GS Farm Taaza Produce: Challenging the farm-to-shelf supply chain

Farm Taaza supplies vegetables and fruits to retail stores with minimal handling

Dayanand, a farmer from Nallakadirenahalli village of the Chickballapur district in Karnataka, is now happy, as he is managing better yields from his fields, and improved and timely realisations for his produce. He grows carrots, chow chow, tomatoes and flowers (marigold) in his fields because of a Bengaluru-based start-up, GS Farm Taaza Produce. “It is different from others as its executives inspect the fields every week and advise on crop health issues, such as which insecticides or pesticides to use,” he says.

Founded in June 2015, Farm Taaza is a B2B e-commerce enterprise in the fresh produce segment that sells to modern retail stores, kirana stores, hotels, restaurants, caterers, and e-commerce firms. It recently raised $8 million in Series-A funding from multiple investors, including Epsilon Venture Partners, Tara India Fund IV. 

Product concept

“Today, the farmer takes his produce to the local mandi. An agent keeps a commission of 5-10 per cent (depending on location) of the price fixed for that day (either through auction or set by another agent). Another middleman buys from the mandi and takes the produce to the city (could be Chennai or Bengaluru or wherever) wholesale market. He sells to the wholesale market agent who also keeps a commission of 5-10 per cent. In some cases, customers (like kirana stores) buy directly from the wholesaler or another agent buys and sometimes grades the produce and delivers it to customers. Farm Taaza buys from farmers (in most cases) and delivers to customers at their store or location directly. The concept is to reduce the number of times the produce is touched so it stays fresh and spoilage is reduced,” said Kumar Ramachandran, founder and CEO of Farm Taaza.

The company started operations in August 2015 and currently has distribution centres in Bengaluru, Chennai and Hyderabad, and collection centres in Chikkaballapur, Ooty, Krishnagiri, Olakkur, and Mettupalayam. More than 1,000 farmers serve Farm Taaza. It delivers more than 150 stock-keeping units. The firm serves three major customer segments, including modern retailers such as Big Bazaar, Star Bazaar, SPAR and Hypercity; HoReCa (hotel, restaurant and caterer) customers such as Apollo Hospitals, Manipal Hospitals and Oriental Cuisines; and over 300 kirana stores in Chennai and Bengaluru. The firm expects to cover Kochi, Thiruvananthapuram and Vijayawada in the next 12 months. 

Opportunities

India’s diverse climate ensures availability of all varieties of fresh fruit and vegetables. It ranks second in production, after China. However, in India the per capita availability is quite low because of post-harvest losses, which account for about 25-30 per cent of production. The farm-to-shelf start-up is chasing a market that throws up an opportunity of $20 billion. Today, about 90 per cent of the market is largely unorganised and controlled by agents at various stages. “There are few new organised players in this segment. We want to differentiate ourselves through the technology we use to improve our procurement and supply chain process,”  Ramachandran said.

Revenue model

Farm Taaza charges customers based on a cost-plus model or based on local market price. It clocked revenue of Rs 19.1 crore in FY17 and aims to close this FY18  with a revenue of Rs 35 crore. It aims to break-even at the Ebitda level by September 2018, and supply about 100 tonnes of fruit and vegetables a day, up from the current 20 tonnes.

Funding

The founder and friends (majority from Silicon Valley) have invested $1.5 million during the seed round and raised $8 million in the recent Series-A round. “Funding is primarily for scaling up our business across south India. This business does not take much capital expense but requires significant working capital. The other reason is to invest more on the next stage, which is data-driven-solutions (machine learning and data analytics) that are key to reducing human involvement in decisions,” said Ramachandran. 

Expert Take

 

Palat Vijayaraghavan, Founder & CEO, Lawrencedale Agro Processing (Leaf)

More professionals needed to bring change

It is heartening to note that there is a rise in professional and organised investment coming into this sector. 

At Leaf, we have pioneered the concept of better management of fresh produce, thus, benefitting the entire value chain. This industry requires more such investments to keep in tune with the government’s plan to double farmers’ incomes by 2022. The Indian agriculture sector is going through enormous stress, given natural disasters coupled with volatility, and it requires more such professional players to bring about the change we would like to see in the near future. The government is putting in all efforts to enhance support to farmers and such initiatives backed by institutional funds will propel the sector further.