The beginning of the StarAgri story goes back to 2006, when three top franchisees of ICICI Collateral Management—all sons of successful agricultural businessmen from Rajasthan—decided to join forces to provide post-harvest solutions to farmers. Their aim was to help local farmers achieve zero wastage and thereby realise maximum returns from their agricultural produce. The trio, surprisingly all Amits—Amith Agarwal, Amit Khandelwal and Amit Mundawala—were no strangers to farmers’ storage woes, having heard poignant tales time and again of farmers’ toils going up in smoke for want of suitable storage facilities. And this inspired them to embark upon their commendable venture that was designed to minimise post-harvest wastage. Variously from Kota, Alwar and Jodhpur, the four directors (this includes the CMD of the company, Suresh Goyal) of StarAgri thus set up offices in Jaipur and five other cities of the state. Twelve years later, they boast operations in 16 states and 290 cities in India and are the largest players in the collateral management market.
Like any rewarding journey, theirs was not one without struggles either. “Our initial challenge was convincing our families,” says Amith Agarwal, who now is the executive director of the company. “They were not for us taking chances on a business partnership, but we were determined. We stayed at each other’s houses for 10 days to convince our families. This exercise took six months, and then we brainstormed for another six months on strategy and business model.” The actual operations started in mid 2007, after18 months of planning. Thereupon, the four directors invested equally and became equal partners. The company has since followed all protocols and has KPMG and Ernst & Young as auditors.
The next challenge was to build the right team. “We only wanted to work with the best,” says Agarwal. “We value corporate citizenship strongly.” Thanks to their passion and perseverance, today all of StarAgri’s 1,500 employees work towards one cherished goal: to enable farmers gain more from their harvests.
A sense of purpose
There are many companies today that serve farmers in the pre-harvesting phase, but barely any that offer post-harvest services. To fill the gap, StarAgri stepped in with broad-based post-harvest services which ranged from procurement of agricultural produce to grading, packing and handling logistics.
A unique service StarAgri provides is procurement for bulk buyers. Bulk purchase in itself is a very big sector in India today, but surprisingly there are hardly any organised players. The country suffers from a lot of avoidable wastage because of this. “If we can put up warehouses and silos in every village in India, then this problem can be solved; but it needs patience,” says Amith Agarwal. “Farmers work as single units, but are not aware of their power and importance; they are often unaware of the facilities that the government provides them. Thinking about all this has always frustrated us. They silently toil hard to provide food to the world but remain hungry themselves. We are here to stand by them and give them what belongs to them.”
Having been born out of compassion and an intense desire to help farmers and then tempered with true Marwari perseverance, the StarAgri model is very different. They build and maintain warehouses across the country and then tireless teams go around encouraging farmers to deposit their goods in these warehouses. Since all of them are state-of-the-art (some are specially constructed with silos imported from USA), they provide a safe haven for farmers’ produce. The purpose of this model, explains Amit Mundawala, is to “educate farmers, improve farm productivity and prevent distress-selling of their produce, which is often unprofitable’’. The farmers stand to gain more after four to five months of harvesting their produce, he reasons, since its demand increases by then.
A testament to the viability of this model is the trust that farmers repose in them. They trust them because they are ensured of the best for their produce. They are also encouraged and taught to trade after the sowing and reaping seasons, which usually last for six to seven months. For this, StarAgri provides receipts and quality certificates for the goods that lie in their warehouses, which can be used as collateral for a bank loan. Banks are incentivised by the Reserve Bank of India to invest in agriculture. A total of 35 banks recognise these receipts across the country.
Besides arranging for finance for farmers, processors and traders, Star Agri also enables them to test their products in labs. Further, it generates regular updates on the quality, quantity and value of the commodities stored in the warehouses. Hence, the company is an end-to-end service provider as far as post-harvest management is concerned. Besides these core services, they also provide allied services like cargo insurance and market intelligence.
In the public sector, StarAgri deals with The State Trading Corporation of India Ltd and serves almost all agriculture-based corporate houses of the country. “At the end of the day, we deliver what we claim; it is really as simple as that. We are well aware of the consequences of making tall claims and fulfilling none. Farmers will only trust us if they realise better prices for their produce, and all our efforts, day in and day out, are aligned in this direction,” Mundawala assures. Truly, StarAgri is unflinching in its efforts to make the best available to the farmer.
Currently, StarAgri has around 800 warehouses across Rajasthan, Haryana, Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh. These are all compliant with WDRA (Warehousing Development and Regulatory Authority) norms and guidelines. The company is also inclined towards promoting silo-based storage to clients, their eventual aim being to convert warehouses into private marketing yards.
Innovating for growth
Like the farmers they cater to, StarAgri is also subject to climatic conditions like the monsoons, governmental schemes and policies, support prices for major crops and other natural factors which affect production of agricultural commodities. However, their rich experience of managing over 30 commodities including food grains, oil seeds, spices and cotton, helps them remain effective. Along with experience, StarAgri prides itself on its innovative concepts, the ‘private mandi’ being one of them.
“Our ‘private mandi’ is an initiative to provide various services to our customers under one roof. Through these mandis, we can eliminate inefficiencies in agriculture,” says Agarwal with excitement. StarAgri aims to improve farmers’ access to markets by building modern, organised agri-trade and marketing infrastructure across India. This means establishing electronic trading platforms and modern, efficient rural retail and wholesale markets that are professionally managed and responsive to farmers’ needs. Also important is to provide direct access to farmers to an alternate and efficient marketplace. “As a pilot study, our first mandi has been developed in Kota, Rajasthan. Based on the response so far, we are upbeat about the concept and would like to take it forward aggressively,” he adds.
Dreams for the future
Today, StarAgri enables 2.5 lakh farmers to be their own agents and decide their own MRPs, but it has a goal to reach 25 lakh farmers. StarAgri started with a capital of five lakh rupees and has reached where it is today, owing to its directors’ passion and drive. IDFC and Temasek have invested INR 150 crore and 250 crore in StarAgri respectively and the company dreams to be the largest agricultural institution in India. “We want to reach all of our six crore farmers and show our gratitude by making these opportunities available to them,” the directors say unanimously.
With a skilled and motivated team at the helm, StarAgri is poised to grow. The directors are all in their thirties and have finance backgrounds. Their chairman, Suresh Goyal is in his 60s. He keeps them grounded and driven. Amith Agarwal, incidentally, was a part of the team that accompanied Prime Minister Narendra Modi to the ASEAN summit in Naypyidaw, Myanmar in November 2014. In view of all this, StarAgri is destined for unprecedented success. After all, that can be the only eventuality when four Marwari entrepreneurs with such motivation and drive are at the helm of affairs.