Mahindra nudges farmers towards mechanisation, seeks win-win

Corporate India is increasingly realising the importance of business models built on the pillar of purpose and taking initiatives that would benefit the community at large. From Hindustan Unilever and ITC to the Tata Group and Godrej, building a purposeful business is at the heart of their strategic growth strategy. What is good for the country would be good for the business, is the philosophy of most companies of India Inc and Mahindra is no different.

Mahindra & Mahindra’s two-year-old omni-channel farm service business (which seeks to improve the per acre income of farmers through its bouquet of advisory services), Krish-e, is all set for the next level of growth. A part of Mahindra’s ₹18,433-crore farm equipment services vertical, Krish-e has over 100 centres across 16 states. The last couple of years, claims Ramesh Ramachandran, Senior Vice-President (Farming as a Service), Mahindra & Mahindra, have seen 600,000 downloads of the Krish-e app and over 200,000 farmers have seen an improvement in their income per acre of land.

Agri Opportunity

So, how does Krish-e benefit farmers and Mahindra? The auto major has a 40% share in the 899,407-unit tractor market (which in FY21 saw the highest ever growth of 26.9%). With a larger purpose of improving farm productivity, its game plan is to further increase the penetration of its tractors as well as other farm equipment such as rice transplanters, laser land levelers and also crop inputs. “About ₹150 crore of products have been sold through the Krish-e farmers. These are farmers who have been put through the Krish-e experience and have chosen to buy Mahindra products and Swaraj products,” explains Ramachandran.

While building a purposeful business is one part of the story, agriculture, especially, ag-tech, is the newest buzz. From ITC to Mahindra, Godrej and Patanjali, several of India’s top-notch corporates are investing in the agri sector. It has also caught the attention of start-ups such as Gramophone and AgNext, which are offering agri-related tech services. Even tech giants such as Microsoft have joined the agri-tech bandwagon.

Cisco, for instance, has partnered with the Government of Kerala to bring in technology intervention that would prevent crop loss. In an earlier interview with Fortune India, Daisy Chittilapilly, President (India & SAARC), had said that she saw an opportunity in the agriculture sector and hence put out an agri-tech challenge. She asked participants to come up with tech solutions around agri income loss, crop loss, pest attacks and soil monitoring.

“This was particularly focused on the start-up ecosystem within the country. It could be a good way for them to get some support, but also get some visibility in terms of how they go about building their organisation, idea and the business as well. We have shortlisted six players as a part of that agri-tech challenge. And, there's a cash price announced as well,” said Chittilapilly.

On the other hand, ITC, which was the first-mover in terms of investing in agriculture as a serious business through its e-Choupal format has now launched e-Choupal 4.0, wherein it is focusing on technology-related services. Not only are the 4 million farmers part of the e-Choupal network able to discover prices of agri-products digitally, they also have access to data on weather, potential pest attack threats and a bouquet of other tech services.

Anindiya Mallick, founder of strategic consulting firm Mindcomb, says that both business houses and start-ups are seeing a huge business opportunity in agriculture. “There is a very big business proposition right from storing agricultural produce to cold chain and logistics. The purpose and CSR narrative is the beginning of a strategy of staying invested in the sector.”

Mallick points out that currently most businesses are focusing on basics such as improving soil quality and offering a variety of agronomy-related services, but once there are regulations in place they would also invest in supply chain and logistics.

Krish-e Model

Agriculture is the soul of Mahindra’s farm equipment business model. However, getting farmers to adopt mechanisation requires a lot of convincing and hand-holding. Doing a soil test before sowing or even treating the seeds prior to sowing isn’t a common practice among Indian farmers, and Krish-e is trying to convince farmers to adopt these practices. Similarly, using a rice transplant machine could drastically improve per acre yield, but for Indian farmers seeing is believing. The company has therefore, set up over 6,000 demo plots where it demonstrates the working of its various farm mechanisation products. These are one-acre plots mostly set up in the farmer’s field itself.

“We are promoting a practice of increasing the row-to-row distance, which is counterintuitive to a farmer. We show them when they have the right distance the yield is higher. Also, when you have the right distance, you can grow something else in the middle. Sugarcane, for instance, is a long-cycle crop which takes a year to mature and to harvest. So, you can grow some short-cycle crops in the middle which you can harvest in three or four months. For that, you need a narrow tractor which fits between the two rows of crops. When we do something like this, it facilitates the sale of narrow tractors,” explains Ramachandran.

He claims that the demo plots have helped increase farmers’ income for a basic crop like rice by almost ₹5,000 per acre, per week, and for a high value crop like sugarcane, the value could be as high as ₹15,000.

But buying a rice transplant machine or a laser leveler can cost a farmer anywhere between ₹2.5 lakh and ₹3 lakh and that’s not cheap, especially for a farmer whose fortunes are hugely dependent on variables such as good monsoon. Therefore, Krish-e has launched a rental model wherein a farmer can rent a machine for around ₹800 to ₹2,400 per day (depending on the machine). “I prefer the rental model as the interest is much lower than buying the equipment,” says Dhan Singh Yadav, an elderly farmer in Vidisha, Madhya Pradesh.

Mallick of Mindcomb terms Krish-e’s equipment rental model as ‘uberisation’ of the agri equipment sector. “The farmers can’t afford such expensive equipment, the rental model is a good way of getting them to embrace mechanisation that will help them to improve their yield.”

Though a significant portion of Krish-e’s revenue comes from its rental model, Ramachandran says that it has also resulted in uptake in tractor and other equipment sales. “Many rich farmers are investing in them and renting them out to farmers who can’t afford to buy.”

Krish-e App

The farm equipment major in the last two years has installed 15,000 IoT kits in tractors of the Krish-e farmers. These kits help farmers track the location of their tractors as well as give information on how much diesel the tractor has consumed, or if a spare part needs to be changed. The larger digital play is happening through the Krish-e smartphone app which gives the farmer a host of agronomy-related information. “It's an advisory in your pocket. If you download the app, and put a bit of information about the crop you grow, you are able to get alerts about when you need to irrigate your land, or three days from now there could be a pest attack and you could spray a particular chemical on your crops. The app also contains videos on how to treat your seeds or use fertilisers.”

The IoT smart kit on the other hand, is priced at ₹2,500 for three years and the farmer has to pay a re-charge price of ₹70 per month. The company has been making substantial investments in precision farming for the past 3-4 years and has even made acquisitions globally. It has invested in Swiss ag-tech company Gamaya, Resson Aerospace in Canada and Carnot Technologies. “We have a product for sugarcane, where we use satellite imagery to improve income per acre. It also tells the right time to harvest, which is crucial for a sugar cane mill.”

Ramachandran, who refers to Krish-e as a start-up within the Mahindra eco-system, says, “We are hoping to touch a million downloads soon and we will offer Krish-e services across all our 1,600 tractor dealerships. Like any new-age business we will constantly try new things and will also stop offering some services if we find the farmers are not benefiting from them. So, there's a lot of shifting that will happen, but at its core we are going to be a business that would improve a farmer’s income per acre. That’s our brand’s purpose.”