Caspian Canvas is Caspian's very own forum through which we contribute towards ecosystem development in specific sector. Currently, specific to food & agribusiness. Through Canvas, the Caspian team interacts with entrepreneurs to learn from them. In turn, Caspian shares own experience as an investor/lender about the key success factors behind successful scalable businesses that work towards the good of the people and the planet. More about Canvas here
On the 15th of December 2017, we hosted Mr. Rangu Rao at our third Canvas session. Rangu is the CEO of Safe Harvest, a private limited company that markets zero pesticide produce.
The Relevance of Non-Pesticide Management (NPM)
Overuse of chemical pesticides and fertilizers is unsustainable for the environment and consumer and farmer health. NPM means less risky, more sustainable farming that eliminates the use of chemical pesticides. There is good reason for this selective focus on pesticides: of all chemical agri-inputs, pesticides have by far the worst impact on health and environment. Secondly, it is relatively easier for farmers to give up chemical pesticides and replace them with bio-pesticides. Giving up chemical fertilizers on the other hand, is more difficult, as productivity may drop initially. The government promotes fertilizer use through subsidies, making them affordable for farmers, but also resulting in overuse. Current market information too positions fertilizers as an integral part of “modern farming”. Therefore, it makes progressive sense for a farmer to adopt NPM, even if they do not go fully organic. However, in the long term, as the soil gets rejuvenated through NPM practices, fertilizer usage too will drop, and eventually can be phased out.
Bringing NPM to Market: Safe Harvest
Safe Harvest was formed in 2009 when eight community-based organizations practicing NPM came together to facilitate market linkages. These community-based organizations had followed NPM for many years prior to the formation of Safe Harvest. Their initial aim in promoting NPM had been to reduce agricultural risks for farmers and improve their economic, environmental and health outcomes.
Until Safe Harvest was formed, NPM farmers had been selling their pesticide-free produce to conventional local markets. They were not taking advantage of the potential market among health-conscious consumers, where they could command a better price. Safe Harvest was the pioneer in bringing pesticide-free food to a market which only knew two categories: organic and conventional. It built the market for a middle category: no to chemical pesticides, but yes to chemical fertilizers.
Safe Harvest’s Growth, Traction and Future Outlook
Initially, Safe Harvest partnered with SPAR, under the latter’s CSR projects, to get shelf space in their stores. The initial customer response was encouraging. Consumers’ trust deficit in the organic category helped the relatively unknown NPM category to get a small foothold. The protocol to test NPM produce includes process analysis and product testing, which is in contrast to organic food, where process is currently the only focus. Food Safety & Standards Authority of India (FSSAI) is now considering introducing product testing for organic food. This will help positioning of NPM, and the price spread between organic & NPM will reduce. There is a possibility that in the long term, from a regulatory perspective, the two categories will be merged. APEDA controls India Organic label that is used in exports.
Safe Harvest procures ~55 commodities, most of which are seasonal. This entails high inventory cost in order to supply products throughout the year. To access finance, the partner organizations of Safe Harvest availed the Warehouse Receipt (WHR) facility. There is an understanding that Safe Harvest will repay the loan when required.
At present Safe Harvest has ~75 SKUs, and is primarily present in in Bangalore, Mumbai, Hyderabad, Vizag and Chennai markets. One of the breakthroughs achieved is co-branding with Metro Cash and Carry. 15-20% of sales currently are through online retailers.
Through its partner institutions, who have a very large farmer base, Safe Harvest has the possibility to scale-up, as the present quantum of procurement is a fraction of the production available with the farmers.