Recently there has been a lot of hype about a few agritech companies having made impressive growth in revenues. Especially, the performance of DeHaat Kisan: Agriculture and Farming is in the news for having used "AI enabled technologies to revolutionise supply chain and production efficiency in the farming sector through an extensive network of15000+ centres and 503 FPOs serving12.8 million+ farmers."
I have always argued that the sordid reality is that farmers in this country do not get a fair price for their products which can even cover their household expenditure let alone allow them to earn a profit. As is borne out from the two graphics below that I have compiled from the results of the farmer situation survey and household consumption expenditure survey conducted by the National Sample Survey Organisation 77th Round in 2019.
Therefore, while agtech and FPOs can improve matters marginally it cannot substantially increase farmer incomes. Moreover, since there are huge costs for any aggregator of agricultural produce in transportation and storage, the only way such an aggregator can make money is by cheating farmers both in weight and price. This is what most agri traders do. Thus, if an aggregator is not cheating the farmers, then given the huge costs of transportation and storage it must be making losses.
I did some research on Dehaat's finances to test out this hypothesis of mine. It is registered as Green Agrevolution Pvt. Limited with the Registrar of Companies (RoC). The latest financials of the company as per the reports submitted to RoC are as follows -
TOTAL REVENUE: - ₹Crores 2,647.6 which is a 36.12% increase year on year.
EBITDA ₹ Crores -1,118.2
NET LOSS ₹ Crores -1,123.9
NET WORTH ₹ Crores -4,178.2
BORROWINGS ₹ Crores 5,119.6 which is a 24.73% increase year on year
ASSETS ₹ Crores 1,370.9
ROCE -41.72 %
Clearly, the company is making huge losses from its operations confirming my hypothesis that given the low prices of agri produce in wholesale markets it is not possible for an aggregator to make profits without cheating farmers. It is not known what prices it is offering for procurement from farmers but it looks as if it is offering more than the market prices so as to attract them to sell to it. This is not a financially sustainable business model and is not only running but also growing its revenues only because it is heavily funded by big investors. We run an organic store https://kansariorganics.in/
which too runs in losses as we offer the farmers a fair price. The losses are subsidised by our NGO https://mahilajagatlihazsamiti.in/
from grant funds. Therefore, instead of falsely stating that agtech and FPOs can solve the serious problem of lack of income of farmers, what needs to be done is to increase substantially the government support to farmers to pursue ecological restoration, ecological farming, distributed renewable energy generation and local processing and consumption of agri produce.
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