. “We are looking at farmers and here the size of the storage is 100 tonnes or 200 tonnes,” Rao said.
Arya.ag handles about 50 commodities, basically those that have more than three months of shelf-life. The company handles grains, pulses, oilseeds, cotton, other fibers and spices among others and mostly these are seasonal crops.
Rao said paddy, cotton, maize, mustard, oilseeds, pulses and wheat are commodities that are handled on a large scale.
Weather impact on rabi crops
On the impact of rabi crops this year, he said the above-normal temperatures in February may affect the maize crop in Bihar. As regards wheat, he said the production may not be affected as the demand for storage has been less “as of now”.
“We don’t see any panic around. People are not coming to book storage facilities. The wheat crop in most of the significant geographics is already mature and in many places the harvest has already started. So, I don’t see too much of a challenge on the output of wheat,” the Arya.ag CEO said.
“Also last year, the heat wave was accompanied by winds. This year it is not. So, when temperatures have gone up, we have not seen accompanying winds which actually caused the damage,” he said.
The company has used satellite imaging to assess crops and in some districts such as Baran in Rajasthan, there could be an impact on the crop, he said.
Freedom of choice
“I think in mustard there could be a little bit of an issue. It is more about timing now at what time the crop is harvested,” Rao said, adding that about 10 lakh tons to 15 lakh tons of wheat come on the company’s platform.
Argya.ag offers farmers storage facilities so that they don’t need to sell their total crop in one go. “Basically, we give them such a choice and we offer to finance against that storage. We enable the commerce that the farmer or FPO or other entities can actually go out and sell at an appropriate time,” he said.
This also gives farmers the freedom of choice to decide on their buyers.
Currently, there is interest among farmers to store their produce for a longer period of time, the company’s CEO said.
“A larger amount of storage happened by traders and farmers when wheat prices increased immediately after harvest last year. They actually got better returns,” he said, adding that the trading community bought a large quantity of wheat and stored it.
On rice prospects, Rao said there is better storage of paddy at the farmers’ level for grains of higher value such as basmati. In particular, FPOs are storing better and higher value paddy.
The current fiscal has been good for the company with its profitability like to increase seven times as storage of commodities on its platform has grown by almost 60 per cent.
On the financing side, it has seen 100 per cent growth on its own platform. The company disbursed over ₹1,000 crore against about ₹500 crore last fiscal.
Waiting gets additional money
The overall finance enabled on Arya.ag’s platform has grown from about ₹6,000 crore to ₹10,000 crore and in terms of commerce, it has increased from ₹700 crore to nearly ₹2,200 crore.
Arya.ag provides farmers with the choice to decide when to sell their produce and also choose the buyer. “If farmers wait for 3-5 months, they can easily get an additional 15-40 per cent for their produce than selling soon after harvest. This is where storage and finance play a crucial role,” Rao said.
Arya.ag does not seek documentation to provide loans against their produce or seek collateral. It does not look into the past borrowings record.
We just see if the commodity is of a certain quality and when it comes in accordingly, a particular sum is given as a loan. It will be equivalent to about 70 per cent of the value of the commodity as of that date,” he said.
Offering risk mitigation
For financing, the company has its own embedded non-banking financing company besides partnering with 25 banks. “We connect farmers to borrowers and that book is almost about ₹9,000 crore that we enable every year for banks,” Rao said.
Stating that farmers are taking advantage of storage, resources, and access to finance, the company’s founder said for FPOs, it is especially offering a price risk mitigation model where they get compensation when prices fall.