The Agri Collaboratory (TAC), a not-for-profit agriculture “Think and Do Tank”,  has launched a project to help smallholder farmers get agri finance at a low cost within a short span of time.

The first phase of the project — “Democratising agri finance for smallholder farmers” or Project AgFx — was launched in January 2022 and completed in September 2023 with TAC launching a series of consultations with industry and tech players on approaches for this project. 

The second phase began in October 2023 to establish proof of concepts (POCs) in several districts of Telangana, Odisha, Assam and Karnataka. In each State, 50,000 farmers will be roped in using “alternate data” with the existing lending and underwriting process of jointly selected regional rural banks and co-operative banks,  TAC co-founder and CEO Nipun Mehrotra told businessline. 

Pool of one million farmers

“We aim to reduce input cost of farmers by 3-5 per cent and improve  output realisation by 10 per cent,” he said.

Ultimately, TAC plans to create a joint pool of one million farmers in Telangana, Andhra Pradesh, Odisha, Assam and Karnataka. The plan is to select at least 50,000 farmers, aligned to a farmers producer organisation (FPO) and with no prior institutional finance experience, Mehrotra said.

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Telangana, Nabard, agtech firm Kalgudi, IISc-Bangalore, agri value chain solutions provider Samunnati, Axis Bank, and agri innovation network CGIAR are engaged in the project. Farmer collectives are also taking part. “Experiments were conducted at Mulkanoor, Khammam and Jammikunta in Telangana to test the Project AgFx hypothesis across stakeholders. The experiments examined issues related to agri credit and more broadly, rural finance,”  the TAC co-founder and CEO said.

Enabling data sourcing

The project has looked into insufficient cash flow, specific challenges for small, marginal, tenanted and women farmers, besides lack of personal financing products, he said.

As the first step, farmers feedback has been obtained on existing credit products, process and hurdles — process time, paperwork, rejection reasons for rejection. AgFx processes have been explained to them, while access to finance and insurance have been provided.

The second step enabled data sourcing with ground truthing. Dates of target farmers are collated across government, private and on-ground  sources.  The third one integrated technology input and output marketplace with the credit assessment platform, which will help the automated process to allow lenders to approve or reject loans online within minutes.

The fourth step enabled low-cost quality inputs and reduced productivity costs. On the output side, the project aimed at getting better price realisation for farmers identifying right markets and warehouses.

Field trials in 4th stage

The second phase will onboard 2-3 lenders such as rural banks, co-operative or Gramin Vikas banks with the help of NABARD.  Finally, it will go in for integration, testing  and rolling out the proof of concepts using agri data exchange and credit platform with selected data sets to process credit quickly and at low cost, Mehrotra said. 

In the third phase, TAC will conduct pilots using learning from the POCs, across agronomic zones for nearly 5 million-plus farmers, experiment farmers’ access to market  and include broader datasets by onboarding 15-plus data providers and 10-plus agri lenders.

In the fourth phase, the field trial will be rolled out for AgFx in several States and self-sustainable commercial business models will be established by onboarding over 25 data providers and 25 agri lenders, he said. 

Project AgFx needs ₹16-24 crore over 3-5 years to execute the project with continued refinement of AgFx’s technological architecture and business framework, Mehrotra said.

Electronic farm records

Initially, a survey of 7,000-10,000 farmers was carried out to capture feedback on lending products, existing credit process and hurdles — including process time, documentation, reasons for delays/rejections) —, and support from farmer producer organisations (FPOs)/farmer collectives, the TAC co-founder and CEO said.

TAC is looking at setting up electronic farm records (EFR) as an important building block that can play a vital role in maintaining a historic record of the specific farmland and provide sufficient opportunities for analytics for several use cases, he said. “EFR can provide a comprehensive record of crop production and a clear understanding of the farming activity and its potential risks. It can also enable mitigation of several key agricultural challenges, such as farm credit, especially reducing the financial lender’s non-performing loans,” Mehrotra said.

The collaboratory has also found the need for a national agricultural data exchange to enable the pooling of private and public data sets and on-board diverse data sources, which can be accessible to relevant stakeholders for verification, authentication, and augmentation. 

Complex solution

“While protecting the business interests of the data providers, the exchange can multiply the usability and productivity of previously unused data, enable better utilisation of digital data for several agri uses and create a neutral platform to bring trust and interoperability to farm data,” Mehrotra said.

The overall objective of the collaboratory is to find a complex solution to problems of food security, climate, agri-finance and sustainability that growers face. This will help India emerge as a global leader in Open Source agri innovation, he said.

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TAC has a three-pronged strategy towards realising its vision. One of these is to privately create digital rails or digital public goods/infrastructure. This will be done through problem-solving methods and the government, he said.

The second is to incubate a collaborative, ecosystem-led open source movement for agriculture and the third is enabling agri-data interoperability. Creating an integrated discrete, standardised and trusted data will help achieve this, the TAC co-founder and CEO said.  

The collaboratory was formed in 2022 with co-founders from diverse disciplines. TAC will use a borderless, volunteer pool of global expertise, to solve complex societal issues. “TAC is inspired by the vision of India emerging as a global leader in open source agri innovation and the Indian farmer — small, tenanted and women — be profitable, sustainable, and resilient,” Mehrotra said.