Start-up firm pays salary to farmers to work on their farms
Imagine a farmer who leases his farm to a private company and grows crops that the company wants. He gets a fixed salary of ₹15,000 a month and monthly bonuses of ₹3,000–₹4,000.
This is how Growpital, an online platform for tech start-ups, has been working for the last couple of years. In turn, the Gurugram-based company gives small investors an asset class that isn’t as common as other asset classes.
Diverse in terms of geography
‘Retail investors can own a group of agriculture portfolios that give them fixed returns that aren’t taxed. On the parallel front, we take farms on lease and give employment opportunities to farmers who are the highest skilled individuals capable of working for us,’ says Rituraj Sharma, Founder of Growpital.
Also Read | Rise of Agri start-ups shows youth realized Agribusiness is safe & profitable
The start-up is currently working on 2,000 acres (810 hectares) of leased land, where crops are being grown in different ways on ‘geographically diverse’ farms with good customers.
Also, the amount of money invested in agri-tech startups will double to $4.6 billion in FY22.
Different kinds of grains, oilseeds, pulses, fruits, and vegetables are grown by the company. Some of the crops grown are bananas, cumin (jeera), green gramme (moong), soya beans, strawberries, mangoes, potatoes, watermelon, tomatoes, capsicum, and amla (gooseberries). ‘We have other kinds of farming, like honey and mushrooms,’ he said.
Buying a tea plantation
Growpital sells via open market and institutional channels. ‘Our primary objective is to offer to institutional channels such as McCain, which buys potato from Barmer in Rajasthan, due to the predictability of the revenue,’ Sharma said.
Currently, Growpital has taken lands for farming in Rajasthan, Bihar, Chhattisgarh, Chandigarh, and Maharashtra. ‘We’re about to take over a tea plantation in Assam. The founder of the company said, ‘We will start projects in Madhya Pradesh, Gujarat, Karnataka, and Kerala.’ Sharma used to work in the solar industry and found that people who let solar panels be put on their land also had a lot of land that could be used for farming.
‘Two years ago when we launched this company, we got associated with them. We started farming, and then this layer of Growpital began,’ he said.
Growpital owns 110 acres in addition to the 2,000 acres it rents. ‘By the end of April, we will be working on approximately 6,000 acres,’ the company’s founder said.
In these two years, the start-up has gone from making a loss of ₹1 lakh to making ₹60 crore. ‘This has been possible because we are sustainable and profitable in nature,’ he said.
All those associated with the firm, including farmers, get a share of the company’s profits. Growpital takes the land on lease and invests working capital in the form of seeds, fertilisers, labour, land preparation and all activities concerning farming.
Diversified mutual fund
‘Investors who agree to a limited liability partnership put in the working capital’ (LLP). ‘We go the LLP route because the Income Tax rules say that profits shared with all partners of an LLP or a partnership firm are not taxed,’ Sharma said.
In a way, the investors own the portfolio of farm projects, which could be thought of as a diversified mutual fund. Even though weather and market prices can pose risks for agriculture, these risks are not the same all over the country because of the different agroclimatic conditions. Growpital’s efforts are leading to a change in the way farming is done. ‘At least 55% of the farmer population is self-employed. They’re good at what they do in their own world. ‘They know how to grow and what to grow,’ said the founder of the company.
Attempting to generate more revenue
As farmers have more children, they want to make more money, but there isn’t enough land for them to do so. So, Sharma said, ‘we make sure they have enough money by giving them a variable salary, which is a kind of minimum guarantee that can increase their income by 3–4 times.’
He said that most Growpital investors come through its online platform and that growers could make more money if they grew horticultural crops.
At least 1,000 investors have put at least ₹25 crore into Growpital. About 100 of these investors are not from India. At least 600 farmers work for the new company, and at least 200 of them are there to stay.
Also Read | Agri start-ups should assist small-scale farmers to boost income: Karandlaje
Also, whenever the company leased land in a village, some farmers came to talk to them. ‘We also teach farmers new skills, like how to spray, for crops like mustard or watermelon, for example. Sharma said, ‘They find it useful and are proud to work for us.’
Growpital has a central agronomy team that decides on the whole set of rules that its workers have to follow. He said that the activities are watched over every day and that the way they are done is smooth.
The focus of the start-up is to keep farm margins stable, and it takes proactive steps to lessen the effects of weather-related problems. It also uses modern ways to farm, such as using drones.