Origo Commodities, a Gurugram-Based AgriTech is providing complete post-harvest management services for agricultural commodities and has become one of the fastest-growing company in its sector.
Since its launch in 2010, the company has made its footprints in 12 different states having 500 warehouses across the country. Having a team of more than 1,000 professionals working across the country, Origo commodities is making its mark in the AgriTech business with its direct procurement of supplies from the farmer’s end. During an interaction with Aishwarya from BISinfotech, Sunoor Kaul, Director, and Co-founder, Origo Commodities has shared ahead strategies and the upcoming trends.
1) Please explain Origo Commodities and their speciality?
Origo Commodities is a leading Agri fin-tech player in India, which is facilitating supply chain, trade & finance services that is providing value proposition in simplicity, security and transparency in commodity transactions to all agri stakeholders. In a world that is rapidly integrating technology into everyday services, the Agri sector in India is one of the least integrated, and Origo’s efforts go into familiarising user-friendly, yet sophisticated services to bring more liquidity, access, and efficiency into the system. For instance, through the introduction of securitized debt instruments, Origo was one of the first players to introduce commodities as an investment instrument for both institutions and retail investors. Origo is also pioneering forward contracts stabilizing the Agri supply chain, as a hedge against inflation, and as a security instrument against uncertainties in the Agri sector. Beyond this, Origo also specializes in providing state-of-the-art warehouse management systems and storage practices, commodity & trade finance etc., which are all transforming the way agricultural value chains are managed.
2) How do you differentiate Origo from other Agri Fin-Tech Companies?
There are several emerging Agri Fin-Techs that are providing solutions to stakeholders in the sector. An environment conducive to free competition should be desired by those who seek to bring better performance and efficiency into the system. Being the first in this space to offer securitized debt instruments, Origo received a head-start. We set a precedent within the industry as to how private companies can offer top-notch services and get recognized by a credible rating agency in the process. For instance, in first-ever, Origo securitized INR 5 crores worth of Maize crop from Gulab Bagh in Bihar and raised money from institutional investors. Investors looking at investing in commodity-backed instruments can look at coupons between 10-11%. For this transaction, we received an A1 rating from India’s well-renowned rating agency ICRA. It shows the credibility of the transaction and the standards investors can expect from Origo, apart from showcasing the current standing among our competitors.
Over the last 5 years, Origo has pioneered the awareness and adoption of Forward contracts in the Agri supply chain. Forward contracts are a. Forward contracts offer a way to hedge your cost of purchase across an array of commodities not only for the standardized contract available on the exchange. These Forward Contracts are also a way to avail off-balance-sheet financing of commodities since the issuer of the contract holds the commodity on its balance sheet till the off-take happens. Our online platform offers blockchain technology to users which allows greater security and transparency to the buyers and sellers on the platform. Origo is also launching its own e-auction platform which will allow buyers and sellers to transact on a digital platform to purchase/sell their commodities at targeted price and use bidding systems for better price discovery.
Last fiscal year, Origo has purchased INR 185 crores worth of Kharif crop, amounting to 65,000 MT. Plans are already afoot to purchase crop worth INR 350-400 crores in FY 2022. Commodities that Origo does Forward contracts on including Paddy, Wheat, Soybean, Mustard, Cotton, Maize, Pulses and Edible Oil.
3) Which sectors are your key focus areas and Indian market strategies?
Origo’s key focus areas have been on creating a robust commodities financing platform, warehouse management system, and an auction-driven trading marketplace. We are currently offering several instruments including blockchain-enabled commodity financing platforms. The idea is to allow an alternate, secure and transparent platform to all types of stakeholders, allowing them a more efficient platform for their commodity requirements.
Origo has made strides in warehouse management as well, and we currently operate close to 400 warehouses across the country. Under our practices, we have already covered IoT operations such as quality and quantity of foods grains.
Our strategy is to offer people easy alternatives, wherein, skilling and learning about operating IoT enabled warehouse management systems opens up the scope for all participants. In terms of promoting this offering, we need not look further beyond the crisis the Indian Agri sector has been experiencing for years. We produce excessive food grain annually, and yet have no facilities to maintain food quality. Our groundwater levels are depleting and climate change is a huge challenge. Therefore, by adopting new and scientific technologies, we can reduce both food wastage as well as carbon footprint by significant margins.
Origo is also launching a digital auction platform for price discovery for users in April. The platform while offering capabilities for price discovery allows for digital payments and also for better transparency.
4) What is your stance on Blockchain Technology and its scope in the Agri-tech sector?
Blockchain in the enterprise is well suited for trade finance in multiple ways. It allows for higher security, transparency for the users and is much needed for trade finance due to the lack of trust in the system and level of decentralization in the transactions. The immutable transactions and consensus-based changes to any data point ensures that data is permanent and no one party is allowed to change it.
Another aspect of Blockchain is the tokenization of assets which allows for contract and commodities to be converted to a digital asset and hence streamlines the transaction flow across all stakeholders.
5) Please share future marketing plans and upcoming projects?
Origo’s focus is to simplify Agri supply chain through end-to-end supply chain solutions and financing. We already have solutions for warehousing & commodity financing (structured trade finance, procurement finance, input purchase financing). In the coming year, we plan to launch our blockchain platform for trade finance and enrol our existing and new customers, suppliers, lenders, and warehouse owners to further augment our ecosystem.
With our digital auction platform launch, the idea is to promote a more efficient commodity purchase mechanism and a better price discovery platform. New laws support disintermediation. So, we believe that digital auctions will allow more direct engagement of farmers and processors, thereby bringing efficiency to the commodity supply chain.
6) How did Covid-19 affect your business and what were your strategies to be viable in the market?
We at Origo deal with two different aspects of agribusiness, i.e. structured financing and warehousing. When it came to warehousing, the impact of the pandemic was very limited since 90% of our business is with the government. Considering that the government played an active role in providing essential supplies as a relief measure during the pandemic, we were at the forefront. We provided our services to different government agencies to stock produce that farmers brought under MSP procurement and serviced timely supply to PDS stores. Government support in allowing our team to operate all warehouses ensured smooth operations and for us to operate effectively utilization our manpower.
Structured Trade Finance was impacted for initial 6 weeks during which period the country had gone through a complete lock-down including the agriculture mandis which limited the transactions. By the month of June, we were ramped up slowly to normal trade and finance operations.
As we are back to our normal operations since June 2020, we are keen on doubling the purchases and the overall quantity in FY2022. We are optimistic about generating higher revenues this year as compared to the prior year.
7) What are your target markets apart from India, which part of the geographies you are planning to expand in the year 2021?
Currently, our focus is on providing services to the domestic market. Origo is dedicated to augmenting the Indian Agri segment. India itself holds immense potential in terms of revamping existing systems and practices, which can bring more efficiency into the system and impact the output, productivity, and profits immensely. Once we feel that we have achieved our goal, we could then think about exploring other markets.
8) Lastly major trends you see catapulting and dominating the Agri-Tech in the coming time?
The way to look at it is to separate the pre-harvest and post-harvest Agri fintech innovations. While one addresses harvest quality, climate predictability, soil quality, etc., other aspects such as bringing liquidity into the system, efficiency to Agri supply chains, profitability for farmers, and distribution channels, etc. need to be addressed as well.
We are likely to see the democratization of pre-harvest technologies, as people will begin to operate, scale, and reduce the overall cost of introducing tech-enabled products and services in the market. Be it the use of drones to sprinkle affected crop areas, GIS and GPS mapping, or soil monitoring, more people will sign up due to the obvious advantages brought in by such tech-driven approaches.
On the other hand, post-harvest innovations such as securitized debt instruments, forward contracts, blockchain-enabled trade financing for Agri stakeholders, IoT integrations, etc. will lead the sector towards faster and transparent systems devoid of pilferages and food wastage. Another key trend is that companies will continue to disrupt the Agri sector with the latest in-warehouse management practices. They will improve the quality of produce while also adding to the efficacy of the supply chain and logistics.