Good Businesses 2013

Farm fresh

I Say Organic sells chemical-free produce at affordable rates to boost demand and encourage organic cultivation

Photographs by Vishal Koul

Picture-perfect paddy fields, mofussil stores selling kitschy Katrina Kaif-churning-buttermilk posters, gyms, schools, tractor, car showrooms and fertiliser shops dot the landscape as we drive into village Khedi Sikander in Haryana’s Kaithal district. If the Green Revolution transformed Indian agriculture in the 1960s, here, in its birthplace, another change is coming along. “You see the paddy there,” says Rajesh Kumar, one of the farmers who meet us outside a farm, “and look here”. He points to crops in two separate fields, separated by a mini canal. “That one is so much blacker than what you will see on this farm here. That’s because of pesticides…” he trails off. Kumar is trying to explain to us the difference between organic farming and larger-scale, chemically sprayed one and also why the former benefits farmers, not merely consumers.

Health-conscious consumers have made the organic produce market in India, currently estimated at 1.71 million tonne, one of the fastest growing in the world. But getting farmers to switch to organic cultivation isn’t easy, despite its many advantages — it is cheaper (at least in India, where labour is plentiful), promotes biodiversity, soil health, worker health and other niceties such as bee health. It is difficult to sell organic produce, claim the farmers, and get a good price. Says Kumar, who switched to organic farming a couple of years ago, “Demand for organic produce has been picking up, but it is still difficult to get a fair price.”

That is where I Say Organic steps in. The cluster of farms we visit in Kaithal, including Kumar’s, are affiliated to the Delhi-based company, which sources substantial quantities of organically-grown fresh veggies and fruits from here to supply to consumers in the capital. The agriculture-centric social enterprise was started by 28-year-old Ashmeet Kapoor in March 2012, retailing 100% certified organic veggies, fruit, grains, honey and more through its website. The aim, says Kapoor, is to incentivise farmers to engage in organic and sustainable farming by selling their products in booming urban markets, giving them fair prices for their produce.

“The current industrial model of chemical farming is playing havoc with the environment, our health, and farmers’ health — these toxic chemicals have entered the air, water and our bloodstream. Do you know agriculture is responsible for 35% of total greenhouse gas emissions?” Kapoor asks. 

Unlike places where markups on organic food are 20-100% over conventionally grown foods, I Say Organic is deliberately pricing its products at relatively affordable rates (as much as 50-60% cheaper than niche stores like Nature’s Basket and other online players) hoping to grow demand further, thus prompting farmers to produce more organic produce and switch to organic farming. For instance, Kapoor sells apples at ₹190 per kg, while they retail on the Altitude Store website at ₹260 per kg. “People typically think of just their personal health when they think organic, but it means a lot more.”  

A wakening consciousness

Those who know Kapoor’s story invariably compare it with Swades, the Shah Rukh Khan-starrer — “to the point that it really annoys me now,” as he puts it. The similarities, though, are striking: man leaves bright future in the US to return to India, roams the countryside before settling in a village and later undertaking a project that will help the villagers. Four years ago, after finishing his masters in entrepreneurship from Brown University, Kapoor helped a team working on a water purification project to be implemented in West Bengal. As the project progressed, he was hooked. “There was no doubt in my mind about where my career path was heading.” 

He moved back to India, travelled extensively and though his initial interest was in energy and water, finally zeroed in on agriculture. He found that “farming doesn’t provide a sustainable income anymore. And the reason is that farming itself is highly unsustainable, both for the farmer and the environment.” To get first-hand knowledge of his task, Kapoor leased a two-acre farm in Deoria, eastern UP, and worked on it for six months. “It became apparent then that organic agriculture was the only sensible way forward.”

In April 2010, he set up Jagriti Agrotech, with an investment of about ₹1 crore through the first year, raised from his family (Kapoor is from a Delhi-based family in the construction business). Initially, the attempt was to persuade, intervene and educate farmers to shift to organic practices. But farmers were wary, not sure it would be worth their while. So, I Say Organic, set up under Jagriti, began work on the other end of the chain, creating a retail network that will ensure a ready market for organic produce.

How does it work? Partnerships have been established with five farmer groups in five states — Haryana, Himachal Pradesh, Uttar Pradesh, Madhya Pradesh and Uttarakhand — which together represent over 5,000 farmers. Every week, I Say Organic buys about 4,000 kg of fresh organic produce directly from the farmers, in contrast to many other retailers who usually go to aggregators — the middlemen of the business. The company pays a 25% premium for its organic purchases over the highest mandi price to the farmers, as part of its fair practices, and produce is collected straight from the fields. “At the moment we are able to source only what there is a demand for in our customer base — on average, we buy 40% of the produce of vegetable farmers, while the rest is sold in conventional markets,” explains Kapoor.

Every other day, hired trucks carry the fruit and veggies to a company-owned cold storage in the Okhla Industrial Area. This means the produce is stored only overnight, making it the freshest available in the city. “Our farm-to-plate model involves harvesting produce, sorting transporting, packaging and delivering to customers, all in one to two days,” explains Kapoor. Careful ordering based on demand analysis ensures that each lot finishes before the next lot arrives. “We realised it is important to customise operations to local buying patterns when it comes to fresh produce,” he says. “Only then will demand grow substantially.”

Unlike other retailers selling fresh produce, where delivery happens just once a week, it is done on the same day by I Say Organic. A set of four delivery vans ferry the fruit and veggies to households across the city. The company has served around 2,000 households, of which 500 buy regularly every month. While the average purchase has grown to ₹750 per month, Kapoor estimates an average increase in demand of 15% to 20% every month.

The company has grown through mainly word-of-mouth and social media. I Say Organic is active on Facebook, Twitter and has a regularly updated blog. That’s how Divya Punj, a South Delhi homemaker, heard about it and began ordering.  “Other organic retailers require you to place the order weekly so they can buy accordingly. As a result I would end up mixing organic veggies with those from local vendors in my home. But with I Say Organic, you can order in the morning and they deliver in the evening,” she says.

Catering to clients like this has helped Kapoor’s enterprise clock ₹1 crore in revenue in the past year and grow to a 20-member organisation. Scaling up further is on the cards, creating more farmer clusters that can supply to local hubs and replicating Delhi operations in Bengaluru, Mumbai, Chandigarh and Jaipur after two years.

“As volumes grow, the consumer price will automatically come down, growing demand for organic products further,” Kapoor predicts. He estimates needing ₹3 crore — which he will collect through personal and external funding — before he can start expansion to other cities. The revenue target over the same period: ₹2.5 crore in FY14 and ₹7 crore the next year. Currently, gross margins are 35% but Kapoor is determined not to raise prices unreasonably. “I need to make about ₹12 lakh a month to not run into losses. Right now, I am making ₹8-9 lakh a month but that doesn’t mean I will hike prices,” he says. The rationale: the idea is to encourage consumption of organic produce, thus tempting more farmers to go organic. 

Still, Kapoor acknowledges that he needs to grow at least 40% if he is to be in the black. But he points to the 150% growth in customers and overall orders between now and 12 months ago as proof of concept. Also, the major cost in handling of produce at current volume translates into higher price per kg. But at higher volumes that will become significantly lower, meaning that the company can be profitable at the same prices. Also, other products (packaged non-perishables) will be offered to add to the stream of revenue.

Going forward, a key challenge will be sourcing certified, above-board produce. As a city boy interested in playing the piano, many people wrote Kapoor off even before he began. “Farmer groups needed to be 100% authentic, so we had to filter out those we thought could be interested just to bank in on the organic premium. We needed farmers who truly believed in the concept of organic like we did,” he says. Even now, with few organised groups growing organic vegetables and fruits, finding reliable and like-minded partners remains the key.

Certainly, the demand side seems to be looking after itself, be it customers such as Punj in Delhi or posh weddings in Ludhiana and Chandigarh, where organic is all the rage. Kapoor and the farmers at Kaithal must certainly hope it’s a trend that catches on and lasts.


You don’t want to be left behind. Do you?

Our work is exclusively for discerning readers. To read our edgy stories and access our archives, you’ve to subscribe