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“High cost to consumers is often the deal breaker”
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Monday, 06 February, 2023, 08 : 00 AM [IST]
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 There is a visible interest for organic dairy produce spanning from milk, curds and paneer. Yet organic dairy farms have a long way to go, said Shashi Kumar, CEO and co-founder, Akshayakalpa Organic, in an email interview with Nandita Vijay. Excerpts:
How do you view the progress of India’s organic dairy?
Organic dairy is getting increasing attention in India owing to the rising health consciousness among consumers as compared to the regular milk. Today, 18% of consumers in India are buying organic produce, apparently the highest in the world and this trend is rising. We really need to educate the consumers of the benefits of organic which are not limited to just environment and extend to their health.
What are the visible trends you sight?
Post-Covid there has been a significant demand for healthy alternatives and organic foods. The cooking at home during the pandemic phase has seen preparation of simple recipes and traditional foods.
Consumers are more aware today and are looking for options. They want to know the source of their food. There is demand sustainability across the entire supply cycle. Akshayakalpa has opened its farms for its consumers to visit to know where their glass of milk comes from.
How has Akshayakalpa Organic fared so far?
Since our inception in 2010, the intent was to provide clean, nutritious milk and other dairy products which we procure from independent farmer-entrepreneurs in rural India.
As of today, our ecosystem outside the model R&D farm in Tiptur comprises over 850 farmers in Karnataka and Tamil Nadu who are a part of a group of rural entrepreneurs. They grow their own animal feed organically, manage the farm and ensure all process standards of Akshayakalpa team are adhered.
This year has been momentous for the brand, as it has diversified from dairy organic products and has also started procuring non-dairy items including country eggs and bananas from farmers. Additionally, it has started collecting organic honey, tender coconut and adding Moringa to the portfolio depending on the consumers’ demand towards organic food.
There is competition in this space in India, what are the key strengths that set the company apart?
The market for good premium milk is wide open, especially in the metro cities. In the face of other players, we do have the first mover advantage, and have a bit of headstart, as we started this organic movement way back in 2010.
The big differentiators for Akshayakalpa are our beliefs and our rigorous processes. We believe that the journey of good quality begins at the very first level of the supply chain, and thus, we have a complete control over the activities at farm level. We are the only dairy organisation in India that has farm level testing and chilling, where the milk is tested to make sure there are no antibiotic traces, the test results are then uploaded to the cloud for regular monitoring.
Setting up an Akshayakalpa farm has been a long process and it takes substantial investment from the farmer. In the regular agricultural scenario, farming is seen as a financially unviable vocation. The farmers are unable to get prices that are viable for them, which pushes them to employ artificial measures to improve yield. Owing to this, the consumer ends up with poor quality food. Akshayakalpa seeks to solve this problem by ensuring the farmer can get the right prices by changing some production practices.
What are the likely future efforts of the company to grow its business?
We are in expansion phase. Presently, Bengaluru, is our biggest office followed by Chennai and Hyderabad. We are setting up the Chennai farm cluster. Three years ago, we started working with a farmer programme in and around Chennai at Pooriyambakkam village to train them and set up the R&D facility and procurement will soon begin.
This year we will work on the Hyderabad cluster. Plans are to enter Pune and Mumbai and similar clusters, like how we have done in Tiptur. A total of 850 happy farmers are associated with us. The objective is to build a robust pipeline of 1,500 farmers by end of this year which will have a positive business impact.
How much of tech adoption is taken up for your operations? Could you detail on the digital tech that is implemented?
Farmers are not digital savvy. This is where the Akshayakalpa app makes the difference. Details like cow data, milk procurement, milking machines, online daily payments, chilling at the farm level and monitoring are registered on the app. Even the cow’s health and milk procurement details are recorded on this app. Additionally, we have started with the online daily payments system. This practice was monthly, then fortnightly, weekly and now daily.
Are there organic dairy exports?
Not at the moment. Current challenge is on production. Setting up the organic way of producing milk takes time, nearly 5 to 10 years and thus the production is limited. For exports, the organic production systems will have to be mainstreamed.
India has witnessed a steady increase in the organic food movement over the recent years. What is your view on this?
India has walked the mile, but there is more to achieve. The high cost to consumers leading to a relatively poor demand for organic produce is often the deal breaker. What one needs to understand is that higher demand will lead to lower cost to consumers and therefore lead to a greater share of organic food consumption. Thus, awareness is most crucial for the entire organic industry.
A farmer will produce good quality milk only if it is economically viable. Milk distribution is expensive. It requires a continuous cold chain, and substantial manpower at various stages. Currently, only few understand and appreciate organic milk. When consumers start appreciating this milk at a scale, the cost per consumer will come down. So, with an Akshayakalpa product, there is the assurance of best quality.
How do you see the business model of contract farming, being beneficial going forward?
The aim is to build up an ecosystem and set a model farm in each village and replicated. We want to inspire the farmers and visualise the benefits while following the Akshayakalpa model.
How are you working on soil health and nutritional security which are key for the economic prosperity of the country?
Our ecosystem comprises: Human beings, soil, and resources. Milk can be called organic when cows are fed on fodder free from synthetic fertilisers, chemical pesticides and are not treated with antibiotics or induced hormones. Cows can graze, access fodder and clean drinking water all the time. Organic farming can’t be prescriptive, it depends upon region to region, area to area, district to district, and, at Akshayakalpa we customise it.
Where does India stand in the areas of organic milk and soil health compared to its global counterparts?
Extractive farm practices including use of chemicals and burning of crop residues are degrading quality of the Indian soil. Soil misuse and mismanagement can affect soil health overall. India is blessed with the skills and growth in organic agriculture. However, we are far behind in adopting organic farming techniques. Although, the demand for organic products has increased post-Covid, there is still, a long way to go and far behind organic farming adoption.
India is the world's largest producer of milk but the country cannot export its surplus as Indian milk does not fulfil the international food quality standard… so what about organic milk?
The quality of the milk is never an issue, but the logistics becomes a challenge. That is why in India, though we have our R&D facility in Tiptur, we are aiming to start centres in Tamil Nadu which will be followed by Andhra Pradesh.
What are the challenges encountered in this space for organic dairy players and those who research and manufacture organic foods?
India is the world’s biggest producer and consumer of dairy products. Yet conventional dairy farming is unregulated, with no promise of quality or taste. Thus, it is absolutely critical to build frameworks that make organic farming viable for farmers, so they invest more and take it up.
In farming, value creation is happening at the farm and value realisation is happening at the market. In India, there is a major disconnect between the two as consumers do not know why they pay a premium and farmers do not know why they need to ensure the quality of milk to get a better price. We need to create a framework, to just make the small farm viable and thriving.
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