Challenging the farm-to-shelf supply chain
Farm Taaza supplies vegetables and fruit to retail stores with minimal handling, reports Nirmalya Behera
Farm Taaza supplies vegetables and fruits to retail stores with minimal handling.
Dayanand, afarmerfrom N all aka dire na hal li village of the Chic kb al lap ur district in K ar nat aka, is now happy, as he is managing better yields from his fields, and improved and timely real is at ions for his produce. He grows carrots, chow chow, tomatoes and flowers( marigold) in his fields because of a Ben gal ur u-based start-up, GS Farm Ta aza 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 pesticidestouse,” hesays.
FoundedinJune2015, FarmTaazaisa B 2 Be-commerce enterprise in the fresh produce segment that sells to modern retail stores, kiranastores, hotels, restaurants, caterers, ande-commercefirms. Itrecently raised $8 million in Series-A funding from multiple investors, including Epsilon VenturePartners, TaraIndiaFundIV.
Productconcept
“Today, the farmer takes his produce to the local man di. An agent keeps a commission of 5-10 percent( depending on location) of the price fixed for that day( either through auction or set by another agent ). Another middle man buys from the man di and takes the produce to the city( could be Chen nai or Ben ga lu ru or wherever) wholesalemarket. Hesellsto the wholesale market agent whoalsokeepsa commissionof5-10percent. Insomecases, customers (likekiranastores) buy directly from the wholesaler or another agent buy sand sometimes grades the produce and delivers it to customers. FarmTaazabuys 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 Ram ac hand ran, founder and CEO of FarmTaaza.
The company started operations in August 2015 and currently has distribution centre sin Bengaluru, Chen na ia nd Hyderabad, and collection centres in Chikka ball ap ur, Ooty, Krishnagiri, Olakkur, andMettupalayam. More than 1,000 farmers serve Farm Ta aza. It delivers more than 150 stock keeping units. The firm serves three major customer segments, includingmodern retailers such as Big Bazaar, StarBazaar, SPARand Hypercity; HoReCa(hotel, restaurant and cater er) customers such as Apollo Hospitals, ManipalHospitals and Oriental Cuisines; and over 300 kira na stores in Chen na ian dB en ga lu ru. The firm expects to coverKo chi, T hi ru van ant ha pu ram and Vijayawada in the next 12months.
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 percent of production. Thefarm-to-shelfstart-upis chasing a market that throws up an opportunity of $20 billion. Today, about 90 percent of the market isl ar gelyun organised 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 ,” Ramachandransaid.
Revenuemodel
Farm Ta a zach ar ge sc us tome rs based on a cost-plus model or based on local market price. It clocked revenue of ~19.1 cr ore in FY 17 and aims to close this FY 18 with a revenue of ~35crore. Itaimstobreak-evenattheEbitda levelbySeptember2018, andsupplyabout 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.