Techie’s drive to empower farmers leads to 1.9 billion organic brand

In the last few years, agriculture, the backbone of India’s economy, has witnessed positive transformation, owing to the intervention of technology and individuals supporting rural entrepreneurship. One such success story is Karnataka-based Akshayakalpa Organic, a vision of a techie who wanted to empower farmers. Since its launch in 2010, the company has served and connected with 1.50 lakh customers, and provided employment to 900 individuals. The brand offers 40 dairy products, five non-dairy products, and over 10 seasonal vegetables. In FY23, Akshayakalpa Organic earned a total revenue of Rs 1,941 million (Rs 194.1 crore). The organic brand is gearing up for a new venture with the upcoming launch of an organic grocery line. This expansion will include products such as pulses, dry fruits, flour, millet, rice, spices, and sweeteners. Speaking with Bizz Buzz, co-founder and CEO of Akshayakalpa Organic, Shashi Kumar provides insight into the organic segment and its potential to grow in India backed by widespread customer awareness and adoption of cluster-based organic farming

How did you begin your journey in organic?

After being in the tech sector for nearly 18 years, I wanted to get back to farming and groom farmers to be entrepreneurs. I started off by opening an NGO but sooner understood that there are lot of challenges, and one of that being daily cash flow for farmers. After farmers cultivate crops, they can look at revenues only after six or eight months, depending upon the crop. So fundamentally I wanted to solve that problem. To solve this first problem, I thought that dairy is a good intervention. To make it perpetual and sustainable, we started looking at soil management. To make this entire farming work, soil needs to be managed properly. Various aspects need to be solved, for example, soil nutrition, produce manure at large scale, protection of topsoil and prevention of its erosion. This is when the organic thought process came in. So, this was the mechanism where we could build on soil and enable cash flow for farmers.

How did dairy fit into your plan?

Dairy solves two problems; it gives regular cash flow and it also gives cow dung which is utilised to make large scale manure for the farms, and by using that manure, we manage the soil. There is no other reason for starting dairy. When we began to break down cash issues, regular income issues, soil management issues, cropping issues and so on, dairy became inevitable. So, we designed a system with dairy in the central and other crops grown around it through better soil management. This is what Akshayakalpa does right now…end to end farm design, in the centre of which is dairy, around that is various crops, grains, vegetables, fruits, horticulture, bee keeping and backyard poultry. All of this gets integrated into the farm. That is how risk for farmers in the market reduces. Farmer has daily cash from dairy, monthly income from green and vegetables, three-monthly income from coconut, tender coconut, while honey, backyard poultry and others are for six monthly incomes.

How is organic achieved in the dairy industry, and how do you maintain quality until the final product reaches consumers?

Organic dairy at Akshayakalpa means that fodder is grown in organic manner for the cows to feed on. When treatment of cow comes, they cannot be infused with antibiotics. So how do we manage cows… they cannot be tied, cows need to have access to feed round the clock, cows need to be raised in free environment with access to clean water. Starting from how the soil is managed to how a cow is managed and after milking what we do with the milk, the entire process comprises organic milk. Later, the milk is chilled immediately to four degrees Celsius to stop bacterial growth, after which it is moved to the processing plant. The quality is preserved through effective cold chain management practices.

Besides dairy, what are the other product lines?

Dairy is one product line, then we have green and vegetables, while banana is the main fruit we have. As and when our farm is ready with each product it gets added into the line. Recently we added a long shelf-life buttermilk into our dairy line which has been launched in the markets we are present, Bangalore, Hyderabad and Chennai. We will continue to introduce one product in every three to four months. We can also increase the yogurt profile, recently we introduced Greek yogurt. In the month of February, we will be launching Akshayakalpa grocery line. We will start off with pulses, and rice. We are bringing out 10 products line. More additions will happen as and when we make progress at our farms.

How many farmers are associated with Akshayakalpa Organic?

In the last 14 years, we have worked with around 1,200 farmers, not many. Farmers are in two clusters right now. One is the Tiptur cluster in Karnataka, and Chengalpattu cluster in Tamil Nadu. The third cluster is coming up at Shadnagar in Telangana. It will take two to three months for the farms to come up in Shadnagar, but it will take over two years for the organic certification process to complete. The research and development facility that is coming up on the outskirts of Hyderabad will be ready in the next two to three months.

How much progress have you made in achieving farmer empowerment?

We have taken each farmers revenue close to Rs 1 lakh per month that is the payment we are doing. For this to succeed consumers need to understand what is organic. Without consumer support this chain will not grow further. It will become only a small initiative. More consumers need to come and understand what is organic, how it is grown, who grew it, on what soil it was grown, how fake it is, all these aspects a consumer needs to make an attempt to understand. This is what is required to get organic into mainstream and once it becomes so, lot more people will start growing organic and the production cost will come down. As it is niche now, the production cost is quite high that is why consumer education is a key part.

How is your presence in the organic market of Hyderabad?

Hyderabad market is very similar to Bangalore, in terms of purchase patterns, and preferences. We came to Hyderabad close to a year back. We do around monthly 3.5 crore sale in Hyderabad. We are able to see good consumer traction in this city. All the products right now are transported on a daily basis from Tiptur to Hyderabad as it will take some time for the farms to be up and running in Hyderabad.

Any plan of entering new markets?

Right now, there is no focus on any other markets as we want to focus on three cities, Bangalore, Chennai and Hyderabad. In terms of consumer education part, we run a programme under which 10,000 consumers from Bangalore visited our farm last year. That is how we are trying to market in terms of consumer education. Our online presence is through our mobile application and all the e-commerce platforms like Swiggy Instamart, Blinkit, among several others. In these three cities we are present in 2,000 retail stores and this number will remain so for the next two to three years, but going forward all the products will be available in all of these stores. All the produce listed by us is localised to our farms.

When do you expect to achieve a break-even point, and what specific purposes are the raised funds being allocated for?

Our last round of funds was raised in July 2022 under Series C from the British government and Nikhil Kamath. We are utilising the investment right now, recently we commissioned our new processing plant in Chennai, in Hyderabad we are expanding the market, and for strengthening of distribution. For the next four to five years, we do not want any investment. As we will continue to expand the market so over next three to four years we do not see breaking even. Maybe by 2026 we should break even. In FY23, we reported a loss of Rs 36 crore as we are expanding markets and as we enter these markets, we have to put up infrastructure, hire people and all other things cost money. It was planned so it is fine. The projected FY24 turnover is Rs 3,164 million.

Why is organic produce expensive?

Conventional greens and vegetables grown with that specific manure like urea is extremely subsidized. Actually 50 kg bag of urea costs around Rs 2,500 but farmer only pays Rs 500 and the remaining is subsidized by the government. In an organic ecosystem we cannot use urea we have to make own manure. That is when the cost proposition goes up and that is one fundamental problem the second problem is that we are not allowed to use sprays that are commercially available. So, there is crop loss involved and hence organic farming is not mainstream. That is the reason why organic products are highly expensive. From manure making to spray to soil management, everything the farmer has to do himself while in a conventional method it is subsidized.

How do you see the scope of growth for organic in India?

Organic segment in general has got lot of scope in India. But the limitation is that the market needs to be created. If the effort is put on educating consumers, then the market can be created. Standalone market does not exist and the stress has to be on cluster farming. We need to really put the effort, money in marketing these products, and educating customers has to be the starting point, only then the market will get created. There is huge potential, it will grow really well but consumers need to be educated to support this growth.

How can a consumer differentiate fake from real organic products?

From organic product identification point of view labelling laws are very clear, which says if your product is certified organic it has to carry two logos, one is India Organic and Jaivik Bharat. If these logos are put on the package, with proper reference given then it is called organic from consumer stand point. Second aspect of organic is the labelling laws under which one just cannot write organic and get away. Government is coming big way to support organic segment, FSSAI has framed stringent testing requirements for organic. Organic producers, packers need to adhere to standards while consumers have to look into these details while buying. As traceability requirements are very high it leads to high cost in production and selling price.