04/12/2019 – Technology Series / Dairy / India
India’s second ‘White Revolution’
Technology is changing the face of dairy farming and delivery in India. Food&Beverage Industry explores some of the startups engaged in disruptive innovations that are ushering forth a second ‘White Revolution’ across the country.
Since 2014, the 26th November has been a special date for India’s dairy farmers, marking the birthday of social entrepreneur and fellow countryman Verghese Kurien – known as the ‘Father of the White Revolution’. National Milk Day is observed in honour of Mr Kurien, whose ‘billion-litre idea’ – dubbed Operation Flood – became the world’s largest agricultural dairy development programme when launched in 1970. The programme proved instrumental in transforming dairy farming into India’s largest self-sustaining industry and the country’s largest rural employment provider, accounting for one-third of all rural income today. According to the FAO, around 75 million farmers across the country currently produce approximately 160 million tonnes of milk per annum, making India the world’s second largest producer behind the US. Such activity generates a market estimated to be worth US$30 billion today, accounting for four per cent of the country’s GDP. Now, a rising tide of dairy tech startups, supported by generous government funding (up to 60 per cent of initial investment), are ushering forth a second White Revolution. Here, we explore some of those innovative startups and how they are supporting greater efficiencies, animal welfare, traceability, and customer convenience throughout India’s dairy supply chain.
Predicting sales, minimising loss
Given the often wafer-thin margins involved at the beginning of the supply chain, predicting sales and minimising loss are crucial to boosting the viability of dairy as a livelihood for millions of farmers across India. “Robust reverse logistics and sales prediction modules have allowed dairies to get insights on projected sales for the next seven days. Our platform generates detailed reports around loss-making routes and leakage losses, while simultaneously tracking crates, helping keep losses to a minimum,” said Samarth Setia, founder and CEO of Mr Milkman, which offers a cloud-based ‘SaaS platform’ with automated processes enabling dairy farms to track subscriptions, revenue, sales growth, payments and customer consumption patterns. It tracks real-time analytics of operations – from farm to consumer – by tracking orders, delivery and inventory management. Technology helps avoid wastage by giving exact data on how much milk needs to be transported daily.
Organic and fair-price assurances
Fear of adulteration and health hazards have long plagued the milk industry – the world over. Organic is the solution, yet pricing and lack of trust have thus far muted growth of this segment in India. Bengaluru-based Akshayakalpa aims to address such issues, and assists farmers to establish smart dairy farms by giving financial and technical support. Technology is implemented at every stage of the production of Akshayakalpa milk, and zero human contact exists throughout the entire process. The firm procures milk from over 160 farmers across Karnataka today, and in so doing assures that 30,000 consumers in the locale receive organic milk from cows that are raised completely free from injections of antibiotics and growth hormones. The company is also keen to promote a fairer approach to farmers – achievable via cutting out many of the middlemen in getting the milk product to the consumer. It claims that 69 per cent of the price the consumers pay for Akshayakalpa organic milk products goes into the pocket of the farmer, with the average income of Akshayakalpa farmers already fast approaching INR 1 lakh (US$1,397) per month, according to co-founder and CEO, Shashi Kumar. “The aim is to help the farmer become a rural entrepreneur, allowing him to earn a rewarding income in the process,” he added.
Care and the consumer experience
Shudh Farms has strived to create a consumer experience that demonstrates good quality and also feeds into the government’s push for protection and welfare of cows. Situated on the outskirts of Chennai, the farm company invites consumers to feed cows and watch them graze. It charges a premium for this privilege – around Rs 70 for half a litre, compared to the typical price of Rs 12 offered by conventional milk brands. The firm claims that consumers are aware of the consequences of adulterated milk and are willing to shell out extra for a high quality product, for good animal welfare and for forming such a connection with the food they are consuming.
Relating to this welfare drive, farmers can now also track and manage a cattle’s health and nutrition through real-time feedback with regards to milking frequency and production. For example, startup Happy Milk’s village-level milk collection centres use IoT-enabled devices and equipment to track the health of the cows and check the quality of milk produced. The firm also uses real-time milk collection data and processes this through cloud computing for instant quality checks, as well as 100-per-cent direct digital payments to farmers.
A growing number of players are entering the micro-delivery space today, including Milkbasket. Founded in 2015, the Gurugram-based firm has raised US$28m in funding since inception, and over the years has transformed into a fully-fledged grocery delivery service. Adopting a subscription-based model has helped Milkbasket continue grow, with repeat orders clearly being advantageous from both a revenue point-of-view and in terms of upselling.
Fellow grocery delivery market player BigBasket has managed to adapt a similar subscription model within the space of just two years. The firm recently acquired milk delivery startups RainCan and Morning Cart, and has built a separate app known as BB Instant for milk and other daily deliveries. The firm is also rumoured to be close to snapping up DailyNinja, which currently reaches close to 40,000 households per day with a monthly active user-base nearing 55,000 households across Bengaluru and Hyderabad.
Given the huge amounts of capital required for expansion amid India’s oft-creaky infrastructure, it is inevitable that the ecommerce segment remains a daunting sales channel – it is also clearly a highly lucrative one for those businesses that can get it right. With the country’s online grocery market predicted to expand at 62 per cent CAGR from 2016–2022, there’s little wonder why so many new tech-focused platforms are rushing to stake a claim in this rapidly flourishing market, and disrupt India’s dairy segment in so doing.
Gone but not forgotten
Having passed away in 2012, Verghese Kurien is commemorated for his efforts in helping lift millions out of poverty in India. Through vastly enhancing efficiencies, improving the quality of the product being processed, and simplifying the supply chain, the technology being deployed today across the dairy segment should prove a continuation of such ambitions, creating a more commercially viable environment for millions of India’s dairy farmers in the years ahead.