Ploughing the full financial field for distressed farmers

Hearing his friends and family tell him it was a bad idea toughened his resolve and made him soldier on. Milan Mehra was not at a comfortable age to to let the entrepreneurial streak get the better of him.

“What could have been an easy option, say, for a 25-year-old, to start off on his own journey and then tackle the knocks that life deals, was unthinkable for me. I have been a wholesale banker for more than 22 years, with global banks. However, my understanding of the economic situation, the fact that farmer-loan waiver is a politically motivated move, the massive agricultural debt relief packages, and the open manoeuvring at mandis were not something that I could let slide,” said Milan, who decided to dive in into bringing structured finance and solutions to the distressed agriculture sector.

Tackling farmers’ issues

Thus was born Agri India Farm to Market, a company looking to tackle farmer issues. “Lack of market linkage, when farmers are compelled to sell to unscrupulous middlemen; bringing about a transparent market price for produce, even in the mandi; ensuring finance since bank portfolios are stressed; and, looking at how to stem the fact that landless cultivators do not get bank finance from Kisan Credit Cards, are some of the problems,” said Milan, who decided on the start-up with two experienced bankers.

“I was in Standard Chartered for 12 years. In the last three years of my stint, I was handling the agri and commodities business, which gave me first-hand experience of what could be done for the lot of farmers. It gave me insights into how the farm sector works. I realised how, without having to invest too much, the government could actually help poor farmers. That was the main intention why I quit my corporate job,” he said.

Milan had worked four years each with HSBC and American Express. The corporate banking background instilled the tenacity and the determination in him to get ahead in the project. “While at Standard Chartered, we were doing a project for the International Finance Corporation at Washington. We had disbursed loans to around 6,000 farmers. To understand that the farmers actually avail themselves of the finance, we interviewed many of them. It was then that I realised farmers are an exploited lot. Middlemen tend to regularly cheat them,” said Milan.

Citing an example, he points out, “Mustard is priced on the basis of moisture. If moisture content is high, the price is low. At a mandi, a middleman takes some mustard and places it in his mouth and then spits it out. He says it won’t sell, the moisture content is 17 per cent. Since the market doesn’t take more than 12 per cent, the farmer is forced to sell his high quality crop at a lower rate. It is unimaginable to think in today’s day and age, how the mouth of a middleman can turn into a measuring machine. Farmers have no clue and can’t identify he is being cheated.”

Auction platform

Along with two friends, Milan is in the midst of setting up an auction platform that will connect farmers and institutional buyers. “The unique thing is farmers will list only produce which will be graded as per industry specification. For instance, if Pepsi has a fundamental requirement of potatoes that are 50 mm and above for their Lay’s chips, we can now provide a ready listing of pincodes that have potatoes that are 50 mm and above, saving time and money for both corporates and farmers. Similarly, moisture content in mustard, as well as in maize, primarily used for cattle feed, is now done through a hand-held meter on site. This has brought on transparency, and is completely auditable,” he said.

Milan maintains the situation is the same in Purnia or Amravati or Akola or Indore. “Farmers are regularly exploited. We are looking to arrest revenue leakage. Almost 40 per cent of India’s agri produce comes from landless labourers, cultivators and very small farmers. We are looking to give them finance,” he said.

Stating that small farmers are dependent on alternative means of finance, Milan said: “Total agri sector loans and advances are roughly ₹11 lakh crore. However, we are ignoring 40 per cent of the farming community.”

Pointing to an RBI report, “which states roughly 25 per cent of the total institutionalised rural lending is with the private moneylenders, who tend to charge 36 per cent per annum as interest,” Milan said, “that is the reason landless farmers are perennially in debt.”

Milan decided it was time. “Sitting in my 12x12 cubicle with AC all my life, I realised life is very different on the ground.”

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