Building an agricultural supply chain on bandwidth

During the initial days of the lockdown in 2020, farmers and wholesalers around the country had to confront adverse conditions to deliver their products to the markets of large cities. Consequently, farmers suffered from a strain in their revenue flow while consumers endured inflated prices due to the lack of supplies. 

This predicament was caused by the fairly antiquated supply chain through which farmers have to sell their products. They usually sell their produce to a wholesaler who carries them from the countryside to large cities and supplies it to retail sellers or other wholesalers. 

By its very nature, this chain is uncoordinated; one severed link can harm every part of the chain, which is exactly what happened during the lockdown. 

As a result, the vegetable farmers received the short end of the proverbial stick. As they had to pluck at least some produce every day and then had to sell it to gain revenue, their livelihood was quickly in danger. 

Atik Mondol, a wholesaler from Madhupur, Tangail found himself, along with the 100 farmers who supplied him with produce, in such a quandary. 

Luckily, these farmers are members of the Madhupur Krishok Club, a farmers' collective managed by the Sasya Foundation. When Sasya was informed about the situation by Atik, they brainstormed an idea: setting up a novel supply chain based primarily on the usage of technology. 

This assimilation of technology was not a gimmick but an absolute necessity. Sasya founders could not travel to Madhupur to talk to the farmers, select products and pricing in person due to the nationwide lockdown. They first partnered with one of the leading e-commerce retailers in the country to supply them with fresh fruits and vegetables. 

The founders coordinated with Atik while the farmers came up with a product list and pricing and submitted that to the retail company. By the end of the day, the farmers of Madhupur collectively received an order for their produce, which was equivalent to around Tk60,000. 

Farmers gathered at Atik's house the following day with their products. 

The first challenge was sorting the products which were up to the standards of the retailer. As the farmers were inexperienced, they were struggling to choose the best products. 

Sasya's founders called a local studio photographer and told him to conduct a live stream of the sorting process, which enabled the founders to select the perfect products for the company. After this process, a loaded van delivered fresh produce to the retailer that very day. 

But these farmers used to conduct their businesses daily and were in dire need of cash. Sasya founders used all available methods of digital financial services to pay the farmers that very day. 

During the next few days, the process became more efficient and streamlined. Instead of talking to the farmers for hours about pricing, Sasya members received product lists and pricing via Whatsapp. Farmers also became far more efficient in sorting out bad products. 

Hours of work were done in only a few minutes. 

Even though it has been most devastating for the economy, the pandemic has also exposed better, efficient and more productive ways of conducting businesses. The agricultural supply chain is no exception. 

Coordinating effectively between the farmers and main retailers can be extremely beneficial for all involved parties. 

Mahmud Hasan, one of the founders of Sasya and the CEO of Agromars, a grocery retailer, said, "As the pandemic has changed consumer behaviour in favour of e-commerce retailers, the demand for daily necessities and fresh produce has increased significantly. Selling directly to the retailers will benefit both the farmers and the customers as both parties will receive value from their transactions". 

This process still has the potential to be more efficient. Retail companies can provide the farmers with transportation facilities, which will allow them to reduce the cost of the products while carrying them more efficiently. 

But that step still has potential barriers. As these farmers' collectives are decentralised and scattered, providing transportation for all of them remains a considerable challenge. 

Additionally, replicating this process on a larger scale may be hindered by traditional financing mechanisms in the agricultural sector. 

As Mahmud Hasan explains, "Farmers usually have to take out high-interest loans from 'mohajons' to finance their cultivation process. In return, they have to sell all or most of their crops back to the 'mohajons' at a lower price point than the market price. As a result, buying directly from the farmers becomes extremely difficult". 

The established methods for financing farmers have not had a large impact on this front. As most farmers are not well-versed in the bureaucratic processes of taking out a loan from a bank, they cannot effectively avail these facilities. 

Finding alternative means for reaching the grassroots farmers will be the key to replicating such a process countrywide. 

"Farmers are more comfortable in using digital financial services, which can be the key to financing such endeavours", said Mahmud, "Ending the farmers' reliance on traditional sources and teaching them about alternative monetary sources will be crucial". 

Despite all these difficulties, farmers from nearby areas of Jalchatra, Dhanbari and Sherpur have decided to join the initiative. It seems like this innovative adoption of technology into the agricultural supply chain is set to spread.