In the recent Budget, the Finance Minister emphasised on the importance of milletsy. Millets are coarse grains (like bajra, ragi, and jowar) that are a perfect food for Indians due to their high nutritional value and high fibre content. India is the world’s leading producer of millets accounting for over 40 per cent of global production. Millets require little water, can withstand heat, and don’t readily attract pests. Contrast this with rice, which uses 2.5 times the amount of water, results in 12 per cent of the world’s methane emissions, and is unhealthy for diabetics.
It seems like the perfect setting for start-ups to seize the opportunity and produce millet unicorns. Despite this, no millet-focused start-up has been able to scale or become a national or local brand. While a few start-ups have received seed funding, only one, Kottaram Agro Foods (Soulfull Foods), has so far been able to give its investors an exit. The millet start-up story can be better explained with an example:
Amit, the founder of a millet start-up, has been obsessed with popularising millets. He spent nearly two years perfecting a millet-based health drink recipe. Due to the high cost of millet procurement and processing as well as the commissions paid to multiple distribution channels, he was forced to price his product at ₹70 for a 150 ml pack. In a market where SOFIT (a health drink) and other packaged beverage cost just ₹30, there were few takers for the millet-based beverage.
Let’s dive into the factors that impact the millet start-up’s success.
Millet production has remained stagnant over the last decade. Millet cultivation is unprofitable for farmers, due to lower yields and the difficulty in processing millets on the farm. The average yield of millets is about 2000 kg/ha, which is half that of paddy due to the lack of research on new seed varieties, seed banks, and innovative scientific practices.
Farmgate processing of some of the millets such as Foxtail/little millets is cumbersome as these grains are small and need more cleaning. The millet processing machinery is either expensive or not available, therefore millet farmers, most of whom are marginal, are not inclined to buy processing machines. Therefore, millets don’t fetch profitable price to farmers and they continue to prefer other crops over millets.
The millet value chain includes a number of intermediaries, including village-level aggregators, mandi traders, millers, brokers and commission agents, stockists, and retailers, which raises millets’ costs. As a result, millets cost nearly twice as much as rice.
According to Jayaram Killi, National Mission Manager-Farm Livelihoods with the Ministry of Rural development, the millet movement has been centred around urban consumers, with millets being promoted to through exhibitions and melas, whereas farmers haven’t been incentivised to increase millet availability and quality.
Millets are typically sold as cookies, pasta, and other ready-to-eat products in supermarkets. Processing makes millets less nutritious and increases their carbon footprint as they are processed far from the production centres.
Since millets are coarse grains, despite processing, they cannot match the taste and ease of cooking of conventional wheat or rice-based products. As a result, many enthusiastic customers abandon the product.
The traditional forms of millet are difficult to cook and do not easily lend themselves to ready-to-cook or ready-to-eat formats. Thus, start-ups are forced to create products that cater to a select few and are also hard to differentiate. On top of that marketing spends and hefty distributor commissions ensure that most companies are not able to create profits.
To create successful start-ups, millet supply and quality must increase. Investment in seed development, post-processing machinery, and creativity in marketing millets locally in their traditional form must come first.
The writer is founder of FineTrain, a boutique advisory firm for climate start-ups