One Way to Help Small Farms in Rural India Thrive? Take Them Inside.
Erin Stewart — Social AdVentures
In rural India, uncertainty keeps small-scale farmers enmeshed in the cycle of poverty. Fifty-five percent of people in India rely on agriculture for their livelihood, but their work can be thankless and entirely dependent on uncontrollable environmental conditions: drought, unseasonable rain, and pests all make it hard for them to reliably grow crops. To offset losses, farmers can take out expensive loans, but borrowing money often leaves them playing financial catch-up even when conditions improve.
Kaushik Kappagantulu and the three other co-founders of Kheyti, an Indian agricultural technology company, spoke to more than 1,000 farmers about what’s foiling their business plans. Using the data they collected, Kheyti determined poverty among the country’s farmers is endemic. “Most farmers don’t want their kids to get into farming because they don’t feel it’s lucrative enough,” Kappagantulu says. “But at the same time, when they’re not able to make ends meet, they’re not able to educate them, or connect them with other jobs.” Not only are the farmers themselves unable to amass financial security, their insecurity makes it hard for the next generation to even imagine a life outside of small-scale farming.
Yet, farming doesn’t necessarily have to be precarious. When environmental conditions are stable, optimal technologies are used, and there’s access to fair markets, small-scale farmers can earn a comfortable living and provide opportunities for their children. Before Kheyti was started, one of its co-founders was already working to help farmers access markets that pay fair prices for crops. However, production wasn’t reliable enough—farmers couldn’t deliver produce regularly, in predictable amounts.
Kheyti’s inexpensive, uniquely designed greenhouse was created to add some regularity to Indian farmers’ production. These 2,500-square-foot greenhouses, white, semi-opaque, and stretched over a modular, rigid skeleton, contain a proprietary irrigation system, and according to Kheyti, will help farmers produce seven times more crops than they otherwise could. Crops in greenhouses also require 90 percent less water than those outside, making it easier to farm year-round. “The thing these farmers were most excited about, especially during summer months, was the use of water,” says Kappagantulu. “Normally in the summer months they don’t really grow anything because the wells dry up and they don’t have much access to water.” Kappagantulu adds that, “You can clearly see the difference between yields inside the greenhouse and outside the greenhouse.”
Kheyti bolsters the impact of the greenhouses by delivering high quality seeds, fertilizers, and agricultural advice to farmers. The greenhouses are particularly designed for vegetables, which meet steady market demand, attract better prices, and have higher yields than other popular crops for small-scale Indian farmers like rice and maize. Vegetables also grow quickly enough for farmers to see financial returns on weekly harvests, helping to stabilize their incomes.
Working in conjunction with programs at Stanford and Northwestern University, the Kheyti team took almost a year to develop a model that would meet the needs of small farms (of around one or two hectares). “Designing a greenhouse for small farmers was one of our biggest challenges because nobody had done any even incremental innovation there,” says Kappagantulu. The existing greenhouses on the market were too big, cumbersome, and expensive. Kheyti’s small, modular greenhouses, on the other hand, currently cost the equivalent of $2,000, and can be efficiently transported to remote regions in a box.
Kheyti’s next challenge is to try to lower the cost of their greenhouse by 50 percent so that it is affordable for a greater number of farmers. In the meantime, the enterprise is making efforts to ensure that farmers can purchase the greenhouse without going into debt. “We realized in talking to farmers that technology alone would not be enough,” says Kappagantulu. As part of its first pilot program—which started last year—15 farmers in rural south India were offered greenhouses at cost. They paid a 20 percent deposit to Kheyti’s banking partners, with quarterly repayments to be made over the following three years. The repayments are funded with the cash flow generated by the greenhouses, which so far, have been well above the cost of each repayment, according to Kheyti. Each greenhouse is insured and expected to last 12 years.
Arranging financing for the greenhouses wasn’t easy. “Agriculture asset financing for small farmers doesn’t exist, basically, in India or across the developing world,” Kappagantulu explains. Banks tend to prefer to make loans for bigger investments while microfinance companies prefer to make smaller loans to groups. According to the International Institute of Sustainable Development, banks in particular tend to find small-scale agriculture investments too risky, because unexpected environmental conditions such as droughts and floods can severely affect profitability. “There was this missing middle where nobody was ready to finance technologies for small farmers. We had to spend a lot of time convincing partners to get in.” One factor that helped Kheyti in these negotiations was that the greenhouse itself mitigates this environmental risk.
Of the 15 farmers involved in the pilot program, 14 have committed to a second greenhouse. Outside the pilot, an additional 35 farmers have signed on so far. After installing the first greenhouses, Kheyti received over 3,000 calls in the space of a week from interested farmers. Over flat, rural land, it’s easy for farmers to see the greenhouses. And when neighbouring farmers visit those greenhouses, Kappagantulu hopes, the advantages will become apparent.
“Over the next year we’re going to scale our proof-of-concept to 300 farmers, that’s when we feel we’ll be in a position to say how it’s scalable, and then really launch it with thousands of farmers next year,” says Kappagantulu.