Authors: Deshna Suryanarayan, Shashikanth Subramanya
Rural communities face value chain gaps when adopting new products due to various reasons such as limited disposable income, lack of awareness, and a limited understanding of the product’s value addition. While mass media technologies like TV or mobile phones succeed due to extensive marketing, climate-smart technologies encounter challenges in gaining widespread acceptance.
The initial step involves acknowledging the need for technology to bridge value chain gaps.
However, currently, there is a rising demand for credit and direct market access, resulting in an inundation of the farming ecosystem with subsidies and loan waivers instead of promoting improved credit and market linkages.
Although subsidies serve as incentives for behavioral changes, they predominantly act as safety nets for failed farm-level businesses. The inherent volatility of the agri-business, from a farming perspective, has led to a decrease in the predictability of cash flows for farmers.
Often we hear farmers saying “we need a higher price for our produce”; what they are essentially saying is that they need certainty in cash flow. The demand for a higher price is the consequence of major downtimes in their business transactions through the years. This is either controlled by intermediary market forces of commissions or by natural disasters such as floods and drought. Over time, farmers developed a specific behavioral pattern that led them to seek cheaper products or high-value products with substantial discounts.
This behavioral pattern affects manufacturers of technology because they struggle to effectively communicate and convince farmers about a product’s high value.
To ensure a successful sale, manufacturers/startups try to make the technology cheaper resulting in reducing the benefits that the technology offered in the first place. This price game to reach the farmers has unfortunately enabled an ecosystem where we convey that farmers do not deserve quality.
Some effective ways to break this behavioral pattern are:
(i) Recognizing the ‘right’ technology has the potential to solve problems
(ii) Quantifying its benefits in the sales process
As a starting point, the sales pitch should focus on the value proposition to smallholder farmers. This requires building an entire ecosystem of stakeholders who can reach out to farmers, provide financing, offer training, and establish market ties with them.
Villgro is making technology adoption a commercially sustainable activity by ensuring that quality reaches farmers.
We are solving value chain gaps among rural communities by adopting a systems approach to sales, where we bring together various market forces and ecosystem players.
It helps adopt a climate-smart lens, create a positive impact and enable impactful innovations to scale in a commercially viable manner.
Villgro works to bring this ecosystem together by focusing on four components -
- Building channels
- Communicating value
- Enabling affordability
- Driving utilization
We create an end-to-end ecosystem between small and marginal farmers and aggregated institutions like FPOs, SHGs, and co-operatives in the agri and allied space to bridge the gaps in the value chain. We work with rural distributors and entities that can go to market channels for us in different geographies. They provide live demonstration units to the end users to generate evidence and eventually sales.
The most critical step is to identify relevant partners who can reach out to rural communities and create sales. To work in tandem with them, we support the sales team of the startups to tackle the markets better. We are trying out models to create ‘Experience centers’ with these channel partners, who can anchor the touch and feel of multiple products in the region with interested end users.
Read more about our recently launched Experience Center’, supported by the Powering Livelihoods initiative, the Amarnarayana FPO, and the KHK federation in Chintamani, Bengaluru.
After bringing the first-hand experience of the technology closer to the ground, we create customized marketing campaigns for end users through trade activation campaigns to create awareness. Despite the discovery, awareness and livelihood-generating opportunity of the product, farmers don’t have the financial health to afford them. Most solutions cost between Rs 20k-1l, depending on which, they are either bought individually or by a group of farmers (FPOs/SHGs).
Villgro facilitates affordability by providing risk mitigation to lenders and incentives to borrowers, through credit guarantees, interest rate subvention, first loss guarantees, and other mechanisms. This approach addresses the significant risk gap that exists in the financing ecosystem for socially impactful and innovative assets.
We help enterprises create training modules, and adopt a value chain play, empowering end users to drive the utilization of the innovation and generate evidence of impact.
This approach has helped expose the shortcomings of the traditional way of subsidizing products/services, which denied rural communities of the world the understanding of the value add the product brings, while they were the ones who needed it the most.
If you are an enterprise looking for market linkage, a financier looking to support enterprises or end users through different kinds of blended finance mechanisms, or a go-to-market entity interested in taking innovations to the last-mile beneficiaries, write to us at info@villgro.org.
