Personal Finance

Ease your farm ownership worries

Meera Siva | Updated on June 02, 2019 Published on June 02, 2019

Many service providers are offering solutions to simplify management

If you live in a metro city, you possibly wish for farm-fresh vegetables and good-quality agriculture products.

With worries on pesticide use on produce (whose origins you do not know of) and increasing understanding of the health benefits of good-quality food, many in the city are looking at ways to take active part in growing what they eat.

You may be tempted to buy agriculture land as it not just gives fresh produce that is priceless, but can be a good investment, too, as prices may appreciate as the area develops (especially if the land is close to a city). But managing the land — planning what to grow, when to plant and harvest, managing labour needed for the various steps, procuring material needed — takes effort.

Also, overseeing to make sure things go as planned — ensuring there is enough water, there are no weeds, natural or other fertilisers, pest-control methods — can be a full-time job. This is where new models can help urban farmers.

Lease model

The simplest and cheapest way to get started is to try leasing farmland by paying a subscription amount to get access to a small plot. You won’t own the land, and hence, will miss out on appreciation.

But for a monthly payment of ₹2,500-3,000, you get the produce from a small plot of land, typically 600 sq ft.

The price usually includes rent for the community farm, seeds, fertilisers, pest control, water, utilities and labour.

It may also include home delivery of naturally grown produce (which tends to be typically vegetables).

For example, Bengaluru-based start-up Farmizen lets you sign up and decide on the vegetables you want to plant, with an app. You get to select a plot from their list of community farms. The company works with farmers to prepare the plot.

Besides door delivery, you also have the option to harvest the produce.

Chennia-based myHarvestis another company that operates in a similar model. You need to subscribe initially for four months, and can choose to extend.

Likewise, Green Leaf India in Gurugram operates on a payment of about ₹31,000 for six months. The company works with local farmers who are paid an annual rent (₹60,000/ per acre); they are also paid for labour.

Edible Routes, based in Delhi, offers larger plot sizes of 1,200-2,400 sq ft. Subscription is for a minimum of six months and the monthly charge is ₹3,000-4,500 for a 1,200 sq ft farm (based on location), without the option for weekly delivery.

Organic Maati in Delhi has a slightly different model, where the plot sizes are about 1 acre for ₹60,000 per year, but you get only half the produce.

Own model

Alternatively, you can buy land and let someone manage it for a fee. There are some who pool together to buy land, and have a few of the owners manage it. Owners pay the various costs and get a share of the produce or the profits from selling it.

You can also choose to go with end-to-end services. For instance, Hosachiguru, a Bengaluru-based agriculture asset management company, lets you buy quarter or half an acre farmland that they manage. They also offer flexible payments options such as paying one-third of the value and paying the rest over 2-3 years.

The focus is on growing trees such as for timber that do not require high maintenance. The land purchased is often close to the city, so that there is good potential for land-value appreciation.

If you already own a somewhat larger land parcel, there are other options you can consider. Hosachiguru manages farmlands that are at least 25 acres in size and located close to their existing projects. Big India Farms works under a different model and manages 1,800 acres of leased land of 100 owners, in various States, including Madhya Pradesh.

The firm takes your land on a 30-year lease to grow dense food forests that require low maintenance. Revenue generated from produce such as mono-floral honey, forest millets, fruits, vegetables, herbs and spices are shared with owners (50 per cent).

Food for thought

If land price appreciation is your goal, the ownership model is what you must go for. You can get produce as a bonus, but it may take over seven years to reach profitability. If you are keen to grow food in a natural way, you must make sure that the manager you have is able to do this and you are willing to bear the ongoing costs. Be sure to check your ability to sell, and how that impacts the contract for management.

With a fixed subscription, profit cannot be a big motive for you. There are many overheads — such as delivery costs — and you may not come out ahead versus buying from a store.

You can consider this if you want to see how interested you are in farming, as they let you visit the farms and work on your plot.

There are also many get-rich-quick ponzi schemes in farming-related investments and schemes. For example, in West Bengal, schemes that promise high returns on potato purchase, tree plantation and poultry farming are being investigated. Pearls Group, for instance, was charge-sheeted for cheating investors on sale and development of agriculture land. So, be sure to do due diligence before signing up.

The writer is an independent financial advisor

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Published on June 02, 2019
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