Disorganised and rife with corruption run by syndicates, one startup is trying to clear a path out of the murky mess that is the country’s agro supply chain sector.
Despite being an agrarian economy and home to numerous native crops, Nepal has not been able to profit from its available agricultural resources. Among the many reasons behind the underdevelopment of the country’s agro-sector is the lack of a proper and effective supply chain. The supply chain sector is mostly disorganised which makes it difficult for farmers to take their products to the market and also prevents customers from buying such items at reasonable prices. The situation may look bleak, but startup ideas are slowly bearing fruit for the country’s commercially deprived agribusiness. And one 10-month old startup is working to give better value for both producers and consumers.
Started by Deepak Ratna Tuladhar and his wife and business partner Jagriti Shrestha in 2016, Farm to Finger, an agro-supply chain firm, has been helping rural farmers by connecting them with urban consumers and reducing the role of unnecessary intermediaries and creating better value for both producers and consumers.
Idea behind the Initiation
The couple had remained in London up till their graduation in 2014. Tuladhar and Shrestha used to work in similar companies. Tuladhar had worked in the HR department of a multi-national supply chain management firm which buys products directly from the producers and sells the items directly to the consumers. Likewise, Shrestha used to look after the management of an organic store which engaged in the processing of farm products.
The duo decided to return Nepal to study the agriculture market with an aim to start a business in the supply chain area. “After coming back, we travelled to districts including Rukum, Rolpa, Salyaan, Surkhet, Jumla, Sindhuli, Sindhupalchowk, Rasuwa for six months for our research. We found that unorganised intermediaries in the agribusiness were the main problem in every place,” Tuladhar says. This situation presented an opportunity for them to enter the market to start direct trading of agricultural produces. Soon after, Farm to Finger came into existence.
How Farm to Fingers works
The founders believe in creating a good relationship with the clients before entering into a partnership. “We have already talked to 5,000 farmers around Nepal,” Tuladhar says, adding, “I myself travel to villages and talk with the locals informally about the situation of agriculture and the volume of the farm produce they trade in the market. After collecting all the required data, I mention the opportunities they have in our supply chain model.” The team updates its producers frequently and also builds more networks by communicating with them. If the farmers are interested, the company partners with them by offering 25 percent more for their products than the other buyers. “This has become possible because we work independently without engaging any intermediary,” he expresses.
The company does not deal in all types of agro products. “We only buy and supply high value indigenous mountainous agri-products that are not available easily. According to the availability, our product line keeps on rotating,” informs Tuladhar. These include different types of fruits like avocado, apples, blood orange kiwifruit and other non-degradable items such as black rice, brown rice, red rice, boiled rice, black bean pulse, red bean pulse, yak cheese, jungle multi-flora honey, organic walnut, ginger powder, nettle powder, reetha (soapnut). According to Tuladhar, Farm To Finger supplies fruits and non-degradable items at competitive prices compared to the products available in grocery marts. Till date, the startup firm has set up its network in 25 districts including Rukum, Rolpa, Salyaan, Surkhet, Jumla, Kalikot, Manang, Mustang, Rasuwa, Sindhuli, Kavre, Ilam and Dolpa partnering with over 1,700 farmers.
Revenue Model and clientele
Started with an initial capital investment of Rs 500,000, the company’s annual turnover now has reached Rs 6,000,000. The startup is currently focusing on widening the link of producers to strengthen its backward linkage. “Our focus for now is on growing our clientele and network expansion,” mentions Tuladhar.
The company’s revenue model is quite simple. The venture buys the products from the producers, does the packaging and labeling on their own brand ‘Farm to Fingers’ and sells the items. The startup mostly finds its customers in various trade fairs and farmers’ markets. Its regular customers include individuals working in corporate houses, NGOs and INGOs. The general product list is also available at the company’s website and orders are mostly taken through phone calls. Whenever new products arrive, the startup’s marketing team updates the customers through SMS, email and Facebook posts.
One of the advantages of rotating the product line on a seasonal basis is that it raises the level of customer curiosity about the arrival of new products. “We have seen that our customers themselves call us to find out about the new arrivals,” says Tuladhar. The products of Farm to Fingers are available in R & D Green Mart, Farmers Market 1905, Yellow House and various organic stores in Kathmandu and a few stores in Biratnagar.
Tuladhar is against the idea of taking the products to supermarkets and departmental stores. “Doing so will result in increasing prices which is against the vision of our company. Generally, supermarkets and departmental stores want to keep a good percentage of the profit,” he says, adding, “We want to provide quality agro products at affordable price points.”
Tuladhar admits that he finds it quite challenging to minimise or end the role of unorganised middlemen in the agribusiness. “One needs to have a very good understanding about supply chain management before entering into this type of business. The agro trade takes place in a fine line without any organised system at all across the nation,” he says. According to him, identifying the producers and talking to them and taking the necessary information are the first steps in building a supply chain. “You need to cautiously build a direct relationship with the farmers just in case the middlemen find about it, because there are more chances that you will get into conflicts,” Tuladhar shares. “The most important thing is how much you can pay for the products and how deeply you can build a network,” he adds.
Transportation of goods has been another challenge for the company.
“For a startup like us which has not been able to place bulk orders, we have to bring the products by means of local transportation instead of proper goods vehicles,” he says. This has been difficult for the venture because goods get stolen in between transit and degradable items rot away.
Similarly, the startup has also been struggling with problems like fluctuating market prices, product quality maintenance and syndication in trading, among others.
Tuladhar likes to describe his company as a connector rather than a collector of products. “Besides buying the products, we provide suggestions to the farmers and assist them in terms of increasing the value of their products,” he says.
The team helps the producers in packaging, sieving the rice and lentils in efficient ways before supply so that they can get better value for their products.
Farm to Fingers is a team of seven members who are based in Kathmandu. The company has representatives in various districts to look after the trade. The team of the startup comprises of passionate and self motivated college students. “We share ideas to work more creatively. We talk to them about opportunities and they explore the ways to realise the potential,” Tuladhar says.
Five years down the line, Tuladhar sees his company connecting with 5,000 farmers across the country. The company also aims to establish two outlets and garner a customer base of around 20,000. “We also envision establishing at least two international agro product brands. We have been discussing about investing in R&D,” Tuladhar shares.
The startup is exploring ways to start processing fruits and crops and to create new products. The company has plans to produce processed items from nettle, wheatgrass, hemp and plants having medicinal properties and special characteristics. “In UK, we used to buy ‘hemp milk’ at very high prices. Seeing such a prospect drives me to do more with these native plants,” Tuladhar concludes.