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Good Businesses 2016

Nature Nurture
Suma Agro is improving crop yields by restoring soil fertility in an organic way

Kripa Mahalingam

Crop doctor: K Karthik, co-founder of Suma Agro

Did you know that 60% of a crop’s yield depends entirely on soil fertility? I didn’t either, till I met K Karthik, the founder of Suma Agro who calls soil fertility the bedrock of agriculture. Karthik is concerned over the excessive use of fertilisers and the resulting significant drop in yields. He then points out that in 1970, where one kg of NPK fertiliser yielded 15 kgs of foodgrain, the same one kg mixture yields only 4 kgs of foodgrain today. To undo the damage in his own way, he co-founded Suma Agro with his neighbour, Sumathi Balamurukan in 2011 to restore soil health through its organic products.

Suma Agro manufactures potassium humate or humic acid which is nothing but carbon extracted from lignite (brown coal). Lignite is considered to be the best source for humic acid or humate, which is increasingly used to rebuild soil, reduce water usage, improve yields and is the single most productive input in sustainable agriculture. Humate, which is made up of various forms of carbon formed through the biological breakdown of plant life over millions of years, restores the natural balance in the soil thereby improving water retention and mineral absorption.

How it started
Since lignite is considered to be the best source of humic acid or potassium humate, the government-owned Neyveli Lignite Corporation (NLC) started working on a technology to extract carbon from lignite that could be used as a soil nutrient or conditioner in 2003. Both the founders, who were neighbours for more than a decade and already business partners, started working with NLC as fabricators. NLC, then developed the technology along with Tamil Nadu Agricultural University (TNAU) over the next five years where the founders helped them in building two manufacturing plants. The technology was commercialised in 2010, but NLC thought it would be better to outsource the technology to someone who would exclusively market and commercialise it. Their most viable option was to offer it to the fabricators who understood the technology, having worked with them for many years. The duo realised that there was a definite need for a product like this in the market and hence, decided to take the plunge. They shut down all their other businesses to focus on Suma Agro. 

They licensed the technology for 10-years, agreeing to an initial payment of 5 lakh and a 3% royalty on sales. The duo then invested about 1.5 crore in setting up a plant with an installed capacity of 1.2 million litres in 2011. They started off by selling the product to B2B customers, mainly small bio-fertiliser companies who bundled the humic acid with their own products and sold it under their brand name. 

Changing track
In 2013, the company decided to adopt the B2C route and came up with its own brand, Humicas.  Suma Agro is currently present in 12 districts of Tamil Nadu with over 100 dealers distributing the product. “There is not one company that is focusing on soil fertility even though 60% of the yield depends on it,” claims Karthik. 

 According to him, humic acid is the fastest way to regenerate the soil and by using the product, farmers are assured of a minimum 20-30% improvement in yields, irrespective of the soil’s state. What’s more, they can cut down on the use of fertilisers and improve the soil’s health. “The improvement of the yield is the bonus that farmers get because they can reduce their fertiliser consumption by 25% which covers the cost of buying our product. So, they are not actually spending anything extra for improving their yields and restoring the health of their soil,” says Karthik. 

Customers who have used the product seem to vouch for the fact that it does improve soil quality and fertility. “We have been using Humicas for the past four years in our farms and the soil quality has definitely improved. It has been soft and porous and its water retention ability has significantly improved,” say Srinivasan, one of the largest individual customers of Suma Agro, who grows paddy through organic farming in Kumbakonam.

It costs about 200 per litre on average on the retail side and the company recommends that the farmers use about 10 litres per acre. The farmers, until now, have been using organic manure to improve fertility. But it takes around 9-12 months for the manure to decompose into carbon and that time lag is done away with when they use Humicas, with the cost remaining the same. The farmers also don’t have to deal with the headache of transportation. What the two-three tonnes of organic manure will do for one acre, Humicas does in just 10 litres.

The immunity and the vitality of crops is also dependent on soil strength, and continuous soil degradation has led to the loss of crop immunity over the years and new threats are emerging. The number of pesticides for a single crop like paddy has risen from 40 in 1950s to 250 currently. Karthik says that like the human body becomes immune to antibiotics and their effect is nullified over a period of time, pesticides too, will start losing their power to protect crops. So the best way to improve immunity is to restore the carbon in the soil.  

Humicas is the only bio-stimulant available in a liquid form,and this is the most effective way to deliver humic acid to the soil. So far, humic acid imported from China comes in the form of granules that are then diluted. However, the granules don’t dilute completely. Since there are no other quality standards that serve as a benchmark, there is no telling how accurate the actual strength of the humic acid is.  To illustrate, Karthik compares Humicas to pre-blended medicine syrup and the granules to an oral suspension medicine. If the water quality is not good or we dilute the suspension too much, the efficacy is lost. Similarly, in the case of granules, the efficacy is lost if it is diluted too much or if the granules are of low quality. 

 Apart from Humicas, they have two other products — ‘Flower Valley’, which is tailored to induce more flowering, consisting of NPK liquid and micronutrients, and ‘Jeevan’, which improves plant metabolism, photosynthesis and promotes leaf growth.

Way ahead
During the last quarter, it raised 60 lakh from Ankur Capital and is looking to use the funds to scale up its distribution network. “Humicas has a direct impact on agricultural productivity and the overall earning ability of the farmer, besides having a macro level impact through its ability to reduce government subsidy. Currently, the product is only being imported and there are concerns on the quality of the imported products. So there is a huge business opportunity for Suma Agro to become a reliable local substitute to improve soil fertility,” says Rema Subramanian, managing partner, Ankur Capital. 

Rema Subramanian, Managing partner, Ankur CapitalApart from beefing up its sales team, the company is also talking to fertiliser manufacturer RCF to use their distribution network as well. The company is also in talks with companies with large contract farming in place to get their farmers to use their product.  They are currently in talks with Pepsi, SABMiller, Mahindra and Godrej and hope to bring on board some of the bigger companies as their clients. “These companies understand technology and are constantly on the lookout for ways to improve yields and Humicas will be the ideal product for that,” says Karthik. Since 90% of land holding is small, or less than two-three acres, he feels it is better to reach farmers through large contract farming companies rather than individually.

The company sold about 2.5 lakh litres in FY16 earning revenue of about 1 crore. In FY17, the company hopes to sell around 5 lakh litres and as they scale up relationships with large contract farming companies, their aim is to sell 10 lakh litres in FY18. Though some of the state governments are focusing on organic farming, Humicas still hasn’t found its way to tap any of the government schemes. According to Karthik, there are over 200 government schemes pertaining to farmers and agriculture with about 20-odd schemes on soil alone. Currently, the government buys organic manure at the district level and supplies it to the farmer free of charge or at a subsidised rate. The company has been convincing state governments to switch to their product. It hopes that the latest technical paper released by TNAU, on how potassium humate is the best for improving soil fertility, should land them their first win in their home state. TNAU is the agricultural advisor to the Tamil Nadu government and the hope is that the buy-in will happen by the end of the year. And if that does happen, Suma Agro plans to showcase the win with other state governments, too. 

Karthik believes that with the availability of cultivable land reducing, the only option available to farmers is to improve farm productivity and that has to come from the soil. He says that the farmer has to go back to the roots and feed the soil, instead of feeding the plant more fertilisers. “Everyone is talking about how we need another green revolution. But I think we need to have a brown revolution that improves soil fertility and that will form the bedrock of the next green revolution.”

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