Why am I Skeptical about Direct-to-Farmer(D2F) Agri Input Market Place?
February 2023
I know a few VC-backed D2F Input Market Places are growing pretty well, but I’m skeptical of this model.
Price Factor: If one can’t match the prices of Agri Input retailers, it will be difficult for them to convince farmers to buy from them, simple. But if we factor in the logistics and handling costs, we will also understand how difficult it will be for them to match the local retailer’s price. Farmers value every single rupee.
Time Factor: Most farmers in India don’t plan their pesticide spray until they see symptoms, and once they see symptoms, they don’t stop for long. So, the 3-10 days delivery timeline will always be the biggest roadblock.
Logistics Hassle: If you look at the biggest consumer marketplaces like Amazon and Flipkart, they control the movement of their products. That’s why they deliver quickly. But agri-input marketplaces depend on logistics aggregators (distributors) for order fulfillment. There are no alternates for logistics, and coverage across all rural pin codes is still unsolved. This dependency on different logistics companies for different orders will create a hassle and make it difficult to speed up their delivery timelines.
Digital Payments: We can say rural India is rapidly adopting digital payments, but if you look at the most pre-paid orders, it’s still less than 10%. Picture farmers placing COD orders and rejecting the order at the time of delivery. Not helpful.
Credit: The cycle of credit starts with manufacturers, moves to distributors, then to retailers, and ends with farmers. It is a driver of sales. But it’s difficult for Agri Input Market Places to facilitate collateral-free credit to farmers for input purchases. Even though there are a lot of FinTech startups that are providing collateral-free credit, the difficulty, however, will be determining the creditworthiness of farmers.