Project AgFx – Ecosystem driven effort for Sugarcane

Concept Note on Project AgFx – Ecosystem driven effort for Sugarcane

Project AgFx will demonstrate that farmers and the value chain, executing well-orchestrated actions, transparently visible to all, can double the profitability for the entire crop value chain - using timely agri finance as a growth lever, combined with access to markets, scientific advisory, value added inputs, crop protection & disciplined follow up.

Why Sugarcane:

While sugarcane is perceived to be a water guzzler (next only to paddy) and hence a “dirty” crop that need not be encouraged, it is in fact a very important crop for India. 3 - 5% of farmers (4-6 million) cultivate 3 - 4% of arable land, contributing 7 - 8% to the Agri GDP. Not just that - it is one of the most important sources for biofuels, helping India meet its sustainability goals. It is largely grown by small farmers who get low but reasonably assured returns - albeit with poor cash flow. We need to collectively increase the average sugarcane yield many fold while halving water and fertiliser consumption – benefitting the farmer, the nation, the soil and the environment.

AgFx Objectives: Potential outcome for Farmers, Value chain and the Environment:

1. Sequentially and equitably expand the profit-pool for all players of Sugarcane value chain - especially Farmers.

• Increase yield from ~32 tons/acre to ~65 tons/acre. Later attempt ~100 tons/acre.
• Increase farmer realization from ~Rs. 110,000 to ~Rs. 200,000/acre.

2. Expand value chain finance flow, so that adequate, low cost cash flow is available when needed.

3. Lenders cut cost of transaction and cost of credit with full visibility of crop’s progress and farmer’s increased ability to repay.

4. Sustainability & Environmental Targets for long term benefits.

• Reduce water & fertilizer use using drip fertigation and value add inputs (eg liquid fertilizers).
• Soil rejuvenation through green manuring, intercropping, reduced Nitrogen leaching.

5. Sugar mills secure higher / assured supplies of cane with better sucrose content increasing utilization.

6. AgriTech innovators benefit from expanding opportunities across the value chain

AgFx will Impact Sugarcane sector nationally, in an environmentally sustainable manner by harnessing the power of the value chain, towards everyone’s commercial benefit, especially the small farmer.

Planned Approach:

Smoothening the flow and enabling adequate, timely and affordable finance (loans / credit etc.) across the crop cycle, is a critical need of sugarcane farmers, especially for the large majority of small farmers.

Combining this cash flow – with scientific advisories to improve yield and reduce water / fertilizer use, can be a force multiplier for the entire value chain – most importantly enhance profitability for the Farmer, it will be equally profitable for other players i.e. the Sugar Mills, for Startups supporting farmers on ground, for the Input sellers and for Lenders – opening up large new opportunities for lending to Small and Medium Farmers while slashing their cost of transaction/credit.

It Is paramount that the orchestration be done in a manner that engenders TRUST – gradually between the value chain players and especially for and of the Farmer; and done at SCALE – gradually expanding across India.

Both these key factors – Trust and Scalability - will be enabled by a digital backbone (“Transparency and Collaboration Platform”). This platform will ensure that unalterable information flows on a comprehensive set of activities of the Farmer and each value chain player is visible to everyone. E.g. use of drip fertigation; confirmation of advisories being followed (Package of Practices, intercropping etc), growth of crop over time, farmer payment by the Sugar mill etc. Lenders will use this to guide credit decision making/ collections while Mills will use it to plan their operation and so on. Satellite imaging will provide external validation on multi-year cropping patterns; sugarcane plantation date; potential quality and yield expected, etc.

Working collaboratively and “phygitally”, Project AgFx will enable finance flow from Lenders to the Farmer / supplier, using their existing business-rules, in tranches, with end use monitoring, reducing NPAs and transaction costs.

Commercials & Assumptions:

Sugarcane cultivation costs Rs. 60,000/acre yielding ~Rs. 110,000/acre. In addition, farmers require ~Rs. 25,000/acre (annualised) to improve sustainability (Rs. 10,000 for value added inputs and Rs. 15,000 amortized annual value of drip fertigation). This can incrementally yield ~30 Tons/acre equivalent to ~Rs 99,000/acre income for Farmers.

Commercial, Societal, Environmental benefits for each stakeholders - from coordinated actions by all:

Government:

• Better policy making – using analysis of historical and projected yield data - available easily.
• Better estimation of production for national policy making and planning (import / exports etc)
• New and proven crop technologies can be tested and implemented on scale

Sugarcane Farmers :

• Cost effective and scientific advisory services due to standardization and scale
• Access to timely, adequate and affordable finance across the crop cycle
• Increase in productivity by adoption of good agronomic practices / timely information
• Increased income and margins

Agri Tech StartUps:

• Access to Farmers at scale.
• Develop specialised agronomic practices and experiences for Sugarcanes per agro climatic region.
• Increased monetisation opportunities for their Advisory and on ground services

Sugar Mills:

• Creation of a robust and enabling ecosystem for sustainable sugarcane production
• Increase in volumes - better capacity utilization-Improving financial health of the sector

Lenders:

• Increasing rural loan book size
• Expanding pool of Small and Medium Farmers for Priority Sector Lending (reduced regulatory cost)
• Lower Transaction costs per Farmer (search, distribution and collection costs) from current 8-10%.
• Reduced cost of credit (through improved recoveries)

Input Sellers (fertilizer, pesticide, mechanical implements, drip fertigation equipment):

• Increase in sales of higher margin products that help farmers improve yield and reduce labour / costs.
• Reduced sales costs and retail credit costs extended to farmers.

Salient features of the “Transparency and Collaboration” Digital Platform

- Seamless registration of all value chain participants – Farmers, Lenders, Mills, Startups, Input Sellers etc.

- Embedding new age technology - AI / ML / Blockchain / Gen AI / Chat Bots etc.

- Integration of the information databases (easily available for all stakeholders)

• Partners to agree on sharing a common set of data required by all for collective success of the project.

- Trust building - Independent authentication and validation of farmer practices, yield estimates etc.

- Data storage and analysis:

• Transactional details of cane price, loans, farmer activity etc. to map against yield.
• Cane area , yield, sucrose content and other details
• Sugarcane quantity grown and supplied

- Services:

• Extension education/ good agri practices
• Mechanization: Custom Hire Model
• Agri-inputs: Doorstep delivery
• Soil health
• Water conservation practices
• Use Agentic AI to customize advisory services based on all agro-climatic zones

- Customized advisory to farmers in these areas:

• Finance access and lending products
• Good Agronomic Practices including Agri-inputs and Soil Health
• Water management practices include capital for micro fertigation.
• Weather updates
• Mechanization

- Centre and states Govt. schemes linkage

The Agri Collaboratory (TAC): Is a “non-compete, not-for-profit, Agriculture Think and Do Tank” co-creating an ecosystem led effort for Sugarcane, on a foundation of improved finance flows, profitability, environmental sustainability and trust and transparency. “The Agri Collaboratory” is the brand name of AgX Collaboratory Forum - a Non-Profit, Pvt Ltd Co, under Section 8 of the Companies Act.