Agritech Start-up Ergos Helps Small Farmers in Avoiding Distressed Sales

Start-up in Agritech Ergos, which uses the grain bank concept to help small and medium farmers in Bihar store and market their harvested produce, has recently expanded its operations to Karnataka and Maharashtra.

"We are seeing a strong response from farmers in Karnataka and Maharashtra, where over 8,000 farmers have signed up." "We have warehouses in 22 locations," said Kishor Jha, Founder and CEO of Bengaluru-based Ergos. Since 2012, the company has hired approximately one lakh farmers in Bihar, where it has established warehouses in 240 locations.

Hiring of Warehouses

Jha described Ergos' business model as follows: Ergos hires warehouses at village levels on long-term leases to create grain banks and connects with farmers in the area to explain the concept of storing produce to get better prices. During the harvest season, every farmer, particularly the small and medium-sized ones, is eager to sell, and the buyer has limited purchasing power.

Ergos uses its technology-enabled platform to convert the produce stored in grain banks into digital inventory, and a passbook with details on the quantity and type of grains is issued to the farmer. Ergos currently handles six types of grains: maize, wheat, paddy, soyabean, tur, and ragi.

"Once the grain enters the warehouse, it becomes fungible." We handle storage, preservation, and connecting the farmer to the market, as well as the financial institution. "Technology plays a significant role in digitizing grains, increasing visibility to buyers, and connecting with them," said Jha, a banker turned agri-entrepreneur.

Grain Banks

Farmers can use Ergos' grain bank services for as little as 40 paise per quintal per day, according to Jha, who added that the model is designed to accommodate even small and marginal farmers who can store and sell one bag of grain. Stock management fees include warehouse rent, chemical treatment, fumigation, and pest control to keep the stock in good condition. "We also ensure the warehouse against fire, burglary, earthquake, and theft, among other things," he added.

For up to nine months, the grain stored at Ergos' grain bank will remain in the farmer's account until the time he wants to sell it. "If the farmer requires liquidity, we have multiple banks and financial institutions on the platform, including SBI and Sammunati, who lend to farmers through one-click against their grains deposited in the banks," Jha explained.

Farmers who sell their produce after 3-4 months of harvesting, according to Jha, can get a better price. Ergos assists farmers in better price discovery, and their incomes have increased by 30-40%. Farmers who use the services can become price makers rather than price takers, according to Jha, who added that his company assists small farmers in avoiding distress sales.