The average income of a farmer in the Nilgiris is Rs 2 to Rs 2.5 lakh per acre a year. Enter Aibono, which calls itself India’s first end-to-end aggregator platform connecting premium, perishable vegetables from ‘Seed-to-Plate’ or ‘Kisan-to-Kitchen’, circa 2015. The reported income of farmers it works with – from advising what seeds to plant and how to when to plant and when to harvest, based on demand – is now Rs.4.9 lakh per acre annually. In the Covid19 period, the platform claims to have witnessed 160 percent growth.
It also received another round of funding of US$2 million from Japanese VC firms Rebright Partners, Mitsui Sumitomo Insurance Venture Capital and Singh Family Trusts in September 2020, on top of $2.5 million in 2019 from impact fund Menterra, Artha Initiatives, Milliways Ventures, Rebright Partners and 3One4 Capital.
From the first farm in Nilgiris in 2015 it added 50 in year one. Aibono worked with 400 farmers in the region in 2019, supplying hill vegetables, herbs, leafy greens and organics to over 250 retailers in Bengaluru. In 2020, that number stands at over a 1000 farmers and over 800 retailers spread across 110 pin codes across Bengaluru.
By the end of 2020, Aibono wants to onboard over 2000 farmers, reach their produce to over 2000 standalone retailers, besides modern retail, and also make its direct-to-consumer foray through the likes of Dunzo, Swiggy, Zomato and Amazon.
Recent developments might suggest a sudden spike, but the foundation has taken time to build. There’s a story behind the growth path, just like there’s a story behind every harvest.
Sowing The Seeds
Aibono Founder Vivek Rajkumar
Vivek Rajkumar started cultivating on four acres of ancestral land after graduating from IIT Madras in 2011 – and failed. He was drawn to agriculture inspired by his grandfather V Damodaran, who had been highly successful at it once. But the interim generation had moved away from farming.
Between 1945 and 1965, the Aibono founder’s grandfather had grown manifold as a farmer – from growing betel leaves on one acre of land to cultivating a 2,400-acre portfolio near Trivandrum in Kerala. Rajkumar was inspired by how, going beyond farming, his dynamic grandfather helped create agri-logistics. He created wooden body trucks that moved produce from farms to cities, breaking free from the shackles of local markets. When TVS Group’s buses plied from Trivandrum to neighbouring towns, some of the roads were laid by the agriculturist. All the development was funded by agriculture, underlines Rajkumar.
But while the West embraced technology and saw an attendant rise in farm productivity and the prosperity of farmers between the 1950s and 1990s, India didn’t keep pace, notes the founder. The end result was a generation skipping agriculture. Rajkumar’s father was a pilot.
Bananas and rice were the chosen produce when Rajkumar decided to get into farming. The intent was to learn the fundamentals. For the next four years, he would research firsthand the use of technology to improve the agriculture ecosystem. With the advent of mass affordable internet, he sensed the potential for large transformation. No longer was it the case that only large farmers could afford technology. The affordability of services for agriculture like crop sensors, was made possible by a shared services ecosystem enabled by Aibono. But farmers did not understand the relevance of services when Aibono made its first move. For them, it was another set of salesmen from the city, the likes of whom who had sold them agrochemicals and farm inputs in the past.
Cultivating Trust
Nilgiris became the focus for Aibono not by choice but by chance, reveals Rajkumar, over a video call from Bengaluru where Aibono is headquartered. He was studying the sizeable tea farming segment, and right next to the tea farm was a vegetable farm. Rajkumar realised that it was horticulture farming that needed technology the most – the productivity gap was the highest in this space.
Aibono set out to solve two problems for the small vegetable farmer in the Nilgiris – low yields and price realisation. It guarantees the procurement and price to the farmer at the outset, mitigating risk. It empowers them with technology and knowhow, some of which come with scale. That scale is achieved by aggregating farmers who cultivate anywhere between half to one acre of land each. At any point in time, currently, Aibono handles approximately 250 acres of land under active cultivation.
The first farm in the Nilgiris that Aibono started work on was what one could call a ‘model’ farm. Founder Rajkumar wanted to show farmers around it that the services Aibono offered could make a difference to their output. The farm Rajkumar and team chose had a temple in it – making sure the local population would visit. Till date, the founder reveals, Aibono hasn’t hired a sales force. Initially, the shared services platform was offered at Rs.1 per kilogram of produce.
“In the earliest version, we offered precision agriculture services – Farming-as-a-Service. We soon realised that yield management is only one aspect of agriculture. The problem is not solved if you do not take care of the price realization. The intent is to turn every part of the produce into a rupee,” explains Rajkumar.
Harvesting For Demand
At the two ends of the horticulture spectrum are the farm and the end-consumer at retail. Aibono offers farm services powered by AI and demand-supply syncing technology to bridge the farm to the market.
“As aggregator, we provide seeds in the same ratio as the demand,” notes Rajkumar. This is made possible with data from the demand side, sourced from small retailers that Aibono supplies to across Bengaluru. Batches of produce per year are decided based on an algorithm.
“In food and vegetables, the demand is inelastic in an ecosystem. Supply can vary, but demand is always inelastic – it does not change on a day-to-day basis,” he adds.
He underlines that this prediction is made possible only with direct data on demand. The high-frequency supply chain engages retailers with deliveries every other day and calls to retailers are made each day. The data thus harnessed is rich enough to tell famers what to harvest, says the founder. Another tech algorithm allows for ‘Just-In-Time’ harvesting. The farmer is told that it is time to harvest – based on real time demand data.
Hill to Shelf in 16 Hours
- 7/8 am: Farmer is nformed
- 9am to 2pm: Harvest is done
- 2pm: Harvest is picked up
- 6am (next day): Harvest delivered to retailer
Around 85 percent of the inventory handled by Aibono moves from farm to retail in 16 hours. Supply chain wastage in the Indian food and vegetable market is estimated at 40 percent, points out the CEO. Apart from reducing waste, an efficient chain allows fresh produce that can command a premium at retail. Aibono charges a premium of about 10 percent over the local mandi price for its produce. Rajkumar contends that against the 16-hour cycle of Aibono produce, the market typically sees a 48-hour gap from farm to store. This will be a factor as Aibono makes its way into modern retail by December this year.
Brand Play
The demand data is fairly consistent across Bengaluru, the only city Aibono supplies to currently. With a foray into a new city, it will start building data from the first 100 retailers on. But it should be relatively easier with the process having been tried and tested. And expansion is on the cards.
“We’d definitely look at the next set of South Indian cities,” reveals Rajkumar. Hyderabad and Chennai should be among targets, by 2021/2022.
From a farm location lens, the focus would be on hill vegetable cultivation belts like Kodaikanal and Mahabaleshwar. But there’s enough to do in Nilgiris. After all, as Rajkumar reminds us, there are over 80,000 farmers involved in horticulture in these beautiful hills, besides 4.5 lakh acres of tea plantations.
Given the premium it commands by virtue of assured product quality, could the next stage of Aibono’s journey involve branding its produce?
Rajkumar affirms, “Typically, when you work as a B2B trading platform, there is no product assurance. The premise of Aibono as an aggregator is that we don’t see the farmer as a seller, but as a partner. We don’t see the buyer as one, but as the consumer. (With end-to-end product awareness) The natural extension for us is to evolve into a brand. The process is on.”
While it commands a premium from the retailer, Aibono pays a fixed rate to farmers with its buy back and price guarantee. Aibono is operationally profitable, says the company’s founder-CEO. He underlines that alongside scale and profitability, there is a huge focus on sustainability. That augurs well for a brand in the making.
Building The Community
Farmer Ravichandran
“The farmer ecosystem is very generous in giving word-of-mouth,” says the founder, recounting the early days of Aibono from about five years ago. “Once they like a solution, they are good at telling their peers and neighbours,” he adds.
But to onboard the initial set of farmers was a challenge. The approach – apart from showing the results on the model farm that also housed a temple – was to work with opinion leaders like retired teachers and elders. Aibono chose not to use a typical ‘marketing’ approach, like how a seeds company would, informs Rajkumar. “Now we have cracked the code,” he quips.
The farmer community has benefited from the scientific inputs provided by Aibono, which tracks 50 input variables. We asked the company’s CEO where it has been able to add the highest value, from the input end.
“Primarily, the farmer in Nilgiris is not very good at deficiency management. For instance they may be unable to correlate the colouration on a leaf to a deficiency and provide additional nutrients at an early stage. We have the support team visiting each farm twice a week. We have created crop modeling – a decision tree for each crop, whereby the farmer can provide additional nutrient support before it is too late,” explains Rajkumar.
The hardest part of the platform has been in connecting production and consumption data into a single layer, he notes. But that is also perhaps the element that is helping the platform make maximum impact.
“We have the ability to look at the food chain as one data continuum. You grow what you eat,” he observes, encapsulating Aibono’s reason for existence rather succinctly as part of what he bills as Agri4.0.
For the farmer community at its core, Aibono is working on shared insurance, working capital financing (using Fintech) and reduced cost of procurement. With Aibono, a typical small farmer with no credit history now has one.
Among those farmers is 82-year-old Malammal, who Rajkumar vividly remembers as one of the first to join the platform. The lady has eight children including two sons, one of whom is hearing impaired and another afflicted by stroke. She is still active on her farm adjacent to her house.
Farmer Malammal and her family
The support team staff in their mid-20s is always assured of a cup of tea when they visit her. She is rather fond of them, as she is grateful to Aibono. Rajkumar recalls her saying that all she has to do now is follow instructions, and wait for a wire transfer.
Removing that element of uncertainty from the lives of such farmers is the most significant change the 150-strong team at Aibono has effected so far. The CEO and team want to sow more such seeds of lasting change.