An evening with Mr Vilas Shinde
Introduction
On Oct 5, we had an insightful session by Mr. Vilas Shinde, a visionary entrepreneur and the Chairman & Managing Director of Sahyadri Farms, India’s leading Farmer Producer Company (FPC) in horticulture. Sahyadri was founded in 2010 with an initial investment of just ₹1 lakh and a collective of 100 farmers.
Under Mr. Shinde's leadership, Sahyadri has grown into a monumental success story, empowering over 24,500 farmers across Maharashtra. Sahyadri crossed the ₹1,000 crore turnover mark in the fiscal year 2022-23, a 28% growth over the previous year. Today the company plays a significant role in India’s agribusiness sector, particularly in grape production, export, and tomato processing. The company exports its produce to over 42 countries, with major contributions from fresh and processed agricultural products. In 2022-23, Sahyadri processed 275,327 metric tons of produce from 40,000 acres of land.
About Mr Vilas Shinde
Mr. Vilas Shinde holds a post-graduate degree in agriculture from Mahatma Phule Krishi Vidyapeeth, Rahuri. He started Sahyadri Farms with the dream of transforming the lives of small farmers by eliminating middlemen and giving them direct market access.
Sahyadri’s vision was to build people, processes and practices to enable and empower smallholder Indian farmers to compete with the best by cultivating the highest quality fresh produce.
Mr. Shinde believed that it was possible to ensure sustainable income for the small and marginal farmers thus ensuring a life of dignity for them and their families. By removing unnecessary middlemen, offering better logistics, reducing post-harvest losses and providing trust and transparency to consumers, Sahaydri sought to achieve sustainability for the farmers and provide quality and assurance to consumers. Mr. Shinde’s foresight has led to Sahyadri becoming India's largest exporter of grapes and a key player in the processed foods industry.
Mr. Shinde's contributions to Indian agriculture have been widely recognized. Recently, he was awarded the prestigious Doctor of Science (D.Sc.) degree from Mahatma Phule Krishi Vidyapeeth for his groundbreaking work in agriculture and farmer empowerment. His leadership continues to inspire young farmers and agripreneurs across India.
Mr. Shinde's journey is one of resilience and determination. He faced early setbacks, including significant financial losses in the initial years of grape exports. But he persevered by introducing value-added products like pulps, juices, and ketchups. All these moves have strengthened Sahyadri’s market presence and made it a force to reckon with in both the domestic and international markets.
About Sahyadri
The intent of Sahyadri was to provide a holistic solution to farmers so that farming became a profitable activity for all the smallholder and marginal farmers associated with Sahyadri Farms.
Since its inception, Sahyadri has been committed to helping farmers overcome the barriers to finance, technology adoption and product value addition. Sahyadri has become a hub of value addition by building and operating an agri-value chain that is efficient and innovative. Sahyadri also promotes sustainable agriculture and innovation, investing in weather stations, satellite imaging, and agricultural technology to support farmers.
What started as an informal understanding among a few smallholder farmers has been transformed into a movement of farmers. Sahyadri has grown today into a leading fruits & vegetable export company from India. It has a network of over 18,000 registered farmers that cover 31,000 acres and 9 crops.
Sahyadri is a model of cooperative success and is often compared to Amul in the dairy sector. With a vision of replicating India’s global success in dairy within the horticulture space, Mr Shinde has promoted 48 additional Farmer Producer Companies (FPCs) engaged in specific crop-related activities. His efforts have helped farmers increase their yields by 25% and significantly improved their incomes.
On his journey
Mr Shinde joined farming after his studies in agricultural engineering. Between 1995 and 2004, he was a full-time farmer, carrying out various experiments and studying various crops on his ancestral farm. He also studied the problems of Indian farmers. The insights and learnings he picked up were many.
Indian farmers face several challenges that are difficult to handle individually: climate change (Horticulture is particularly vulnerable in this regard.), water shortage, draught, resource management, limited bargaining power, market side issues such as pricing (There is no minimum support price for horticultural crops). For a marginal farmer, It is like fighting the ten headed demon, Ravana.
For most Indian farmers, farming is a traditional occupation. There is no professionalism in their approach. Neither do they do proper accounting nor are they on top of all the details of the operations.
Monthly incomes in agriculture are low. The monthly income per family is on an average Rs 10,000-12,000 varying from Rs 4000-5000 in states like Jharkhand and Orissa to Rs 15,000-18,000 in states like Punjab. With such low incomes who would like to continue in farming?
Many farmers want to move to secure government jobs. But there are very few available. The private sector meanwhile is cutting the need for people through aggressive automation. At the same time, the farmers aspire to lead a similar lifestyle as their counterparts in the cities. It is a Catch 22 situation (chakravyuha).
Mr Shinde started working backwards. To generate a monthly income of Rs 50,000 per family, for a 3-acre land, each acre has to generate Rs 200,000 per year. To achieve the targets, it is necessary to be customer focused and choose the right crop. In a globalized environment, the ability to face international competition is critical, whether the farmer is exporting or not. In developed countries, there are big farmers who have abundant capital, use modern technology and have a professional approach. By considering the interests of the farmers, the customers and other stakeholders, Mr Shinde framed his strategy.
That is how the idea of FPO originated. FPOs are like cooperatives in many ways. But the key difference is the role of the government. In the case of FPOs, the government is not involved in day-to-day operations.
Mr Shinde feels that professionalization is the way forward and not greater government support. The need of the hour is an entrepreneurial mindset, taking ownership and solving problems. Collaboration can generate greater bargaining power. A suitable organization structure, end to end eco system and the use of digital technology are the major building blocks of the strategy.
Q&A
The main issue was gaining the trust of the farmers. The best way to do this was to gain credibility through collective action that produced meaningful outcomes for the farmers. Once it was demonstrated that the business model was working, things started falling in place. The other key issues were marketing, capital, talent, technology.
When it came to the customers it was important to gain trust by building transparency and traceability so that they would be assured of the highest quality. Digital technologies are a big enabler here.
In Nasik, there are 1000 small farmers each working on an average 2 acres of land. But thanks to standardized processes, they generate a uniform product for European supermarkets. The same approach has been replicated for other crops and for other markets. Technology enables customers to audit the entire process.
Farmers are also being enabled to offer value added products and not just the fresh crop. When there is a glut, value added products can be offered. When there is a shortage, the fresh product can be offered.
Mr Shinde believes that with the right talent and leadership, the model (with its essential building blocks of vertical integration, multiple crops, international markets) can be replicated in other locations and for other crops. This is just like how the Amul model has been replicated in other states (e.g. Nandini in Karnataka). Digital strategy can be a big enabler. If the right leaders are available, and we can attract capital, the learnings of Sahyadri can be implemented in other states. We need to attract good talent from universities and inspire them to be social entrepreneurs. But each crop has its own nuances.
In Sahyadri’s business which revolves around mostly small farmers, there is a limited role for the use of commodity derivatives. They are more applicable for cereals, pulses, oil seeds, etc. The focus on Sahyadri is on getting a premium. And premium prices can be charged only when there is value addition and a direct connect with the customer.
Sahyadri’s app Farm Setu enables farmers to access weather data on a day-to-day basis. Data from weather stations on the farm and the clusters are integrated. Farmers are advised accordingly on a regular basis.
Through the app, production and sales data are also made available to famers. This facilitates better planning. Some 20,000 farmers have downloaded the app. About 5000-5500 framers are using the app on a daily basis.