An evening with Mr Sathya Raghu
On Friday, February 3, we had a very impactful session by a young entrepreneur, Mr Sathya Raghu. Along with his colleagues, Sathya is trying to transform Indian farming and improve the lives of the farmers.
About Mr Sathya Raghu
Mr Sathya Raghu is Co-founder and President of Kheyti and CosmosGreen, two startups trying to help small and marginal farmers rise out of poverty. CosmosGreen builds large farms to carry out climate smart agriculture for agri innovations. Kheyti delivers micro greenhouses to smallholder farmers who can double their incomes while being resilient to vagaries of the climate.
A Chartered Accountant-turned-farmer and agri-entrepreneur. Sathya is a 2014 Acumen Fellow, a 2016 Aspen New Voices Fellow, 2018 Rainer Arnhold Fellow and 2020 TeD fellow. He recently delivered a well-received talk in TED Global climate count down in Scotland.
Kheyti won the prestigious Earthshot Prize, which is considered as Eco Oscars, in December 2022 and received a million pounds and an award from Prince William of the British Royal family.
Coming to the personal front, Sathya is the father of two wonderful kids and a passionate Himalayan motor biker.
On his journey
After his CA, Sathya pursued his internship with PWC for about 3.5 years before he decided to quit and join farming. He was driven by purpose, curiosity and a need for challenge. Once on a visit to his native place, he saw a farmer eating mud. When he asked his uncle, he was told that it was common for farmers to mix mud with their food and consume it. When he talked to a farmer he replied that the stomach did not know that the pocket was empty. Sathya felt sad that farmers could not even enjoy two square meals a day.
The idealism and enthusiasm of youth made him jump into farming, understand the problems and try to do something about it. Instead of keeping it a cerebral exercise he wanted to get into action mode. Even in his PWC days, while travelling, Sathya would visit villages over the weekends and try to understand first-hand the problems faced by the farmers. Through Cosmos Green, he decided to learn more about farming and earn the right to advocate change.
Over a period of about 4 years, Sathya understood the challenges faced by Indian farmers. Pests eat up the crops. Due to extreme heat, with temperatures going up to 125 F, water dries up completely. Unseasonal rains can spoil the harvest.
About 100 million famers lose money. About 75% of them are on the verge of quitting. Almost 90% of the farmers do not want their children to take up farming. Predictability and dependability do not exist in Indian agriculture. Farmers need a minimum income of Rs 5000-6000 per month. But this is by no means assured and farmers move in and out of the cycles of poverty as their incomes fluctuate.
With heat waves prevalent and water drying up, Sathya realized that there were no solutions in the market to manage climate risk. Farmers felt helpless and had to depend on their prayers.
About Kheyti
Kheyti was born with the idea of managing climate risk and providing predictable income to the farmers. Kheyti has cocreated solutions along with the farmers in a spirt of humility and with a servant leadership mindset. The company has presented various options to famers and validated them.
The Kheyti greenhouse costs only about Rs 60,000, occupies about one tenth of a hectare and consumes just 2% of the water that would ordinarily be consumed. With about one hour of extra work per day on an average, farmers can earn a predictable income of about Rs 200,000 per year. The following diagram illustrates how the greenhouse transforms the farm.
Kheyti’s business model includes sale of the greenhouses as well as service revenues.
Connecting the dots
Technology alone is not enough. Small farmers face risks at every step. Kheyti is primarily focused on offering greenhouses. But the company works relentlessly to connect the dots so that farmers can enjoy end-to-end services that make technology work for them.
Along with the greenhouse, Kheyti works with banks to get the farmer an affordable loan to buy the greenhouse. The upfront payment is comparable to her investment in open farming. So there is no extra burden.
Kheyti works with large input providers and local entrepreneurs to get farmers the seeds and nutrients at the right price at the right time in right doses. The company’s experienced technical team provides training to the farmer and visits her regularly to provide high quality advisory and troubleshooting services. Kheyti partners with large retailers to help the famers sell their harvest at the best price.
Today, with a Kheyti greenhouse, farmers can manage their operations for a year, with just one day of water they were consuming earlier. The farmers love the greenhouse as it is a life changing asset. The founders are happy that they are solving a “super real problem super sincerely”.
Impact
The founders realized that the success of their venture could not be measured in terms of greenhouse sales. It had to be in terms of the impact on the farmers’ income. Depth of the impact is more important than breadth of the impact. Were farmers making money because of the greenhouse?
Measured this way, Kheyti has been a resounding success. For the farmers, a $1000 investment is generating a 100% ROI in one year and $3 of profit per day. We must keep in mind that the poverty line is $ 2 per day.
We live in an era where there is too much hype about scaling and expanding the customer base. But Sathya believes that we must first measure the depth of impact and then only the spread of the impact. There is no point in scaling something with an insignificant impact. We must only scale something which is transformative.
Greenhouses have been around for 60-70 years. Kheyti’s innovation was to make it affordable to Indian famers and also much smaller in size considering the size of the Indian land holdings. And keeping in view the technological obsolescence, the solution had to be 5X better. Thus, the Kheyti greenhouse was designed with impact in mind.
Design for scale. If something is working well, it must scale. Earlier greenhouses were used for only niche vegetables such as broccoli. With Kheyti greenhouses, 20 commonly consumed vegetables in the country can be grown.
Do no harm. One guiding principle that Sathya and his colleagues have followed is that the company should not dump an asset on farmers that would make them worse off or make them exposed to more risk.
We should dream big and collaborate well. Satya recalled his CA teacher asking what they would do if they saw a bearer cheque lying on the road. Students thought about the cheque amount in terms of Rs 1000 or Rs 10,000. The teacher asked them: What if it was the biggest cheque written in the world, say thousands of crores. We should think big. That opens up new perspectives and helps in attracting collaborators who resonate with our dreams. The dream of the founders is to touch about 1,000,000 farmers in a decade.
Q&A
Greenhouse is not the only solution available. Indeed, there are many opportunities in the farming ecosystem. But for any model to succeed, it should consider the socio-political reality.
- Innovations in financing such as leasing.
- Solar based drip irrigation. In many areas, there is a little water. Here solar based drip irrigation systems can be used effectively.
- Livestock management
According to Satya, some other ideas worth exploring are:
Kheyti is as much focused on solution scaling as on company scaling. These are early days and there are major opportunities to grow the business. There is no need to restrict people from entering the space. There is space for a 100 more entrepreneurs.
Meanwhile, from one state, Kheyti has entered 8 states. The company has realized that there are multiple ways of getting the technology to the farmers. Kheyti is trying to expand its reach in various ways: Dealer model, partner organizations, direct field force, community-based organizations, dealer networks of other large conglomerates. From growing vegetables, it is also possible to move into growing nurseries.
There are many companies today in this space. Acumen investee S4S is involved in post-harvest value addition for vegetables. Our Food is doing this for dry groceries. Honey is another promising area. Lots of funding are available to make this space attractive.
Awareness is created when people who provide the information are trustworthy. Kheyti works with Pradan, Tata Trusts and other organizations who have been associated with farmers for decades.
Village meetings are another useful forum. These meetings are not just about pushing technology but also about understanding the real needs of farmers. The solution should ultimately meet their needs.
Designing for Bharat is a very different proposition. For example, Indian farmers are worried about the monkey menace. Such a problem would be unheard of in a country like Israel. The material in the greenhouse must be monkey proof so that the screen is not easily torn. Based on the inputs from the farmers, the design has been improved on an ongoing basis.
The average life of a greenhouse is 15+ years. After about 6-7 years, the covering material must be changed. This works out to about 25-30% of the initial investment. Otherwise, there are no major running costs.
Earlier, the structure would keep falling when exposed to gusts of wind. This would literally keep Sathya awake at night as customers would call him. But over time, the design has improved, and the structure is quite stable. The conventional solution would have been to make the structure stronger. But imbibing the Bruce Lee philosophy (Be water), Kheyti has come up with a clever innovation. It has built a net on all sides so that the wind can easily pass through. In the event of very strong winds, the clips that hold the nets fall off, but the structure does not collapse.
Kheyti’s philosophy has been to put science at the centre but take into account emotions when rolling out the solution. Cows, bees, etc. are part of the ecosystem and we must protect them. Indeed, as Sathya put it, biodiversity is the insurance or shield behind which humanity is hiding. If we let the bees and cows go, all microbial activity will stop. The ecosystem will collapse.
But we should not take the rhetoric too far and argue that this is the only way to go, i.e. the Indian economy should be running only with cows. Indeed, the people who make the biggest noises about protecting cows are generally not dependent on agriculture and do not have any idea of how to grow and rear a cow. Unnecessary rhetoric is counterproductive to the farmers who are working hard to earn two square meals a day and indeed harmful to the agri ecosystem.
Hydroponics means there is no need for soil. All that we need are water and inert media. This solution is not relevant to India as hydroponics needs uninterrupted power supply. Moreover, our soil is still in good condition. Why not leverage it to our advantage?
As far as possible, Kheyti’s philosophy is to pursue practices that are gentle on the soil. We should use preventive mechanisms to avoid using chemicals and pesticides. However, micro doses of synthetic sprays (very small quantities, maybe 5% of what is ordinarily consumed) must be used when needed. It is like our own health. We should try to lead a healthy lifestyle but if the situation demands, we must visit an allopathic doctor and take medicines to get cured.
In a seed bank, suitable conditions are maintained to conserve seed specimens of different plant species (wild or cultivated). The objective is the preservation of as many plants as possible for posterity.
This problem involves multivariable optimization. Getting farmers, a reliable income is the current priority. Once this is taken care. Of, we can try to optimize the ecology. There is no incentive for farmers if they are hungry. On the positive side, farmers are wonderful people. They persist with their profession despite handicaps, hardships and losses. So if we can ensure a reliable income for them, they will definitely embrace the concept of seed banks.
Kheyti can justifiably feel proud for making a significant contribution to the lives of farmers. The level and predictability of income are increasing for the farmers, while the risks are under control.
But Sathya also offers a word of caution. Not everyone who is in farming should continue. The odds may be against them and the risks too high. They may be better off moving out of farming.