Platform business models for agri-input industry

Key experiments in the sector

There have been several experiments in the agri-input sector in terms of new
distribution and marketing channels

Several firms have attempted to deliver total solutions to farmers, including farm
and allied inputs

In the contemporary setting, digital platforms are also becoming prominent in the
agribusiness environment
Need of platform for agri-inputs: Buyer-seller information asymmetry

Agricultural inputs belong to the experience and credence class of goods, where the farmers
cannot make a priori assessment of the quality parameters.
The retailer controls the information related to the product’s price and quality, and the farmer
becomes a mere follower of the retailer prescription.
There is a buyer-seller information asymmetry (BSIA), and the farmer cannot make a due
assessment of the competitive offerings.
Hence the seller’s opportunistic behavior and adverse selection problem at the buyer end
Need of platform for agri-inputs: High transaction cost

The transaction cost of acquiring agri-inputs from a traditional store is relatively high
regarding the high opportunity cost of farmers’ time.
Transaction cost includes the information search cost, decision-making cost,
bargaining, and all other costs needed for smooth functioning of transaction.
For agri-input firms also the transaction cost is high, because the number of
intermediaries in the agri-input supply chains is extensive in the traditional distributor
and retailer model.
There is a need of alternative channel → Digital platforms
Traditional pipeline model

Private entity
manufacturing Wholeseller Retailer Farmers
agri-inputs
Traditional pipeline model for cooperative firms (IFFCO/KRIBHCO)

Cooperative
entity District level Primary
State cooperative
manufacturing cooperative agricultural Farmers
federation
federation society
agri-inputs
Platform as an alternative

The digital platform facilitates interactions and collaboration among buyers (farmers),
sellers, and other stakeholders, eventually creating synergy among the actors

Platform-based business models for agri-inputs can eventually reduce the transaction
cost and facilitate transparency in the information exchange
Digital platforms are becoming prominent in agriculture

The digital platforms for agriculture serve as technology-based intermediaries

facilitating the economic and non-economic interactions between farmers, sellers
and stakeholders.
The agri-input digital platforms can potentially encompass a dynamic network of
complementors like:
▪ Technology developers & agri-input firms
▪ Farmers, cooperative societies & farmer producer organizations
▪ Regulatory bodies & government institutions
▪ Financial institutions
▪ Local micro-entrepreneurs
▪ Agricultural universities & research institutions
▪ Farm produce buyers
▪ Logistic partners
 A simplified
platform
schematics

Complementor 1

Lead firm
Farmer Complementor 2

Complementor 3

Value creation opportunities: discovery (reduce search cost), and matching, transaction
Digital platforms are attractive alternative in the agri-input industry

High TC ,BSIA, Adverse selection and Moral hazard

Agri-input Physical
Manufacturer Distributer Farmers
Retail Store

• Platform business models operates on the dynamic

network of complementors
C3 C2
• Focus is on Resource sharing
• Focus on both customer value and network shared
value
Cn C1
• Reduction in Transaction cost
• Sharing of information: Minimizes BSIA, adverse
Lead
selection and moral hazard
Target
firm group
Network effect

Value attached by one group of complementors on the other groups in the platform:
Indirect-network effect
The number and quality of complementor groups attract the users
Direct effect: Value attached by a user to the same group of complementor

Input Consult

Tech Bank
I Farmer

Lead
D
Farmer
firm
Network effect
 The growing internet penetration: Genesis of new age agri-tech platforms

Internet penetration has improved in the hinterlands of the developing world, which has
paved the road for new age technology-based enterprises in agriculture.
In India, growing internet subscribers in rural areas (34.60% in December 2020); is
supporting the genesis of digital platforms in agriculture.
Time Dec-20 Sep-20 Jun-20 Mar-20 Dec-19 Dec-18 Dec-17 Dec-16
Rural internet subscriber (millions) 308.17 302.35 293.092 285.969 268.43 213.3 132.03 115.06
Source: TRAI performance indicator reports 2021, 2020 and 2019

Agriculture: The world’s least digitized industry, is now experiencing a digital revolution.
350

Rural internet subscribers

300
250
(millions)
200
150
100
50
0

Oct-17

Oct-18

Oct-19

Oct-20
Aug-17

Aug-18

Aug-19

Aug-20
Apr-17
Jun-17

Apr-18
Jun-18

Apr-19
Jun-19

Apr-20
Jun-20
Feb-17

Feb-18

Feb-19

Feb-20
Dec-16

Dec-17

Dec-18

Dec-19

Dec-20
Digital technology: an enabler for platform enterprises in agriculture

Awareness of the digital technologies, and their potential is emerging in developing

economies, with interest growing among entrepreneurs, investors, and governments.

The current state of both development and adoption of digital technologies in

agriculture is less mature in developing and emerging economies as compared to the
likes of US and Germany.

Still it can be considered that the digital technology infrastructure and access can
serve as an enabler for platform based enterprises.
Pipeline model vs Platform models

Pipeline businesses create value by controlling a linear series of activities—the classic

value-chain model. IFFCO fertilizer business is essentially a pipeline.
Raw material at one end of the chain (say, materials from suppliers) undergo a series
of steps that transform them into a final product or service that’s worth more: the
finished product, which is finally delivered to farmers or farmers collectives.
Pipeline model vs Platform models

Combine IFFCO fertilizer business with the IFFCO Bazar mobile phone application,
banking partners, logistics partners, last-mile delivery partners, field extension
agents, cooperative societies, FPOs, village common service centres etc., and you’ve
got a platform.
Challenge of attracting farmers on platform
Despite the rising interest of agri-input firms, platform orchestrators and allied
partner firms to enter and conquer the rural digital space, they face the challenge of
attracting the farmers to use the platform and perform transactions.

How ?

Aware
Users Buyers
farmers

How ? Any suggestions?

Barriers to the adoption of the digital platforms in agriculture

The social, economic and perceptual barriers are limiting the development and the
widespread diffusion of digital platforms
Overcoming these barriers involves bridging the disconnect of expectations between
farmers, entrepreneurs and other stakeholders, and creating solutions with strong
value propositions
Platform business model

The business models are conceptual representation of business

It represents:
1. Choices made by the lead firm in nucleating a core of complementors
2. Decision related to the key target group to serve: Individual farmers, FPOs,
Cooperative society or micro-entrepreneur.
3. Value offered by platform : Discovery, Matching, Transaction and Evaluation
(DMTE)- Inputs supply, consultation, access to market, etc.
4. Resources
5. Revenue model: Membership cost, commission, advertisement, etc.
6. Key cost elements
 Digital platform for agri-inputs

Relationship with
Key complementors
target group Target group
segment
Farmers/FPOs/Coo
perative societies
Role in platform Key resources Critical operations

Organization of Value capture: Key Mode of

Value propositions: Lead firm: sources of revenue interaction with
Key offerings Cooperative or and key cost target group
Private elements
Value created by platforms: Discovery and Matching

The discovery platforms minimize the search costs for participants.

The Samunnati’s agroelevate and Plantix platforms are primarily discovery platforms.

The matching platforms use several mechanisms of computational filters and

programming algorithms to ensure that the preferences of the interacting partners
are served.
For instance, the Sammunati Samaarabh platform allows the agri-tech partners to establish
market linkages with other complementors as per their mutual interests.
Value created by platforms: Transactions and Evaluation

The transaction platforms aim to reduce the frictions between complementors and
minimizes the transaction costs; in fact, the process of transaction is subsumed in
the platform,
For instance, the IFFCO Bazar, Agrostar and Dehaat.
The platform can also have a module for complementors evaluation, feedback, and
review the evaluation platform serve this requirement;
IFFCO Bazar, Dehaat and Agrostar allow for farmers review, they also have social
media handles on Facebook and WhatsApp that allows the complementors to
interact with each other and provide a medium of sharing feedback
Platform value framework

DMTE as a cycle
Discovery Plantix, Samunnati’s Agri-elevate

Evaluation Matching
Dehaat, IFFCO Bazar Samunnati’s Samaarambh

Transaction
IFFCO Bazar, Dehaat

1. Srinivasan, R. (2021). Platform Business Models. Springer.

Case studies
Case studies

IFFCO bazar Lead firm- Manufacturing Cooperative promoted

and marketing of fertilizers platform

Dehaat and Agrostar Lead firm- Technology Privately promoted

developer and ecommerce platform
firm
Samunnati Lead firm- Non banking
financial institution

.
Agrostar

Founded in 2013
AgroStar is India’s leading direct-to-farmer digital platform where farmers can
procure quality agri-inputs at a fair price just by using a mobile phone
Works on an inventory-based model (Hub and Spoke)

Maintain a sizable inventory based on demand centres.

The traditional approach like effective localised print media, regional television, agri
exhibitions, village-level focused farmer meetings, participation in local festivals and
events etc., are used to create awareness in the farming community.
Agrostar

A farmer aware of the AgroStar platform expresses his interest to transact with
AgroStar either through a missed call on a toll-free number or interactive voice
response system (IVRS) or through an ‘AgroStar’ android app.
AgroStar’s intelligent predictive dialler connects qualified customer relations
executives with the farmer.
The executive understands his query and provides him with personalised agronomy
and product solutions based on his crop cycle and places an order on behalf of the
customer with the aid of a smart CRM→ Agrostar’s Agri-Doctor
Agrostar

The products are dispatched from the central warehouse through one of the delivery
channels viz. India Post, local entrepreneurial logistics partners or through field
sales executives and are delivered at the farmer’s doorstep.

The number of agri-clients have grown over 300% in the two-year window of 2018-
2020.
Agrostar: Key complementors

Distributers and logistic Centralised Customer call

Agri-input manufacturers Farmers
partners centers

On-field promoters and Inhouse technology

Social media platforms Agriculture insurance partners
demonstrators developement

Banks for lending credit

Challenges: Augmenting the farmers trust on platform

• The platform aims to change the farmers' approach from a traditional buying
mode to a mobile-first approach.

• With over 4 lac farmers currently connected to AgroStar, what marketing

campaigns or trust-building activities should AgroStar do to develop and
strengthen the element of trust in the farming community

Aware
Users Buyers
farmers
Dehaat

DeHaat is an ICT based platform – which brings all agri offerings for small farmers
under one roof.
It connects small farmers to their various needs – Seeds, fertilisers, equipment, crop
advisory & market linkage.
The company’s platform features distribution of agricultural inputs, customised farm
advisory, access to financial services and market linkages for selling farm produce
through a transparent agricultural chain.
It has a web as well as a mobile interface.
Dehaat: The role of micro-entrepreneur

• Farmer’s registration and Field visit (Registering farm-based queries in picture

and text format, which directly goes to the R&D team)
• Aggregate demand for inputs and place an order through the mobile phone
itself, which gets delivered within 2 to 3 days.
• Market linkage of final farm produce and collection of farmers’ feedback
• Crop reminder calls – Customised crop reminder calls for farmers in local
language in synch with inputs taken
Dehaat: Key Complementors

Local micro-entrepreneurs (franchise

Agri-input manufacturers Warehouses Farmers
owned stores)

Social media platforms Field extension officers Inhouse technology developement FPOs and Cooperative societies

Bulk agri-produce buyers

Customers/Users group linked with the platform:

• 50,000+ farmers households in eastern India

• The platform has 450+ Input SKUs directly from players like UPL, IIL, PHI, Bayer,
Yara and many more
• 75+ bulk buyers including ITC, Godrej, Spencers, NCML
Dehaat: Revenue model

a) Market linkage of farm produce

b) Sale & distribution of Agri input (Commission)
c) Subscription for input-output companies (Onboarding charges)
Approximately 50,000 farmers are currently active with DeHaat for their day-to-day
queries related to input-advisory-output.
Platform Year Govern. Expertise of the Key complementors Value delivered
lead firm
Dehaat 2012 Private Technology • Logistic partners Delivery of agri-inputs to nearest Dehaat
Development and • NCML: National collateral outlet managed by a local micro-
e-commerce management services entrepreneur
• Inhouse smart farming and digital
Procuring agri-output from farmers at the
tech development unit
Dehaat outlet.
• Inhouse and third party farm
Farm advisory and information through
advisory units
Dehaat application
• Trying to partner with the state
governments Microcredit for purchasing agri-inputs to be
• Crop insurance partners will be integrated soon
added in the near future
• Village level entrepreneurs
• Microfinance and NBFCs
• Bulk farm produce buyers
• Agriculture- input company
IFFCO Bazar

IFFCO Bazar Limited, a fully owned subsidiary of the Indian farmers' Fertiliser
Cooperative
The objective is to provide a modern retail experience to the Indian farmers by
delivering agricultural inputs and other services under one roof.
Currently, there are more than 1200 modern retail outlets operating under the
brand name IFFCO BAZAR.
The stores under operation are company-owned company-operated and franchise-
owned franchisee operated.
IFFCO BAZAR also provides services like soil testing, soil health check-up, etc., at its
outlets.
 IFFCO
owned
Franchise
stores

Private Direct
owned
franchise
door step
store delivery

IFFCO
Bazar
Input Input
booking booking
through
mobile through
phone app Village CSC

Buy directly
from IFFCO
bazar
stores
IFFCO Bazar

Customers can select their required product and need to fill shipping address and
make payment in advance to place the order
Farmers can pay through their debit card/credit card/net banking/UPI/ wallet, etc.,
to buy products online
Currently, a free home delivery service is being provided to around 25,000 pin codes
across the country. The ordered material is being delivered to the farmers within 7-
10 days
IFFCO Bazar: Village level entrepreneur

IFFCO BAZAR has joined hands with CSC e-Governance Services India Limited, to
faster the reach of this digital platform to villages and farmers through its expansive
spread of 3.9 lakh village-level entrepreneurs (VLEs) spread across the country.
This initiative will provide an opportunity for VLEs to earn additional income by the
sale of agri-inputs to farmers in nearby villages.
They can leverage the strong brand image of IFFCO to connect with farmers in
nearby villages to inform them that now they can order the products from the CSC
Center.
VLEs can sell entire IFFCO group company products. For each order, VLEs will get an
instant commission of 4% of the total order value.
IFFCO Key Complementors

Agri-input manufacturing The agri-produce buyers (To Cooperative societies and

Financial institutions Farmers
firms be added in future) FPOs

Third party technology Warehouses and logistic

Village level CSC Social media platforms Other IFFCO entities
developers partners
Digital platform Year of Governance Expertise of the lead Key complementors Value delivered
estab. firm

IFFCO Bazar 2016 Cooperative Manufacturing and Financial institutions/ banks (SBI-YONO Last-mile home delivery of all
marketing of fertilizers Krishi), the offerings of the IFFCO and
Ware houses and logistic partners the strategic partners.
Micro-entrepreneurs and village common
The Agri-advisory services
service centre promoted by Ministry of
Agri-consultation using IVRS
electronics and information technology
and call-based module.
Social media partners
India Post In the process of integrating
Other subsidiaries of IFFCO the Credit module
Partnering agri-input manufacturers
FPOs and cooperative society
Third-party technology developers
Agri-output buyers to be linked with the
platform.
Agri-Elevate: From Platforms to Ecosystem

Samunnati has launched “Agri Elevate”, an ecosystem platform offering services

across the agri value chain to FPOs (farmer producer organisations) and agri
enterprises.
The platform aims to help FPOs, and agri enterprises fulfil all their service needs,
and in turn, actively spearhead the digital transformation in the agriculture industry.

Agri-input Target
firms and Agri- group is
Value chain elevate
partners FPO
Agri-elevate

The farmers and FPOs are at the core of all initiatives of this platform and will be the
primary beneficiaries of this initiative in future.
Serving as a neutral platform with linkage to Samunnati’ 's products and services
maintained separately, Agri Elevate is a not-for-profit initiative with the sole aim to
facilitate connections in the agri ecosystem.
Agri-elevate key complementors

Agri-input manufacturing agri-produce processing Cooperative societies and

Agri-output buyers The incubation centers
and firms firms FPOs

Agri-tech startups Innovators Local micro-entrepreneur Social media platforms Self help groups

agri-logistic teams
Digital platform Year of Govern. Expertise of the Key complementors Value delivered
estab. lead firm
Samunnati 2020 Private Financial service • FPOs The focus is on incubating an
provider in • Technology developers ecosystem of enabling actors in
agriculture • Agri-output traders and the agriculture value chain. It
processors provides working capital equity
• Agri-input manufacturing units and seed money to the FPO,
• New age agri-tech startups technology developers and new
• New age supply chain partners age agri-startups.
• Software developers
Provides financial support and
• Agri-food value chain partners
advisory to the new generation
agri-tech startups. It also helps
agri-tech startups create
market linkages.
Thank you