Social enterprise | Business | Farm | Smallholder Farmers | agriculture
Khetipati Organics — Prakriti Gautam and Binamrata Sharma founded the agro-food enterprise in 2021 aims to minimise post-harvest loss of smallholder farmers and provide them with a stable price and market ensuring financial stability.
The enterprise sources fruits from nearby farmers and also grows on its own farm, hiring local farmers, situated at a 60 ropanis facility in the Koshi hill of Dhankuta Municipality. The facility operates as cold storage and specialises in advanced dehydration techniques extending the shelf life of agricultural produce, mainly fruits. There, the fruits are dehydrated and sundried, and packaged for export.
The fruits include avocado, dragon fruit, custard apple, mango, banana, and litchi, among others. Millet, coffee, vegetables, herbs, and spices such as ginger, cardamom, mustard, and akbare are also processed and packaged.
Khetipati has recently launched a new brand, Laughing Sherpa, which specialises in ready-to-eat meals.
Gautam, also CEO of the enterprise, pursued an undergraduate degree in Economics from Delhi University in 2013. She earned two master’s degrees — one in Economics, the other in Development Management.
Last month, Khetipati won the first prize at the ‘Pitch It 2023’ competition organised by LSE Generate (an entrepreneurship support platform at the London School of Economics) and also qualified as a finalist for an upcoming mid-term funding competition. The company won a scale-up prize at the Global Solutions Initiative in Berlin, Germany two months ago.
In this interview, Gautam talks about the inception, production, and working model of Khetipati, the smallholder farmers associated, and the risks and challenges involved in the agro-food business. She also touches upon Nepal’s fruit market and why she chose to export. Before venturing to Khetipati, she worked in hydropower projects at Illam and Dailekh for at least three years, and as a consultant with NGOs and INGOs.
She works with smallholder farmers, who are at risk by the large-scale farmers as the latter have a large risk appetite, and easier access to resources such as finance, machinery, and agricultural consultations, among others. While the work is bread and butter for the former.
Currently, the enterprise provides 11 full-time employees, and 45-50 seasonal jobs for one to two months in different fruit seasons who look after harvest, logistics, and packaging.
The interview has been condensed for clarity.
What drove you to the agro-food industry? How did you venture into it?
If we look at Bhatbhateni departmental stores, most fruits there are imported and then packaged here. On the other hand, in Nepal, smallholder farmers face a lot of post-harvest loss, including during transportation.
Farming here is cost-intensive and labour-driven as farmers mostly carry fertilisers and their produce in Doko. So innovative solutions that can meet customer needs but at the same time protect the interests of smallholder farmers are crucial.
A while ago, I talked to a friend, who asked if I could export fruits from Nepal to India. However, the majority of fruits in Nepal come from India. So, what is it that I can explore here? Probably, avocado — a high-value commodity that people consume in various forms and has international demand. However, the season for avocado was then gone.
So, I left for a tour to New York in 2019 in search of fresh perspectives on avocados, where I learned about the challenges of growing avocados and other fruits. Later, I found Dhankuta to be an ideal place for avocado and dragon fruit due to the suitable soil and temperature.
We then went on to explore more about avocados. I travelled to California with my co-founder Binamrata, where we met a few researchers and professionals, and observed the farms, production scales, the fruits that the industry buys, fresh marketing, logistics, grading and processing facilities, etc. I also received insights at different stations on a separate road trip with my brother.
The pandemic-induced lockdown gave us time for reflection and preparation as none of us had prior experience in this sector. We had to establish a factory, search for workers, and didn't have money to give to contractors while our loan applications were rejected by seven or eight banks. Everybody questioned if it would really take off.
What did your research bring up?
Multiple research on avocados has been carried out for 30-40 years globally, which enables farmers to plan accordingly. In Nepal however, thousands of households were distributed saplings, promising that avocado would give them a return, without any research.
The plants that are grown through seeds most often do not reflect the mother’s characteristics. If 100 seeds of avocados are sown, there is a possibility that 100 different types of avocados will grow if they are not grafted.
(Grafting is the act of placing living tissues from one plant (bud or scion) to or on a stem, root, or branch of another such that the tissues will be regenerated forming a new and identical plant)
However, we need to maintain consistency to cater to demand. For instance, if I’m sending products to someone in India, they would expect the same product next time. But as farmers did not follow grafting, the products wouldn’t bear the same characteristics.
The professors I met in California said planting avocados efficiently is not possible without grafting. However, Nepal’s geographical structure allows the planting of different avocados in different seasons. That means we can yield them for all seasons.
For instance, in a particular season, avocados harvested in Dhankuta are supplied to different markets in the country such as Kathmandu, Chitwan, and Surkhet. Then, the harvesting season turns to Chitwan, a more convenient place to supply avocados in the markets. This leads to phasing out Dhankuta’s produce from markets as transporting from the upright east becomes a more expensive option.
All the planted avocados and distributed saplings would produce fruits at some time. So, I thought if there was a potential for an industry that could at least capture the interest of a few hundred farmers, and started with the goal to work in avocados.
We began to sell our products to Kathmandu’s larger outlets which taught us a lot. As of now, the avocados produced in nearby places of Kathmandu dominate the Valley’s market. However, interestingly, most traders sell the avocados produced in proximity to Kathmandu as having come from Dhankuta. (Dhankuta is the top commercial producer of Avocado)
Is avocado enough production-wise?
We are trying to bring innovation to avocados. At the same time, we are also experimenting with multiple fruits, such as kiwi and custard apple, because the season for avocado is short — three or four months.
Our goal is to specialise in dehydration. Kiwi from Ranke (Illam) is available abundantly but lacks market access forcing farmers to go to the alternatives. Similarly, farmers who grow custard apples in Mulghat (Dhankuta) do not even get Rs. 20 per kg.
So, can we add some value to it? Probably not at a scale, but if we make people see the possibility, others get encouraged too. We don’t aim to become the only agro firm working around avocados and definitely want others to come around and play with fruits. Also, if we can make our products raw material.
We prioritise avocado plantation while exploring multiple products as to what can be done to sustain throughout the year. And this year, we started manufacturing avocado powder.
How are you sourcing your fruits?
Multiple fruits come directly from farms to our plant. For Avocados, we got into contract farming with farmers, done at least three months pre-season. Farmers are then secured.
Payments are mostly made in cheques. Many farmers complain that they don’t know their actual earnings and find it difficult to access loans due to cash transactions. We educate and encourage farmers to open bank accounts and transact through the banking system instead of cash. If they continue the practice for three years, they can track their earnings, and enhance their creditworthiness.
Similarly, we’ve been pushing for contracts with women. The resource would then go into the hands of women.
It might not appear effective on a large scale. However, in comparison to last year, women farmers have increased significantly. We have advised them to produce ginger, turmeric, etc. wherever possible. If we can assure them to purchase their produce, it will encourage them. But they can sell at other markets too.
Overall, we have worked with 750-800 farmers from the eastern belt — Dhankuta, Panchthar, Illam, Sankhuwasabha, Terathum, Bhojpur, and Lahan, among others, in the last two years. As a startup, we’re experimenting with onboarding more farmers and exploring markets for them. Hope this number increases in the future.
Why are products from Khetipati Organics expensive?
We don’t bargain with our farmers. Our rule is simple — for instance, if I am buying 20 kg Daal and asking for a Rs. 20 discount per kg, the amount of Rs. 400 will be incurred in farmers’ books. I would rather charge that sum to our customers.
Farmers work hard, have the highest inputs, and yet keep their price low without considering their labour cost, and invasion risks of monkeys, mice, Dumsi (porcupines), and deers.
In one instance, a farmer shared that she didn't get a fair price for her turmeric which was better in comparison to others. We sent out her samples to the US and received an order. We asked farmers to plant the same turmeric. For such a high quality and organic turmeric, all she asked for was Rs. 62-63 per kg.
We usually pay 30% more than the market rate. As we have value addition in our products, we then brand them and search for such customers accordingly. Farmers are always going to be at the heart of the production.
The price is probably nothing for those who buy expensive products.
What are you sharing with farmers? Is it just providing their product’s price or is there any other modality?
Farmers do not want much but a stable and secure return on their investment and limited risk, which the government has failed at securing for them.
Anyways, we provide agro-advisory and training on planting, fertiliser usage, irrigation, and nursery services when flowering occurs and advise them on the distinction between male and female. They have immense knowledge of traditional procedures but lack the platform to share it. If 15-30 ginger farmers gather at a place, the discussion and knowledge are so rich.
We work directly with our avocado farmers. For anybody reaching out, we try to find an expert who can guide them. We have also negotiated with insurance companies to insure the hell stone-prone products.
I wanted to collaborate with the municipality, bring foreign professors and translate their learning materials, and train around 20 students to impart learning to others. But authorities have misplaced priorities.
Where is your export market? Since you are exporting organics, what are the compliances related to certifications?
Depends on the export market. We mostly export to the US and the European Union member states. EU regulations are difficult, fortunately, we did find some people interested.
Some ask for specifically the USDA (United States Department of Agriculture) organic certification, which is firstly expensive and secondly, it’s not practical to certify every farmer we source from. Next, we always wanted to be organic and farmers don’t need to necessarily have certification but the amount of input used during farming is lab tested. Some ask for lab tests and others don’t, while a few examine samples.
What is the usage of your products?
Our products can be used as a substitute, and for convenience. Why would I buy anything if I can get fresh mangoes? But if your child is craving chocolates, but you don’t want to have that, our dried mangoes come as an alternative.
For consumers on a diet or diabetic, or you are having oats but seasonal fruits are not available, then you can go for our kiwis. Interestingly, if you put the kiwis in water and hydrate, it turns into a regular seasonal kiwi. Our products’ versatility and uniqueness make them more appealing for convenience.
Isn’t it difficult logistically to work with many products at a time?
Though we may have been working with various products, we focus only on dehydration.
It depends on the client, and what we dry. For instance, you didn’t know that kiwi is available in a dehydrated form. Now that you know, you might become a client.
We are also available for private labelling.
How hard was it to get loans from banks?
For a women-led, rural-based agro-food industry, project financing is the key. But our bank lending is based on fixed assets as collateral. The bank valuation of the Dhankuta land that we bought was less than the cost price. I was then asked for Biratnagar or Kathmandu-based lands for collateral or collateral from my parents, a personal guarantee from my mother-in-law and husband, and so on. We said this is project financing. Whatever the company owns, the bank loans.
I even often faced the question — who will look after the project once I marry?
After hassles and explaining our enterprise model — which is not commercial but social, to seven or eight banks, we finally got a loan with whatever the company owns.
Anything else that makes Khetipati unique?
We believe in employment, empowerment, economy, and environment.
The economy of Dhankuta is agro-based. We have a cold storage facility that the farmers can rent at their convenience. Although there might be a 15-20% loss, farmers can take advantage of a price rise. We’re trying to set an example.
If farmers are planning to crop ginger, they can also plant turmeric.
Meanwhile, we are trying to be resourceful and optimise the factory. We’ve been experimenting with forest resources such as bamboo and nigalo (Himalayan bamboo) which also contribute to conservation. With such initiation, it can generate income and employment in community forests.
On the empowerment front, we have onboarded women into avocado processing, pumpkin cutting, ginger processing, etc who earlier generated indirect income. What we have found so far is women have attention to detail and are better at processing.
On the other hand, it’s hard to engage women full-time and in hard labour, given monthly periods. The factory should go on processing for months to provide them with stable jobs, which is not possible. Women are engaged only during processing and cutting fruits, while heavy work like carrying fertilisers is assigned to men.
Next is the environment.
If you look at the factory, it’s not a big installation. We could have expanded the facility by cutting down the trees but we chose not to. While we were building the factory, we were concerned about how we could give it a natural structure like where we should put the retention wall. We wanted to be where the farmers are and as a producer of lightweight products, we were able to do that.
We do compost on our own. Villagers are allowed to take the leftovers which they use to make alcohol and use other residues to feed their livestock as everything is organic. We depend on solar backup and hydroelectricity, along with generators but we are trying to minimise its use. On Saturdays we don’t run the machine, instead do other work.
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