Origo Commodities Starts Purchasing Loose Agricultural Produce Stocks from Farmers

Recently, Origo Commodities (an Agri fintech firm) has taken up an initiative to set up shops to buy loose stocks with growers at farmer procurement centers (FPCs) in coordination with the  farmer producers organizations (FPOs) and infrastructure firms. 

Sunoor Kaul (Co-founder, Origo Commodities Pvt. Ltd) said – “The shops at FPCs will allow farmers to bring in their loose stocks. FPOs will help in buying the (agricultural produce) stock that will be assessed real-time through a cloud-based method for quality by Origo. The stocks will be purchased and stored in a warehouse. Once the stock of a specified commodity makes up a batch of 25 tons, it will be auctioned on the e-auction platform. On the e-auction platform, the batch of the commodity put up for sale will be bid by any 5,000 buyers registered with Origo Commodities for bidding besides the agri-fintech firm.” 

Helpful for Stakeholders 

The e-auction platform has been launched to help the stakeholders like farmers, traders, and agro-processors to sell and produce commodities. It offers different options such as price discovery, price risk, trade settlement, and forward and reverse auction. “The bidding on the offers will be made by FPCs since they would procure the loose stocks from growers. The process will be transparent as Origo will also make a bid. Once the auction gets completed successfully, Origo will again carry tests for the quality of the product that is being loaded for delivery. We send all details to the buyers digitally” – said Kaul. 

He added – “the amount due from the buyer will be deposited in an escrow account before being given to the FPOs, which will, in turn, be distributed to the growers. For this, farmers need not come to the FPCs. There is a 4-5 percent gap in the price of commodities traded on ht platform. Growers get at least 1-2 percent additional money for their produce, while buyers get the commodity at a price lowers by at least one percent.” 

Zero Intermediaries 

Since there are no intermediaries involved in the process, the farmers will get more for their commodities and the buyers will buy at a low price.“FPCs get 0.5 to one percent as a transaction platform fee. Origo Commodities has tied up with infrastructure firms for the storage of commodities. We have a revenue-sharing understanding with the infrastructure firms. Over 20 FPOs have joined hands with Origo for the e-platform trading and about 25,000 farmers are involved in this. These people have aligned with the platform in October itself and we also keep building the FPCs across major commodities belts” – Origo co-founder said. 

Warehousing capacity 

“All the FPCs have warehouse capacities to store between 150 and 3,000 tons. Farmers can keep their produce in these warehouses until they get the right price for it. In case there are no bids on the e-platform, Origo offers to buy the product. One of the FPCs is a private mandi from where Agri production is graded and processed at feed mills. A complete process has been set up at this FPC and FPOs deal directly with them. This also makes the supply chain efficient. In the past few years of our operations, everyone involved has earned a good share of the profits” – Kaul said. 

Farmers profit from the greater money since their expenditures stay unchanged. Commodity arrivals are now lower at the three FPCs that are experiencing inward shift. Live auctions, especially at the private mandi, have yet to begin. 

Pacing Arrivals 

Arrivals are projected to go up after a fortnight since moisture levels in agricultural commodities like maize are now at 16-17 percent. Arrivals would increase up after the moisture level dropped to a safe level of 14 percent or less. While Origo is well-known for its trade and procurement finance, it is now bolstering its backend by establishing memorandums of understanding with infrastructure companies, FPCs, and FPOs. 

Farmers in Maharashtra, Madhya Pradesh, and Uttar Pradesh are interested in Origo's e-platform, with one FPO functioning in Uttar Pradesh. By December, Kaul expects eight additional FPOs from the northern state to join the platform. Many mid-size traders from all around the country are exhibiting interest in the e-platform. 

Buyers were cautious to purchase soybean stockpiles due to high bean prices, but maize trading appears to be ramping up. "Paddy (Pusa-1121 type) prices are also extremely high," he said, adding that “volume is projected to increase in the coming six months.”