Suumaya Agro, a company that is part of the ₹22,000 crore turnover Suumaya conglomerate, plans to enter the crop input business in the second quarter of the next fiscal.

“We are planning to start supplying urea and other fertilisers to farmers from the second quarter of next year,” said Ushik Gala, Suumaya Industries Ltd Chairman and Managing Director (CMD). 

Established in 2020, Suumaya Agri deals in 233 major components in agriculture. “We deal with staples, spices and millets. We began millets six months ago. We are doing rice, wheat and pulses,” he said. 

In spices, the company deals in chilli and turmeric. 

Initial procurement

The company is in talks with crop input firms to become their master distributor. It is also looking to trade in nano fertilizer, too.

Suumaya began operations in the agriculture sector, which has “a complex supply chain”, by initial procuring from mandis (agri terminal markets) and arthiyas (commission agents). 

“From late 2021, we began direct procurement from farmers through farmers producers organisations (FPOs),” the company’s CMD said, adding that currently 50 per cent is procured from arthiyas and the rest from FPOs.

Tie up with FPOs

Suumaya Agro, whose parent firm Suumaya Industries was established in 1985, has tied up with FPOs for commodities such as wheat, rice, onion, chilli and turmeric. For the rest of agricultural produce, the company buys whatever the FPOs offer it and whatever suits it.

“Of the 16,000 FPOs registered with us, we are actively working with 850 FPOs,” he said. 

After procuring from farmers and FPOs, Suumaya Agro sells the produce to multi-national and large trading firms such as Olam, Bunge, Cargill, ITC and DMart, Gala said.  

“Basically, we supply from the farmgate to the processor’s entry gate. We are not mediators but play an integrated role by value-adding and offering finances because these are cash crops. We take crops, pay advance and underwrite them, including the quality,” he said. 

Quality assurance

Any rejection of produce on quality grounds in Suumaya’s books. In view of this, the company has appointed a quality assurance firm which does batch-wise quality checks, he said.   

In terms of value, Suumaya has traded  ₹20,000 crore worth of goods in 2021-22 fiscal and in terms of volume, they were 30 lakh tonnes, the company’s CMD said. 

To a question on rice supplies, Gala said this year there could be a shortage as the per hectare yield is low. “I feel prices for rice should rise,” he said.  

On wheat, he said its prices could stabilise but added that his company has “made money” this fiscal. “The more the shortage, the more the money people make,” the company’s CMD said.

Structured trade

He said the wheat crop was coming up well and its yield should be normal.  

Suumaya Agro does structured trade finance where it stores agri commodities and provides limited warehouse financing. “We store commodities on behalf of multinational companies and charge them for that including levying interest.   

Suumaya Agro does not plan to enter any digital platform for trading at least until 2025. The conglomerate, which deals in textiles and women garments, also trades in petro-chemicals, resin and PVC. 

It gets these materials from refineries and sells them to Tier I traders. Gala said both petroleum and agri commodities are doing well currently.