This snack brand steams ahead with small farmers5 min read . Updated: 02 Nov 2020, 08:53 AM IST
- YCook, a farm-to-fork startup engaging directly with farmers, takes a mission-driven approach to succeed
A few years ago, a village near Salem in Tamil Nadu got a fright when a farmer grew what the locals called ‘naga corn’. The genesis of that was a startup trying to introduce contract farming of sweet corn. This farmer decided to give an extra 20cm gap between saplings than the recommended 1 metre. The result was that the plants got an overdose of nutrients and developed conjoined corn cobs. With the hood on top, the twin corn cobs took on the appearance of cobras swaying in the wind.
Myths came out about how a Naga had once cursed that land and the project appeared doomed. Then the startup brought a priest, performed a puja and handed out ‘sacred threads’. Farmers used the threads to measure out their next planting and all was well. Each thread being a metre long also helped remove the curse.
Gayathri Swahar, co-founder of Bengaluru-based YCook, recounts the story to illustrate the twists and turns the startup took to build relationships with farmers. Its processing plant that came up later in Salem had a termite hill on the grounds which had to remain intact. “We have been conditioned by so many nagina movies that you don’t want to mess with them for fear of one of them in a white sari knocking on your door," says Swahar.
Sensitivity to such sentiments was one part of working directly with farmers to get inputs with the desired quality for the startup’s vision of creating packaged food products that would be nutritious without being overladen with chemicals. Apart from pujas, several practical measures went into co-opting the farmers.
A crucial step was setting up micro-entrepreneurs with nurseries to hand out free saplings to farmers who promised to grow and sell the produce to the startup. “We had no written contracts because farmers in India are scared to sign anything. But it helped us win their trust because they saw we were investing in this," says Swahar.
Farmers were free to sell the produce in the open market, but few did so because they wanted to continue receiving free saplings of assured quality. YCook also introduced them to Global GAP, a worldwide standard for good agricultural practices. This ensured its products also met requirements on chemical residues for the export market in Europe and the US. Orders for Israel even comply with kosher standards.
About a fifth of the 2,832 farmers supplying sweet corn, chickpea, rajma, peanuts, tuvar dal, sweet potato and tapioca to YCook have GAP certification. The rest are yet to get certified but are expected to follow GAP. Their produce is tested for residues and those not complying are retrained or let off. The startup mostly works with small and marginal farmers who are not caught up in the traditional system of traders and mandis.
This has helped build a direct relationship with farmers, which is key to the startup’s innovation in products. It makes boiled and steamed snacks and ready-to-cook items that are minimally processed. They use no preservatives as they are thermally sterilized and vacuum-packed, with a year’s shelf life.
These aim to help a growing section of consumers make healthier diet choices. For example, steamed kabuli chana sprouts provide a healthy alternative to packaged snacks. And for those wanting to rustle up a quick meal, steamed rajma comes in handy.
YCook’s first product was steamed sweet corn kernels. Apart from creating a new category, it used a crop that’s not available at all times in India. “For us, this was a great argument for a farm-to-fork startup," says Reihem Roy, partner at VC Omnivore, an investor in YCook. “When you engage with farmers to grow a crop that’s not readily available in the market, and then you do value addition to create a product consumers want, that is something defensible."
Sweet corn is highly perishable, which means it’s fit only for fodder unless consumed fresh. YCook’s local plant processes the harvested corn within 18 hours, and it hires rural women to hand-pod the kernels. “This became a USP for us in Europe because mechanical podding cuts off the nutrient-rich endosperm," says Swahar.
Backward integration with farmers and processing without chemicals occupied the startup’s early journey. The tougher job now is generating demand for steamed snacks under its brand name Tadaa. Hypermarkets like Big Bazaar were the main outlets before covid forced the startup to reach out to kiranas. It has tied up with 63 distributors across the country as well as leading e-commerce sites.
It takes a lot of persuasion to convince retailers they can make money from a new product. YCook also wanted to keep its products affordable, so it refused to pay money to display its items. Despite these challenges, a healthy ratio of repeat buyers has enabled the startup to reach a monthly revenue of ₹2.6 crore. Swahar believes it would have been twice as much if not for the pandemic’s effect on distribution.
An encouraging aspect is growing interest from overseas markets. It recently entered Russia with a leading retail chain that has 12,000 stores. Its products are also available in Germany and the US, where it retails in the main stores and not just the Indian ones, because snacks like steamed chickpeas, promising freshness and nutritive value, have a broad appeal.
Many packaged food startups have come up in recent years, but few have managed to engage directly with farmers on a large scale. It’s a risky proposition, given the vagaries of weather, soil and inputs which make it hard to ensure consistent quality.
Hyderabad-based Troo Good’s value proposition is to reach mass consumers with an alternative to unhealthy snacks. It is coming out with ragi rusks and probiotic millet-based chikkis that are priced on par with products from big brands. Unlike YCook, its focus is to create demand and distribution channels for these alternative products.
“It’s a chicken-and-egg dilemma. We are going after the demand first, which is the only way we can impact farmers at a huge scale. We will figure out the back-end later," says Troo Good founder Raju Bhupati. It mostly procures millets and peanuts from the open market; now, it is tying up with farmer producer organizations (FPOs) as well.
Gurugram-based Farmley, on the other hand, first built relationships with FPOs for niche commodities like walnuts, raisins and makhana, which it sold to FMCG companies and exporters. Now, it is trying to establish a Farmley brand, although its products are also white-labelled for e-commerce companies and buyers abroad.
“In commodities like almonds and cashew, the first thing you need to work on is to ensure availability of good quality in sufficient volume. That’s what we did pati-ently for the first three years before launching our own branded products this year," says Farmley co-founder Akash Sharma.
Finding the right balance between differentiation and scale is a hard nut to crack.
Malavika Velayanikal is a Consulting Editor with Mint. She tweets @vmalu